Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 23, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | ALLIANCE RESOURCE PARTNERS LP | ||
Entity Central Index Key | 1,086,600 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 807,387,739 | ||
Entity Common Units Outstanding | 130,903,256 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 6,756 | $ 39,782 |
Trade receivables | 181,671 | 152,032 |
Other receivables | 146 | 279 |
Due from affiliates | 165 | 271 |
Inventories, net | 60,275 | 61,051 |
Advance royalties, net | 4,510 | 1,207 |
Prepaid expenses and other assets | 28,117 | 22,050 |
Total current assets | 281,640 | 276,672 |
PROPERTY, PLANT AND EQUIPMENT: | ||
Property, plant and equipment, at cost | 2,934,188 | 2,920,988 |
Less accumulated depreciation, depletion and amortization | (1,457,532) | (1,335,145) |
Total property, plant and equipment, net | 1,476,656 | 1,585,843 |
OTHER ASSETS: | ||
Advance royalties, net | 39,660 | 29,372 |
Equity investments | 147,964 | 138,817 |
Cost investments | 106,398 | |
Goodwill | 136,399 | 136,399 |
Other long-term assets | 30,654 | 25,939 |
Total other assets | 461,075 | 330,527 |
TOTAL ASSETS | 2,219,371 | 2,193,042 |
CURRENT LIABILITIES: | ||
Accounts payable | 96,958 | 64,055 |
Due to affiliates | 771 | 906 |
Accrued taxes other than income taxes | 20,336 | 18,273 |
Accrued payroll and related expenses | 35,751 | 41,576 |
Accrued interest | 5,005 | 316 |
Workers' compensation and pneumoconiosis benefits | 10,729 | 9,897 |
Current capital lease obligations | 28,613 | 27,196 |
Other current liabilities | 19,071 | 14,778 |
Current maturities, long-term debt, net | 72,400 | 149,874 |
Total current liabilities | 289,634 | 326,871 |
LONG-TERM LIABILITIES: | ||
Long-term debt, excluding current maturities, net | 415,937 | 399,446 |
Pneumoconiosis benefits | 71,875 | 62,822 |
Accrued pension benefit | 45,317 | 42,070 |
Workers' compensation | 46,694 | 40,400 |
Asset retirement obligations | 126,750 | 125,266 |
Long-term capital lease obligations | 57,091 | 85,540 |
Other liabilities | 14,587 | 17,203 |
Total long-term liabilities | 778,251 | 772,747 |
Total liabilities | 1,067,885 | 1,099,618 |
Alliance Resource Partners, L.P. ("ARLP") Partners' Capital: | ||
Limited Partners - Common Unitholders 130,704,217 and 74,375,025 units outstanding, respectively | 1,183,219 | 1,400,202 |
General Partners' interest | 14,859 | (273,788) |
Accumulated other comprehensive loss | (51,940) | (38,540) |
Total ARLP Partners' Capital | 1,146,138 | 1,087,874 |
Noncontrolling interest | 5,348 | 5,550 |
Total Partners' Capital | 1,151,486 | 1,093,424 |
TOTAL LIABILITIES AND PARTNERS' CAPITAL | $ 2,219,371 | $ 2,193,042 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Dec. 31, 2017 | Jul. 28, 2017 | Dec. 31, 2016 |
CONSOLIDATED BALANCE SHEETS | |||
Common units outstanding | 130,704,217 | 130,704,217 | 74,375,025 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
SALES AND OPERATING REVENUES: | |||
Coal sales | $ 1,711,114 | $ 1,861,788 | $ 2,158,006 |
Transportation revenues | 41,700 | 30,111 | 33,597 |
Other sales and operating revenues | 43,406 | 39,554 | 82,130 |
Total revenues | 1,796,220 | 1,931,453 | 2,273,733 |
EXPENSES: | |||
Operating expenses (excluding depreciation, depletion and amortization) | 1,095,167 | 1,124,848 | 1,386,783 |
Transportation expenses | 41,700 | 30,111 | 33,597 |
Outside coal purchases | 1,514 | 327 | |
General and administrative | 61,760 | 72,529 | 67,484 |
Depreciation, depletion and amortization | 268,981 | 336,509 | 323,983 |
Asset impairment | 100,130 | ||
Total operating expenses | 1,467,608 | 1,565,511 | 1,912,304 |
INCOME FROM OPERATIONS | 328,612 | 365,942 | 361,429 |
Interest expense (net of interest capitalized of $551, $358 and $695, respectively) | (39,385) | (30,669) | (31,153) |
Interest income | 94 | 10 | 1,459 |
Equity investment income (loss) | 13,860 | 3,543 | (49,046) |
Cost investment income | 6,398 | ||
Debt extinguishment loss | (8,148) | ||
Acquisition gain, net | 22,548 | ||
Other income | 2,980 | 725 | 955 |
INCOME BEFORE INCOME TAXES | 304,411 | 339,551 | 306,192 |
INCOME TAX EXPENSE | 210 | 13 | 21 |
NET INCOME | 304,201 | 339,538 | 306,171 |
LESS: NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTEREST | (563) | (140) | 27 |
NET INCOME ATTRIBUTABLE TO ALLIANCE RESOURCE PARTNERS, L.P. ("NET INCOME OF ARLP") | 303,638 | 339,398 | 306,198 |
GENERAL PARTNERS' INTEREST IN NET INCOME OF ARLP | 21,904 | 80,911 | 146,338 |
LIMITED PARTNERS' INTEREST IN NET INCOME OF ARLP | $ 281,734 | $ 258,487 | $ 159,860 |
BASIC NET INCOME OF ARLP PER LIMITED PARTNER UNIT (in dollars per unit) | $ 2.80 | $ 3.39 | $ 2.11 |
DILUTED NET INCOME OF ARLP PER LIMITED PARTNER UNIT (in dollars per unit) | 2.80 | 3.39 | 2.11 |
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT (in dollars per unit) | $ 1.88 | $ 1.9875 | $ 2.6625 |
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING - BASIC (in units) | 98,707,696 | 74,354,162 | 74,174,389 |
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING - DILUTED (in units) | 98,707,696 | 74,354,162 | 74,174,389 |
CONSOLIDATED STATEMENTS OF INC5
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF INCOME | |||
Interest expense, interest capitalized | $ 551 | $ 358 | $ 695 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
NET INCOME | $ 304,201 | $ 339,538 | $ 306,171 | |
OTHER COMPREHENSIVE INCOME/(LOSS): | ||||
Total adjustments | (13,400) | (3,983) | 1,290 | |
OTHER COMPREHENSIVE INCOME (LOSS) | (13,400) | (3,983) | 1,290 | |
COMPREHENSIVE INCOME | 290,801 | 335,555 | 307,461 | |
Less: Comprehensive (income) loss attributable to noncontrolling interest | (563) | (140) | 27 | |
COMPREHENSIVE INCOME ATTRIBUTABLE TO ARLP | 290,238 | 335,415 | 307,488 | |
Defined benefit pension plan | ||||
OTHER COMPREHENSIVE INCOME/(LOSS): | ||||
Prior service cost | (1,498) | |||
Amortization of prior service cost (1) | [1] | 186 | ||
Net actuarial loss | (6,610) | (2,589) | (863) | |
Amortization of net actuarial (gain) loss (1) | [1] | 3,054 | 2,952 | 3,354 |
Total adjustments | (3,370) | (1,135) | 2,491 | |
Pneumoconiosis benefits | ||||
OTHER COMPREHENSIVE INCOME/(LOSS): | ||||
Net actuarial loss | (7,938) | (205) | (750) | |
Amortization of net actuarial (gain) loss (1) | [1] | (2,092) | (2,643) | (451) |
Total adjustments | $ (10,030) | $ (2,848) | $ (1,201) | |
[1] | Amortization of prior service cost and actuarial gain or loss is included in the computation of net periodic benefit cost (see Notes 13 and 17 for additional details). |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 304,201 | $ 339,538 | $ 306,171 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation, depletion and amortization | 268,981 | 336,509 | 323,983 |
Non-cash compensation expense | 12,326 | 13,885 | 12,631 |
Asset retirement obligations | 3,793 | 3,769 | 3,192 |
Coal inventory adjustment to market | 449 | 1,952 | |
Equity investment (income) loss | (13,860) | (3,543) | 49,046 |
Distributions received from investments | 13,939 | 2,719 | |
Paid-in-kind distributions received from cost investment | (6,398) | ||
Net gain on sale of property, plant and equipment | (696) | (76) | (1) |
Asset impairment | 100,130 | ||
Acquisition gain, net | (22,548) | ||
Valuation allowance of deferred tax assets | (3,339) | (1,365) | 1,557 |
Debt extinguishment loss | 8,148 | ||
Other | 6,212 | 3,300 | 6,388 |
Changes in operating assets and liabilities: | |||
Trade receivables | (29,639) | (29,157) | 64,412 |
Other receivables | 133 | 417 | 422 |
Inventories, net | (1,449) | 44,948 | (21,898) |
Prepaid expenses and other assets | (6,067) | 17,023 | (3,403) |
Advance royalties, net | (13,591) | (2,464) | (6,915) |
Accounts payable | 25,499 | (15,140) | (41,534) |
Due to/from affiliates | (29) | 696 | (11,114) |
Accrued taxes other than income taxes | 2,063 | 2,652 | (4,287) |
Accrued payroll and related benefits | (5,825) | 4,545 | (24,527) |
Pneumoconiosis benefits | (159) | 447 | 2,808 |
Workers' compensation | (4,371) | (6,427) | (2,491) |
Other | (4,205) | (8,732) | (17,632) |
Total net adjustments | 251,915 | 364,006 | 410,171 |
Net cash provided by operating activities | 556,116 | 703,544 | 716,342 |
Property, plant and equipment: | |||
Capital expenditures | (145,088) | (91,056) | (212,797) |
Increase (decrease) in accounts payable and accrued liabilities | 7,404 | (4,402) | (3,021) |
Proceeds from sale of property, plant and equipment | 2,139 | 1,165 | 2,062 |
Contributions to equity investments in affiliates | (20,688) | (76,797) | (64,540) |
Purchase of cost investment | (100,000) | ||
Distributions received from investments in excess of cumulative earnings | 11,462 | 3,313 | 444 |
Payments for acquisitions of businesses, net of cash acquired | (1,011) | (74,953) | |
Payment for acquisition of customer contracts | (23,000) | ||
Advances/loans to affiliate | (7,300) | ||
Other | 4,190 | ||
Net cash used in investing activities | (244,771) | (191,788) | (355,915) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Borrowings under securitization facility | 100,000 | 44,600 | 6,500 |
Payments under securitization facility | (127,600) | (27,700) | (23,400) |
Payments on term loan | (50,000) | (156,250) | (108,502) |
Borrowings under revolving credit facilities | 215,486 | 140,000 | 543,000 |
Payments under revolving credit facilities | (440,486) | (270,000) | (308,000) |
Borrowings under long-term debt | 400,000 | ||
Payment on long-term debt | (145,000) | (205,000) | |
Proceeds on capital lease transactions | 33,881 | 100,000 | |
Payments on capital lease obligations | (27,071) | (24,456) | (4,312) |
Payment of debt issuance costs | (16,487) | (101) | |
Payment for debt extinguishment | (8,148) | ||
Contributions to consolidated company from affiliate noncontrolling interest | 251 | 3,014 | 2,147 |
Net settlement of employee withholding taxes on vesting of Long-Term Incentive Plan | (2,988) | (1,336) | (2,719) |
Cash contributions by General Partners | 1,105 | 1,047 | 1,595 |
Distributions paid to Partners | (240,812) | (247,915) | (346,799) |
Other | (2,621) | (189) | (6,107) |
Net cash used in financing activities | (344,371) | (505,405) | (351,597) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (33,026) | 6,351 | 8,830 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 39,782 | 33,431 | 24,601 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 6,756 | $ 39,782 | $ 33,431 |
CONSOLIDATED STATEMENT OF PARTN
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL - USD ($) $ in Thousands | Limited Partners' Capital | General Partners' Capital (Deficit) | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest | Total |
Balance at beginning of period at Dec. 31, 2014 | $ 1,310,517 | $ (260,088) | $ (35,847) | $ 465 | $ 1,015,047 |
Balance at beginning of period (in units) at Dec. 31, 2014 | 74,060,634 | ||||
Comprehensive income: | |||||
Net income (loss) | $ 159,860 | 146,338 | (27) | 306,171 | |
Actuarially determined long-term liability adjustments | 1,290 | 1,290 | |||
COMPREHENSIVE INCOME | 307,461 | ||||
Issuance of units to participants in deferred compensation plans (Note 14) | $ (2,719) | (2,719) | |||
Issuance of units to participants in deferred compensation plans (Note 14) (shares) | 128,150 | ||||
Common unit-based compensation | $ 12,631 | 12,631 | |||
Distributions on common unit-based compensation | (2,627) | (2,627) | |||
General Partners contributions (Note 12) | 1,595 | 1,595 | |||
Contributions to consolidated company from affiliate noncontrolling interest (Note 10) | 2,147 | 2,147 | |||
Distributions to Partners | (197,444) | (146,728) | (344,172) | ||
Balance at end of period at Dec. 31, 2015 | $ 1,280,218 | (258,883) | (34,557) | 2,585 | 989,363 |
Balance at end of period (in units) at Dec. 31, 2015 | 74,188,784 | ||||
Comprehensive income: | |||||
Net income (loss) | $ 258,487 | 80,911 | 140 | 339,538 | |
Actuarially determined long-term liability adjustments | (3,983) | (3,983) | |||
COMPREHENSIVE INCOME | 335,555 | ||||
Issuance of units to participants in deferred compensation plans (Note 14) | $ (1,336) | (1,336) | |||
Issuance of units to participants in deferred compensation plans (Note 14) (shares) | 186,241 | ||||
Common unit-based compensation | $ 13,885 | 13,885 | |||
Distributions on common unit-based compensation | (3,355) | (3,355) | |||
General Partners contributions (Note 12) | 1,047 | 1,047 | |||
Contributions to consolidated company from affiliate noncontrolling interest (Note 10) | 3,014 | 3,014 | |||
Distributions from consolidated company to affiliate noncontrolling interest (Note 10) | (189) | (189) | |||
Distributions to Partners | (147,697) | (96,863) | (244,560) | ||
Balance at end of period at Dec. 31, 2016 | $ 1,400,202 | (273,788) | (38,540) | 5,550 | $ 1,093,424 |
Balance at end of period (in units) at Dec. 31, 2016 | 74,375,025 | 74,375,025 | |||
Comprehensive income: | |||||
Net income (loss) | $ 281,734 | 21,904 | 563 | $ 304,201 | |
Actuarially determined long-term liability adjustments | (13,400) | (13,400) | |||
COMPREHENSIVE INCOME | 290,801 | ||||
Issuance of units to participants in deferred compensation plans (Note 14) | $ (2,988) | (2,988) | |||
Issuance of units to participants in deferred compensation plans (Note 14) (shares) | 222,011 | ||||
Issuance of units to MGP in Exchange Transaction | $ 14,171 | (14,171) | |||
Issuance of units to MGP in Exchange Transaction (in units) | 56,100,000 | ||||
Issuance of units to SGP in Exchange Transaction | $ (320,838) | 320,838 | |||
Issuance of units to SGP in Exchange Transaction (in units) | 7,181 | ||||
Exchange Transaction fees | $ (1,605) | (1,605) | |||
Common unit-based compensation | 12,326 | 12,326 | |||
Distributions on common unit-based compensation | (3,248) | (3,248) | |||
General Partners contributions (Note 12) | 1,105 | 1,105 | |||
Contributions to consolidated company from affiliate noncontrolling interest (Note 10) | 251 | 251 | |||
Distributions from consolidated company to affiliate noncontrolling interest (Note 10) | (1,016) | (1,016) | |||
Distributions to Partners | (196,535) | (41,029) | (237,564) | ||
Balance at end of period at Dec. 31, 2017 | $ 1,183,219 | $ 14,859 | $ (51,940) | $ 5,348 | $ 1,151,486 |
Balance at end of period (in units) at Dec. 31, 2017 | 130,704,217 | 130,704,217 |
ORGANIZATION AND PRESENTATION
ORGANIZATION AND PRESENTATION | 12 Months Ended |
Dec. 31, 2017 | |
ORGANIZATION AND PRESENTATION | |
ORGANIZATION AND PRESENTATION | 1. ORGANIZATION AND PRESENTATION Significant Relationships Referenced in Notes to Consolidated Financial Statements · References to "we," "us," "our" or "ARLP Partnership" mean the business and operations of Alliance Resource Partners, L.P., the parent company, as well as its consolidated subsidiaries. · References to "ARLP" mean Alliance Resource Partners, L.P., individually as the parent company, and not on a consolidated basis. · References to "MGP" mean Alliance Resource Management GP, LLC, ARLP's sole general partner and, prior to the Exchange Transaction discussed below, its managing general partner. · References to "SGP" mean Alliance Resource GP, LLC, ARLP's special general partner prior to the Exchange Transaction discussed below. · References to "Intermediate Partnership" mean Alliance Resource Operating Partners, L.P., the intermediate partnership of Alliance Resource Partners, L.P. · References to "Alliance Resource Properties" mean Alliance Resource Properties, LLC, the land-holding company for the mining operations of Alliance Resource Operating Partners, L.P. · References to "Alliance Coal" mean Alliance Coal, LLC, the holding company for the mining operations of Alliance Resource Operating Partners, L.P., also referred to as our primary operating subsidiary. · References to "AHGP" mean Alliance Holdings GP, L.P., individually as the parent company, and not on a consolidated basis. · References to "AGP" mean Alliance GP, LLC, the general partner of Alliance Holdings GP, L.P. Organization ARLP is a Delaware limited partnership listed on the NASDAQ Global Select Market under the ticker symbol "ARLP." ARLP was formed in May 1999 to acquire, upon completion of ARLP's initial public offering on August 19, 1999, certain coal production and marketing assets of Alliance Resource Holdings, Inc., a Delaware corporation ("ARH"), consisting of substantially all of ARH's operating subsidiaries, but excluding ARH. ARH is owned by Joseph W. Craft III, the President and Chief Executive Officer and a Director of MGP, and Kathleen S. Craft. SGP, a Delaware limited liability company, is owned by ARH. SGP owns 20,641,168 common units of AHGP's 59,863,000 outstanding common units, 7,181 common units of ARLP and, prior to the Exchange Transaction discussed below, owned a 0.01% special general partner interest in both ARLP and the Intermediate Partnership. We are managed by MGP, a Delaware limited liability company and the sole general partner of ARLP. MGP holds a non-economic general partner interest in ARLP, a 1.0001% managing general partner interest in the Intermediate Partnership and a 0.001% managing member interest in Alliance Coal. AHGP is a Delaware limited partnership that was formed to become the owner and controlling member of MGP. AHGP completed its initial public offering ("AHGP IPO") on May 15, 2006. AHGP owns directly and indirectly 87,188,338 common units of ARLP's 130,704,217 outstanding common units as of December 31, 2017. AHGP indirectly owns 100% of the members' interest of MGP. ARLP and its consolidated subsidiaries represent virtually all the net assets and operations of AHGP. See discussions below regarding MGP's and AHGP's change of ownership in ARLP effective with the Exchange Transaction on July 28, 2017. The Delaware limited partnership, limited liability companies and corporation that comprise our subsidiaries are as follows: Intermediate Partnership; Alliance Coal; Alliance Design Group, LLC ("Alliance Design"); Alliance Land, LLC; Alliance Minerals, LLC ("Alliance Minerals"); Alliance Resource Properties; Alliance Resource Finance Corporation ("Alliance Finance"); AROP Funding, LLC ("AROP Funding"); ARP Sebree, LLC ("ARP Sebree"); ARP Sebree South, LLC ("ARP Sebree South"); Alliance WOR Properties, LLC; Alliance Service, Inc. ("ASI"); Backbone Mountain, LLC; CR Services, LLC ("CR Services"); CR Machine Shop, LLC ("CR Machine Shop"); Excel Mining, LLC; Gibson County Coal, LLC ("Gibson County Coal"); Hamilton County Coal, LLC ("Hamilton"); Hopkins County Coal, LLC ("Hopkins County Coal"); Matrix Design Group, LLC ("Matrix Design"); Matrix Design International, LLC; Matrix Design Africa (PTY) LTD; MC Mining, LLC ("MC Mining"); Mettiki Coal, LLC ("Mettiki (MD)"); Mettiki Coal (WV), LLC ("Mettiki (WV)"); Mid-America Carbonates, LLC ("MAC"); Mt. Vernon Transfer Terminal, LLC ("Mt. Vernon"); Penn Ridge Coal, LLC ("Penn Ridge"); Pontiki Coal, LLC ("Pontiki"); River View Coal, LLC ("River View"); Rough Creek Mining, LLC; Sebree Mining, LLC ("Sebree"); Steamport, LLC; Tunnel Ridge, LLC ("Tunnel Ridge"); UC Coal, LLC ("UC Coal"); UC Mining, LLC ("UC Mining"); UC Processing, LLC ("UC Processing"); Warrior Coal, LLC ("Warrior"); Webster County Coal, LLC ("Webster County Coal"); White County Coal, LLC ("White County Coal"); WOR Land 6, LLC and Wildcat Insurance, LLC ("Wildcat Insurance"). Exchange Transaction In 2017, the board of directors of our general partner ("Board of Directors") and its conflicts committee ("Conflicts Committee") unanimously approved a transaction to simplify our partnership structure and on July 28, 2017, MGP contributed to ARLP all of its incentive distribution rights ("IDRs") and its 0.99% managing general partner interest in ARLP in exchange for 56,100,000 ARLP common units and a non-economic general partner interest in ARLP. In conjunction with this transaction and on the same economic basis as MGP, SGP also contributed to ARLP its 0.01% general partner interests in both ARLP and the Intermediate Partnership in exchange for 7,181 ARLP common units (collectively the "Exchange Transaction"). In connection with the Exchange Transaction, ARLP amended its partnership agreement to reflect, among other things, cancellation of the IDRs and the economic general partner interest in ARLP and issuance of a non-economic general partner interest to MGP. MGP is the sole general partner of ARLP following the Exchange Transaction, and no control, management or governance changes otherwise occurred. The Exchange Transaction constituted an exchange of equity interests between entities under common control and not a transfer of a business. Therefore, the exchange resulted in a reclassification, as of the date of the Exchange Transaction, of a $306.7 million deficit capital balance from the General Partners' interest line item to the Limited Partners - Common Unitholders line item in our consolidated balance sheets. The reclassification amounts represented the carrying value of the exchanged interests, which included the SGP's deficit balance associated with its prior special general partner interests in ARLP and the Intermediate Partnership, partially offset, by MGP's capital balance associated with its prior managing general partner interest in ARLP. The SGP deficit balance primarily resulted from contribution and assumption agreements associated with the formation of the ARLP Partnership in 1999. Simultaneously with the Exchange Transaction discussed above, MGP became a wholly owned subsidiary of MGP II, LLC ("MGP II") which is owned 100% directly and indirectly by AHGP and was created in connection with the Exchange Transaction. As of December 31, 2017, MGP II held the 56,100,000 ARLP common units discussed above. Presentation The consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of December 31, 2017 and 2016, and results of our operations, comprehensive income, cash flows and changes in partners' capital for each of the three years in the period ended December 31, 2017. All of our intercompany transactions and accounts have been eliminated. . |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Estimates — The preparation of consolidated financial statements in conformity with generally accepted accounting principles of the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates and assumptions include: · Impairment assessments of investments, property, plant and equipment, and goodwill; · Asset retirement obligations; · Pension valuation variables; · Workers' compensation and pneumoconiosis valuation variables; · Acquisition related purchase price allocations; and · Life of mine assumptions. These significant estimates and assumptions are discussed throughout these notes to the consolidated financial statements. Consolidation — The consolidated financial statements present the consolidated financial position, results of operations and cash flows of ARLP, the Intermediate Partnership (a subsidiary of ARLP and a variable interest entity of which ARLP is the primary beneficiary), Alliance Coal (a subsidiary of the Intermediate Partnership and a variable interest entity of which the Intermediate Partnership is the primary beneficiary) and other directly and indirectly wholly- and majority-owned subsidiaries of the Intermediate Partnership and Alliance Coal. The Intermediate Partnership, Alliance Coal and their wholly- and majority-owned subsidiaries represent virtually all the net assets of the ARLP Partnership. MGP's interests in both Alliance Coal and the Intermediate Partnership are reported as general partner interest in the ARLP Partnership. MGP's previous 0.99% managing general partner interest and IDR in ARLP and SGP's previous 0.01% interest in both ARLP and the Intermediate Partnership, all held prior to the Exchange Transaction, are also reported with the general partner interest in ARLP. All intercompany transactions and accounts have been eliminated. See Note 10 – Variable Interest Entities for more information regarding ARLP's consolidation of the Intermediate Partnership and Alliance Coal. See Note 9 – Distributions of Available Cash for more information regarding MGP's IDR in ARLP. See Note 1 – Organization and Presentation for more information regarding the Exchange Transaction. Fair Value Measurements — We apply fair value measurements to certain assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value is based upon assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and risks inherent in valuation techniques and inputs to valuations. Fair value measurements assume that the transaction occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability (the market for which the reporting entity would be able to maximize the amount received or minimize the amount paid). Valuation techniques used in our fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our own market assumptions. We use the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: · Level 1 – Quoted prices for identical assets and liabilities in active markets that we have the ability to access at the measurement date. · Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations whose inputs are observable or whose significant value drivers are observable. · Level 3 – Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for the asset or liability. The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement requires judgment, considering factors specific to the asset or liability. Significant fair value measurements are used in our significant estimates and are discussed throughout these notes. See Note 8 – Fair Value Measurements for discussion of recurring fair value measurements not otherwise disclosed in these consolidated financial statements. Cash and Cash Equivalents — Cash and cash equivalents include cash on hand and on deposit, including highly liquid investments with maturities of three months or less. Cash Management — The cash flows from operating activities section of our consolidated statements of cash flows reflects adjustments for $14.0 million and $10.6 million representing book overdrafts at December 31, 2017 and 2015. We did not have material book overdrafts at December 31, 2016. Inventories — Coal inventories are stated at the lower of cost or net realizable value on a first-in, first-out basis. Supply inventories are stated at an average cost basis, less a reserve for obsolete and surplus items. Business Combinations — For acquisitions accounted for as a business combination, we record the assets acquired, including identified intangible assets and liabilities assumed at their fair value, which in many instances involves estimates based on third-party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques. Goodwill — Goodwill represents the excess of cost over the fair value of net assets of acquired businesses. Goodwill is not amortized, but instead is evaluated for impairment periodically. We evaluate goodwill for impairment annually on November 30th, or more often if events or circumstances indicate that goodwill might be impaired. The reporting unit or units used to evaluate and measure goodwill for impairment are determined primarily from the manner in which the business is managed or operated. A reporting unit is an operating segment or a component that is one level below an operating segment. There were no impairments of goodwill during 2017 or 2016. Property, Plant and Equipment — Expenditures which extend the useful lives of existing plant and equipment assets are capitalized. Interest costs associated with major asset additions are capitalized during the construction period. Maintenance and repairs that do not extend the useful life or increase productivity of the asset are charged to operating expense as incurred. Exploration expenditures are charged to operating expense as incurred, including costs related to drilling and study costs incurred to convert or upgrade mineral resources to reserves. Land, machinery and equipment under capital lease agreements are capitalized and amortized over the useful lives of the assets given that in each case, ownership transfers at the end of the lease term. Preparation plants and processing facilities are depreciated using the units-of-production method. Other plant and equipment assets are depreciated principally using the straight-line method over the estimated useful lives of the assets, ranging from 1 to 22 years, limited by the remaining estimated life of each mine. Depreciable lives for the mining equipment range from 1 to 22 years. Depreciable lives for buildings, office equipment and improvements range from 1 to 24 years. Gains or losses arising from retirements are included in operating expenses. Depletable lives for mineral rights, assuming current production expectations, range from 1 to 22 years. Depletion of mineral rights is provided on the basis of tonnage mined in relation to estimated recoverable tonnage, which equals estimated proven and probable reserves. Therefore, our mineral rights are depleted based on only proven and probable reserves derived in accordance with Industry Guide 7. At December 31, 2017 and 2016, land and mineral rights include $34.5 million and $34.4 million, respectively, representing the carrying value of coal reserves attributable to properties where we or a third party to which we lease reserves are not currently engaged in mining operations or leasing to third parties, and therefore, the coal reserves are not currently being depleted. We believe that the carrying value of these reserves will be recovered. Our accounting for operating leases not currently capitalized is expected to change upon the adoption of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) ("ASU 2016-02"), as discussed below under New Accounting Standards Issued and Not Yet Adopted . Mine Development Costs — Mine development costs are capitalized until production, other than production incidental to the mine development process, commences and are amortized on a units of production method based on the estimated proven and probable reserves. Mine development costs represent costs incurred in establishing access to mineral reserves and include costs associated with sinking or driving shafts and underground drifts, permanent excavations, roads and tunnels. The end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete. Coal extracted during the development phase is incidental to the mine's production capacity and is not considered to shift the mine into the production phase. Long-Lived Assets — We review the carrying value of long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount may not be recoverable based upon estimated undiscounted future cash flows. To the extent the carrying amount is not recoverable, the amount of impairment is measured by the difference between the carrying value and the fair value of the asset (See Note 4 – Long-Lived Asset Impairments). Intangibles — Intangibles subject to amortization include contracts with covenants not to compete, customer contracts acquired from other parties and mining permits. Intangibles other than customer contracts are amortized on a straight-line basis over their useful life. Intangibles for customer contracts are amortized on a per unit basis over the terms of the contracts. Amortization expense attributable to intangibles was $10.5 million, $18.1 million and $15.1 million for the years ending December 31, 2017, 2016 and 2015, respectively. Our intangibles are included in Prepaid expenses and other assets , Other long-term assets , Other current liabilities and Other liabilities on our consolidated balance sheets at December 31, 2017 and 2016. Our intangibles at December 31 are summarized as follows: December 31, 2017 December 31, 2016 Accumulated Intangibles, Accumulated Intangibles, Original Cost Amortization Net Original Cost Amortization Net (in thousands) Non-compete agreements $ 9,697 $ (7,378) $ 2,319 $ 14,542 $ (10,974) $ 3,568 Customer contracts and other, net 48,970 (36,462) 12,508 54,978 (33,300) 21,678 Mining permits 1,500 (178) 1,322 1,500 (104) 1,396 Total $ 60,167 $ (44,018) $ 16,149 $ 71,020 $ (44,378) $ 26,642 Amortization expense attributable to intangible assets is estimated as follows: Year Ended December 31, (in thousands) 2018 $ 6,918 2019 7,737 2020 391 2021 74 2022 74 Thereafter 955 Investments —Our investments and ownership interests in which we do not have a controlling financial interest are accounted for under either the cost method of accounting if we do not have the ability to exercise significant influence over the entity, or under the equity method of accounting if we have the ability to exercise significant influence over the entity. Historical cost is used to account for investments accounted for under the cost method and distributions received on those investments are recorded as income unless those distributions are considered a return on investment in which case the historical cost is reduced. Our cost method investment includes Kodiak Gas Services, LLC ("Kodiak"). See Note 11 – Investments for further discussion of this cost method investment. Investments accounted for under the equity method are initially recorded at cost, and the difference between the basis of our investment and the underlying equity in the net assets of the joint venture at the investment date, if any, is amortized over the lives of the related assets that gave rise to the difference. In the event our ownership entitles us to a disproportionate sharing of income or loss, our equity investment income or loss is allocated based on the hypothetical liquidation at book value ("HLBV") method of accounting. Under the HLBV method, equity investment income or loss is allocated based on the difference between our claim on the net assets of the equity method investee at the end and beginning of the period, with consideration of certain eliminating entries regarding differences of accounting for various related-party transactions, after taking into account contributions and distributions, if any. Our share of the net assets of the equity method investee is calculated as the amount we would receive if the equity method investee were to liquidate all of its assets at net book value and distribute the resulting cash to creditors, other investors and us according to the respective priorities. None of our current equity investments use the HLBV method. Our last use of this method was in 2015 for our equity method investment in White Oak Resources LLC ("White Oak"). Our equity method investments include AllDale Minerals, LP ("AllDale I"), and AllDale Minerals II, LP ("AllDale II") (collectively "AllDale Minerals"), both held by our affiliate Cavalier Minerals JV, LLC ("Cavalier Minerals") and additionally, we have an equity method investment in AllDale Minerals III, LP ("AllDale III") which is held through our subsidiary, Alliance Minerals. AllDale III, together with AllDale Minerals is considered the "AllDale Partnerships." During 2015, our equity method investments also included White Oak prior to our acquisition of its remaining equity interests on July 31, 2015. See Note 11 – Investments for further discussion of these equity method investments. For discussion of the White Oak acquisition, see Note 3 – Acquisitions. We review our investments and ownership interests accounted for under both the equity method of accounting and the cost method of accounting for impairment whenever events or changes in circumstances indicate a loss in the value of the investment may be other-than-temporary. Advance Royalties, net — Rights to coal mineral leases are often acquired and/or maintained through advance royalty payments. Where royalty payments represent prepayments recoupable against future production, they are recorded as an asset, with amounts expected to be recouped within one year classified as a current asset. As mining occurs on these leases, the royalty prepayments are charged to operating expenses. We assess the recoverability of royalty prepayments based on estimated future production. We have recorded a $6.1 million and $6.2 million allowance against these prepayments as of December 31, 2017 and 2016, respectively. Royalty prepayments estimated to be nonrecoverable are expensed. Our Advance royalties, net at December 31 are summarized as follows: 2017 2016 (in thousands) Advance royalties, affiliates (see Note 18 – Related-Party Transactions) $ 32,993 $ 19,820 Advance royalties, third-parties 11,177 10,759 Total advance royalties, net $ 44,170 $ 30,579 Asset Retirement Obligations — The majority of our operations are governed by various state statutes and the Federal Surface Mining Control and Reclamation Act of 1977, which establish reclamation and mine closing standards. These regulations require, among other things, restoration of property in accordance with specified standards and an approved reclamation plan. We record a liability for the fair value of the estimated cost of future mine asset retirement and closing procedures, escalated for inflation then discounted, on a present value basis in the period incurred or acquired and a corresponding amount is capitalized by increasing the carrying amount of the related long-lived asset. Those costs relate to permanently sealing portals at underground mines and to reclaiming the final pits and support surface acreage for both our underground mines and past surface mines. Examples of these types of costs, common to both types of mining, include, but are not limited to, removing or covering refuse piles and settling ponds, water treatment obligations, and dismantling preparation plants, other facilities and roadway infrastructure. Accounting for asset retirement obligations also requires depreciation of the capitalized asset retirement cost and accretion of the asset retirement obligation over time. The depreciation is generally determined on a units-of-production basis and accretion is generally recognized over the life of the producing assets. As changes in estimates occur (such as mine plan revisions, changes in estimated costs or changes in timing of the performance of reclamation activities), the revisions to the obligation and asset are recognized at the appropriate credit-adjusted, risk-free interest rate. Federal and state laws require bonds to secure our obligations to reclaim lands used for mining and are typically renewable on a yearly basis. See Note 16 – Asset Retirement Obligations for more information. Pension Benefits — The funded status of our pension benefit plan is recognized separately in our consolidated balance sheets as either an asset or liability. The funded status is the difference between the fair value of plan assets and the plan's benefit obligation. Pension obligations and net periodic benefit costs are actuarially determined and impacted by various assumptions and estimates including expected return on assets, discount rates, mortality assumptions, employee turnover rates and retirement dates. We evaluate our assumptions periodically and make adjustments to these assumptions and the recorded liability as necessary (See Note 13 – Employee Benefit Plans). The discount rate is determined for our pension benefit plan based on an approach specific to our plan. The year-end discount rate is determined considering a yield curve comprised of high-quality corporate bonds and the timing of the expected benefit cash flows. The expected long-term rate of return on plan assets is determined based on broad equity and bond indices, the investment goals and objectives, the target investment allocation and on the average annual total return for each asset class. Unrecognized actuarial gains and losses and unrecognized prior service costs and credits are deferred and recorded in accumulated other comprehensive loss ("AOCL") until amortized as a component of net periodic benefit cost. Unrecognized actuarial gains and losses in excess of 10% of the greater of the benefit obligation or the market-related value of plan assets are amortized over the participants' average remaining future years of service. Workers ' Compensation and Pneumoconiosis (Black Lung) Benefits — We are liable for workers' compensation benefits for traumatic injuries and benefits for black lung disease (or pneumoconiosis). Both traumatic claims and pneumoconiosis benefits are covered through our self-insured programs. In addition, certain of our mine operating entities are liable under state statutes and the Federal Coal Mine Health and Safety Act of 1969, as amended, to pay pneumoconiosis benefits to eligible employees and former employees and their dependents. We provide income replacement and medical treatment for work-related traumatic injury claims as required by applicable state laws. Workers' compensation laws also compensate survivors of workers who suffer employment related deaths. Our liability for traumatic injury claims is the estimated present value of current workers' compensation benefits, based on our actuarial estimates. Our actuarial calculations are based on a blend of actuarial projection methods and numerous assumptions including claim development patterns, mortality, medical costs and interest rates. Our pneumoconiosis benefits liability is calculated using the service cost method based on the actuarial present value of the estimated pneumoconiosis obligation. Our actuarial calculations are based on numerous assumptions including disability incidence, medical costs, mortality, death benefits, dependents and discount rates. Actuarial gains or losses are amortized over the remaining service period of active miners. See Note 17 – Accrued Workers' Compensation and Pneumoconiosis Benefits for more information on Workers' Compensation and Pneumoconiosis Benefits. Revenue Recognition — Revenues from coal sales are recognized when title passes to the customer as the coal is shipped. Some coal supply agreements provide for price adjustments based on variations in quality characteristics of the coal shipped. In certain cases, a customer's analysis of the coal quality is binding and the results of the analysis are received on a delayed basis. In these cases, we estimate the amount of the quality adjustment and adjust the estimate to actual when the information is provided by the customer. Historically, such adjustments have not been material. Non-coal sales revenues primarily consist of transloading fees, administrative service revenues from our affiliates, mine safety services and products, royalties and throughput fees earned from White Oak prior to July 31, 2015 as disclosed in Note 3 – Acquisitions, other coal contract fees and other handling and service fees. Transportation revenues are recognized in connection with us incurring the corresponding costs of transporting coal to customers through third-party carriers for which we are directly reimbursed through customer billings. As discussed below, we do not expect the new revenue recognition standard introduced by ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09") will result in a material change to our pattern of revenue recognition when it becomes effective. Common Unit-Based Compensation — We have the Long-Term Incentive Plan ("LTIP") for certain employees and officers of MGP and its affiliates who perform services for us. The LTIP awards are grants of non-vested "phantom" or notional units, also referred to as "restricted units", which upon satisfaction of time and performance based vesting requirements, entitle the LTIP participant to receive ARLP common units. Annual grant levels and vesting provisions for designated participants are recommended by the President and Chief Executive Officer of MGP, subject to review and approval of the compensation committee of our general partner ("Compensation Committee"). Vesting of all grants outstanding is subject to the satisfaction of certain financial tests, which management currently believes is probable. Grants issued to LTIP participants are expected to cliff vest on January 1st of the third year following issuance of the grants. We account for forfeitures of non-vested LTIP grants as they occur. We expect to settle the non-vested LTIP grants by delivery of ARLP common units, except for the portion of the grants that will satisfy tax withholding obligations of the LTIP participants. As provided under the distribution equivalent rights provisions of the LTIP and the terms of the LTIP awards, all non-vested grants include contingent rights to receive quarterly distributions in cash or at the discretion of the Compensation Committee, in lieu of cash, phantom units credited to a bookkeeping account with value, equal to the cash distributions we make to unitholders during the vesting period. We utilize the Supplemental Executive Retirement Plan ("SERP") to provide deferred compensation benefits for certain officers and key employees. All allocations made to participants under the SERP are made in the form of "phantom" ARLP units and SERP distributions will be settled in the form of ARLP common units. The SERP is administered by the Compensation Committee. Our directors participate in the MGP Amended and Restated Deferred Compensation Plan for Directors ("Deferred Compensation Plan"). Pursuant to the Deferred Compensation Plan, for amounts deferred either automatically or at the election of the director, a notional account is established and credited with notional common units of ARLP, described in the Deferred Compensation Plan as "phantom" units. Distributions from the Deferred Compensation Plan will be settled in the form of ARLP common units. For both the SERP and Deferred Compensation Plan, when quarterly cash distributions are made with respect to ARLP common units, an amount equal to such quarterly distribution is credited to each participant's notional account as additional phantom units. All grants of phantom units under the SERP and Deferred Compensation Plan vest immediately. The fair value of restricted common unit grants under the LTIP, SERP and the Deferred Compensation Plan are determined on the grant date of the award and recognized as compensation expense on a pro rata basis for LTIP and SERP awards, as appropriate, over the requisite service period. Compensation expense is fully recognized on the grant date for quarterly distributions credited to SERP accounts and Deferred Compensation Plan awards. The corresponding liability is classified as equity and included in limited partners' capital in the consolidated financial statements (See Note 14 – Compensation Plans). Income Taxes —We are not a taxable entity for federal or state income tax purposes; the tax effect of our activities accrues to the unitholders. Although publicly traded partnerships as a general rule will be taxed as corporations, we qualify for an exemption because at least 90% of our income consists of qualifying income, as defined in Section 7704(c) of the Internal Revenue Code. Net income for financial statement purposes may differ significantly from taxable income reportable to unitholders as a result of differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements under our partnership agreement. Individual unitholders have different investment bases depending upon the timing and price of acquisition of their partnership units. Furthermore, each unitholder's tax accounting, which is partially dependent upon the unitholder's tax position, differs from the accounting followed in our consolidated financial statements. Accordingly, the aggregate difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined because information regarding each unitholder's tax attributes in our partnership is not available to us. Our subsidiaries, ASI and Wildcat Insurance, are subject to federal and state income taxes. A valuation allowance is established if it is more likely than not that a deferred tax asset will not be realized. The Tax Cuts and Jobs Act of 2017 signed into law on December 22, 2017 is not expected to have a material impact on our consolidated financial statements. Our tax counsel has provided an opinion that ARLP, the Intermediate Partnership and Alliance Coal will each be treated as a partnership. However, as is customary, no ruling has been or will be requested from the Internal Revenue Service ("IRS") regarding our classification as a partnership for federal income tax purposes. Variable Interest Entity ("VIE") — VIEs are primarily entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders, as a group, lack one or more of the following characteristics: (a) direct or indirect ability to make decisions, (b) obligation to absorb expected losses or (c) right to receive expected residual returns. A VIE must be evaluated quantitatively and qualitatively to determine the primary beneficiary, which is the reporting entity that has (a) the power to direct activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. To determine a VIE's primary beneficiary, we perform a qualitative assessment to determine which party, if any, has the power to direct activities of the VIE and the obligation to absorb losses and/or receive its benefits. This assessment involves identifying the activities that most significantly impact the VIE's economic performance and determine whether it, or another party, has the power to direct those activities. When evaluating whether we are the primary beneficiary of a VIE, we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties. See Note 10 – Variable Interest Entities for further information. New Accounting Standards Issued and Adopted – In January 2017, the Financial Accounting Standards Board (the "FASB") issued ASU 2017-04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). The ASU simplifies the subsequent measurement of goodwill by eliminating the need for an entity to determine the implied fair value of goodwill to calculate an impairment charge. Under the new guidance an entity compares the fair value of the reporting unit containing the goodwill to its carrying value and records any excess carrying value as an impairment charge. This new standard is applied prospectively and is effective for annual and interim periods beginning after December 15, 2019; however, early adoption is permitted. We have early adopted this new standard and will apply the guidance to any future goodwill impairment assessments. The adoption of ASU 2017-04 did not have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies the accounting for several aspects of share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, flexibility in the accounting for forfeitures and classification on the statement of cash flows. ASU 2016-09 was effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The adoption of ASU 2016-09 did not have a material impact on our consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU 2015-11 simplifies the subsequent measurement of inventory. It replaces the current lower of cost or market test with the lower of cost or net realizable value test. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new standard was applied prospectively and was effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods, with early adoption permitted. The adoption of ASU 2015-11 did not have a material impact on our consolidated financial statements. New Accounting Standards Issued and Not Yet Adopted – In March 2017, the FASB issued ASU 2017-07, Compensation–Retirement Benefits (Topic 715) ("ASU 2017-07"). ASU 2017-07 requires that an employer disaggregate the service cost component from the other components of net benefit cost. It also provides explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allows only the service cost component of net benefit cost to be eligible for capitalization. The new guid |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2017 | |
ACQUISITIONS | |
ACQUISITIONS | 3. ACQUISITIONS White Oak Resources On July 31, 2015 (the "Hamilton Acquisition Date") Hamilton acquired the remaining Series A and B Units, representing 60% of the voting interests of White Oak, from White Oak Finance Inc. and other parties (the "Sellers") for total fair value consideration of $310.3 million (the "Hamilton Acquisition"). The following table summarizes the total fair value of consideration transferred at the Hamilton Acquisition Date: (in thousands) Cash on hand $ 50,000 Contingent consideration 14,800 Settlement of pre-existing relationships 124,379 Previously held equity-method investment 121,155 Total consideration transferred $ 310,334 Effective from the Hamilton Acquisition Date, the Partnership now owns 100% of the interests in White Oak and has assumed operating control of the White Oak Mine No. 1 (now known as the Hamilton mine), an underground longwall mining operation located in Hamilton County, Illinois. The Hamilton Acquisition was consistent with our general business strategy and a strategic complement to our coal mining operations. The contingent consideration is payable to the Sellers to the extent Hamilton's quarterly average coal sales price exceeds a specified amount on future sales. Amounts payable under the contingent consideration arrangement are subject to a defined maximum of $110.0 million reduced for any payments that we make under an overriding royalty agreement between White Oak and certain of the Sellers relating to undeveloped mineral interests controlled by White Oak. We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model. The assumptions used in the model included a risk-adjusted discount rate, forward coal sales price curves, cost of debt, and probabilities of meeting certain threshold prices. The fair value measurement is based on significant inputs not observable in active markets and thus represents a Level 3 fair value measurement. Prior to the Hamilton Acquisition Date, we accounted for our 40% interest in White Oak as an equity method investment (See Note 11 – Investments). The acquisition date fair value of the previous equity interest was $121.2 million and is included in the measurement of the consideration transferred. We re-measured our equity investment immediately prior to the Hamilton Acquisition using a discounted cash flow model which resulted in a loss of $52.3 million ("Re-measurement Loss") which is recorded in the line item Acquisition gain, net in our consolidated statements of income. The assumptions used in the determination of the fair value include projected financial information, forward coal price curves, and a risk adjusted discount rate. The assumptions used in this fair value measurement are not observable in active markets and therefore represents a Level 3 fair value measurement. In connection with the Hamilton Acquisition, we settled our pre-existing relationships with White Oak which included existing account balances of $49.6 million. The settlement of pre-existing relationships also included, under business combination accounting, a $74.8 million net gain for above-market terms associated with pre-existing contractual agreements which were comprised of coal leases, a coal handling and preparation agreement, a coal supply agreement, export marketing and transportation agreements and certain debt agreements. The net gain of $74.8 million associated with the settlement of the net above-market terms is recorded in the line item Acquisition gain, net in our consolidated statements of income partially offset by the Re-measurement Loss of $52.3 million discussed above, which nets to $22.5 million. These settlements of account balances and settlements of net above-market terms are included in the measurement of consideration transferred for the Hamilton Acquisition. As part of the settlement of these agreements, we considered the rates at which a market participant would enter into these agreements and recognized gains for the above-market rates and losses for the below-market rates contained in the various agreements. We developed a discounted cash flow model to determine the fair value of each of these agreements at market rates and compared the valuations to similar models using the contractual rates of the agreements to determine our gains or losses. The assumptions used in these valuation models include processing rates, royalty rates, transportation rates, marketing rates, forward coal price curves, interest rates, projected financial information and risk-adjusted discount rates. These fair value measurements were based on the previously discussed assumptions which are not observable in active markets and therefore represent Level 3 fair value measurements. The following table summarizes the fair value allocation of assets acquired and liabilities assumed at the Hamilton Acquisition Date: (in thousands) Cash and cash equivalents $ 3,125 Trade receivables 3,018 Prepaid expenses 3,942 Inventories 7,240 Other current assets 9,456 Property, plant and equipment 299,214 Advance royalties 3,349 Deposits 6,981 Other assets 12,829 Total identifiable assets acquired 349,154 Accounts payable (31,181) Accrued expenses (20,987) Deferred revenue (517) Current maturities, long-term debt (29,529) Long-term debt, excluding current maturities (63,973) Other long-term liabilities (12,175) Asset retirement obligations (12,484) Total liabilities assumed (170,846) Net identifiable assets acquired $ 178,308 Goodwill 132,026 Net assets acquired $ 310,334 The goodwill recognized is attributable to expected synergies and operational cost reductions by using our other owned facilities and reserves as well as utilizing our centralized marketing, operations and administrative functions. All of the goodwill has been allocated to our Hamilton reporting unit included in our Illinois Basin segment. We recognized intangible assets and liabilities associated with the above- and below-market customer contracts in addition to a mining permit as follows: Weighted-average Account in table (in thousands) amortization period above Customer contracts and intangibles Current above-market contracts $ 9,333 Other current assets Non-current above-market contracts 3,671 Other assets Current below-market contracts (4,702) Accrued expenses Non-current below-market contracts (1,525) Other long-term liabilities Total customer contract intangibles 6,777 3 years Mining permit 1,500 20 years Other assets Total intangibles acquired $ 8,277 We determined the fair value of cash and cash equivalents, trade receivables, prepaid expenses, advanced royalties, deposits, accounts payable, accrued expenses, and deferred revenue approximated White Oak's carrying value given the highly liquid and short-term nature of these assets and liabilities. We determined the fair value of inventories, property, plant and equipment (inclusive of mineral interests), and mining permits using a market approach. The market approach included the development of an entity-wide value using discounted cash flows and allocating the entity-wide value back to the underlying assets based on observed market prices. We have recorded the fair value of the above- and below-market components of customer contracts acquired as assets and liabilities. We determined these fair values through comparison of the terms in the contracts against projected coal prices. We also evaluated the acquired asset retirement obligation to determine the cost to fulfill the obligation and applied an appropriate discount rate to determine the fair value. The assumptions used in these fair value measurements are not observable in active markets and thus represent Level 3 fair value measurements. We determined the fair value of the long-term debt acquired through comparison of similar debt instruments and interest rates in active markets, and thus the assumptions used for the long-term debt represent Level 2 fair value measurements. (See Note 2 – Summary of Significant Accounting Policies – Fair Value Measurements for more information regarding fair value hierarchy levels.) The amounts of revenue and earnings inclusive of the $22.5 million in net gains associated with the settlement of pre-existing relationships and the Re-Measurement Loss, both discussed above, included in the Partnership's consolidated statement of income from the Hamilton Acquisition Date to the period ending December 31, 2015 are as follows: (in thousands) Revenue $ 75,251 Net income 20,687 The following represents the pro forma revenue and net income for the year ended December 31, 2015 as if Hamilton had been included in the consolidated results of the Partnership since January 1, 2015. These amounts have been calculated after applying the Partnership's accounting. Additionally, the Partnership's results have been adjusted to remove the effect of its equity investment in White Oak and the pre-existing relationships that it had in White Oak. (in thousands) Total revenues As reported $ 2,273,733 Pro forma 2,337,380 Net income As reported $ 306,171 Pro forma 295,219 Patriot Coal Corporation On December 31, 2014 (the "Initial Closing Date"), we entered into asset purchase agreements with Patriot Coal Corporation ("Patriot") regarding certain assets relating to two of Patriot's western Kentucky mining operations, including certain coal sales agreements, unassigned coal reserves and underground mining equipment and infrastructure. Both of the mining operations – the former Dodge Hill and Highland mining operations – were closed by Patriot in late 2014 prior to entering into these asset purchase agreements. Also on December 31, 2014, Patriot affiliates entered into agreements to sell other assets from Highland to a third party. Additional details of the transactions are discussed below. On the Initial Closing Date, our subsidiary, Alliance Coal acquired the rights to certain coal supply agreements from an affiliate of Patriot for approximately $21.0 million. Of the $21.0 million purchase price, $9.3 million was paid into escrow subject to obtaining certain assignment consents. In February 2015, $7.5 million of the escrowed amount was released to Patriot for a consent received and $1.8 million was returned to Alliance Coal as a result of a consent not received, reducing our purchase price to $19.2 million. The acquired agreements provided for delivery of a total of approximately 5.1 million tons of coal from 2015 through 2017. Revenues generated by these contracts during 2015 were $130.5 million. On February 3, 2015 (the "Acquisition Date"), Alliance Coal and Alliance Resource Properties acquired from Patriot an estimated 84.1 million tons of proven and probable medium/high-sulfur coal reserves in western Kentucky (substantially all of which was leased by Patriot), and substantially all of Dodge Hill's assets related to its former coal mining operation in western Kentucky, which principally included underground mining equipment and an estimated 43.2 million tons of non-reserve coal deposits (substantially all of which was leased by Dodge Hill). In addition, we assumed Dodge Hill's reclamation liabilities totaling $2.3 million. Also on the Acquisition Date, the Intermediate Partnership's subsidiaries, UC Mining and UC Processing, acquired certain underground mining equipment and spare parts inventory from Patriot's former Highland mining operation. The mining and reserve assets acquired from Patriot described above are located in Union and Henderson Counties, Kentucky. The mining equipment, spare parts and underground infrastructure that we acquired from Patriot has been and is continuing to be dispersed to our existing operations in the Illinois Basin region in accordance with their highest and best use. Our purchase price of $19.2 million and $20.5 million paid on the Initial Closing Date and the Acquisition Date, respectively, described above was financed using existing cash on hand. In addition, our purchase price was increased by $8.3 million, comprising $2.1 million cash paid prior to the Acquisition Date related to the transaction and an agreement to pay approximately $6.2 million additional consideration, which was satisfied as of December 31, 2015. In conjunction with our acquisitions on the Acquisition Date, WKY CoalPlay, LLC ("WKY CoalPlay"), a related party, acquired approximately 39.1 million tons of proven and probable medium/high-sulfur owned coal reserves located in Henderson and Union Counties, Kentucky from Central States Coal Reserves of Kentucky, LLC, a subsidiary of Patriot, for $25.0 million and in turn leased those reserves to us. See Note 18 – Related-Party Transactions for further information on our lease terms with WKY CoalPlay. The fair value of the acquired tangible and intangible assets and assumed liabilities are based on discounted cash flow projections and estimated replacement cost valuation techniques. We used an estimate of replacement cost based on comparable market prices to value the acquired equipment and utilized discounted cash flows to value intangible assets and reserves. Key assumptions used in the valuations included projections of future cash flows, estimated weighted-average cost of capital, and internal rates of return. Due to the unobservable nature of these inputs, these estimates are considered Level 3 fair value measurements. The following table summarizes the consideration transferred from us to Patriot and the fair value allocation of assets acquired and liabilities assumed as valued at the Acquisition Date: (in thousands) Consideration transferred $ 47,874 Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: Inventories 1,994 Property, plant and equipment, including mineral rights and leased equipment 32,029 Customer contracts, net 19,193 Asset retirement obligation (2,255) Other liabilities (3,087) Net tangible and intangible assets acquired $ 47,874 Intangible assets related to coal supply agreements, represented as "Customer contracts, net" in the table above, are reflected in the Prepaid expenses and other assets line item in our consolidated balance sheet at December 31, 2016. Amortization expense was recognized based on the weighted-average term of the contracts, ranging from 1 to 3 years, on a per unit basis. MAC In March 2006, White County Coal and Alexander J. House entered into a limited liability company agreement to form MAC. MAC was formed to engage in the development and operation of a rock dust mill and to manufacture and sell rock dust. White County Coal initially invested $1.0 million in exchange for a 50% equity interest in MAC. Our equity investment in MAC was $1.6 million at December 31, 2014. Effective on January 1, 2015, we purchased the remaining 50% equity interest in MAC from Mr. House for $5.5 million cash paid at closing. In conjunction with the acquisition, we assumed $0.2 million of liabilities and $7.3 million in assets, net of cash acquired, including $4.2 million of goodwill which is reflected in Other and Corporate in our segment presentation (Note 21 – Segment Information) and is included in the Goodwill line item in our consolidated balance sheets. See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for business combinations and goodwill. |
LONG-LIVED ASSET IMPAIRMENTS
LONG-LIVED ASSET IMPAIRMENTS | 12 Months Ended |
Dec. 31, 2017 | |
LONG-LIVED ASSET IMPAIRMENTS | |
LONG-LIVED ASSET IMPAIRMENTS | 4. LONG-LIVED ASSET IMPAIRMENTS During the fourth quarter of 2015, we idled our Onton mine in response to market conditions and continued increases in coal inventories at our mines and customer locations. Our decision to idle this mine, as well as continued low coal prices and regulatory conditions, led to the conclusion that indicators of impairment were present and our carrying value for certain mines may not be fully recoverable. During our assessment of the recoverability of the carrying value of our operating segments, we determined that we would likely not recover the carrying value of the net assets at MC Mining within our Appalachia segment and Onton within our Illinois Basin segment. Accordingly, we estimated the fair values of the MC Mining and Onton net assets and then adjusted the carrying values to the fair values resulting in impairments of $19.5 million and $66.9 million, respectively. The fair value of the assets was determined using a market approach and represents a Level 3 fair value measurement under the fair value hierarchy. The fair value analysis was based on assumptions of marketability of coal properties in the current environment and the probability assessment of multiple sales scenarios based on observations of other mine sales. During the fourth quarter of 2015, we determined that certain undeveloped coal reserves and related property in western Pennsylvania were no longer a core part of our foreseeable development plans and thus surrendered the lease for the properties in order to avoid the high holding costs of those reserves. We recorded an impairment charge of $3.0 million to our Appalachia segment during the quarter ended December 31, 2015 to remove advanced royalties associated with the lease from our consolidated balance sheet. During the third quarter of 2015, we surrendered a lease agreement for certain undeveloped coal reserves and related property in western Kentucky. We determined that coal reserves held under this lease agreement were no longer a core part of our foreseeable development plans. As such, we surrendered the lease in order to avoid the high holding costs of those reserves. We recorded an impairment charge of $10.7 million to our Illinois Basin segment to remove certain assets associated with the lease, including mineral rights, advanced royalties and mining permits from our consolidated balance sheet. See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for asset impairments. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES | |
INVENTORIES | 5. INVENTORIES Inventories consist of the following at December 31 : 2017 2016 (in thousands) Coal $ 22,825 $ 29,242 Supplies (net of reserve for obsolescence of $5,149 and $4,940, respectively) 37,450 31,809 Total inventories, net $ 60,275 $ 61,051 See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for inventories. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | 6. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following at December 31: 2017 2016 (in thousands) Mining equipment and processing facilities $ 1,847,037 $ 1,854,001 Land and mineral rights 449,152 439,236 Buildings, office equipment and improvements 310,167 304,696 Construction and mine development in progress 47,223 26,025 Mine development costs 280,609 297,030 Property, plant and equipment, at cost 2,934,188 2,920,988 Less accumulated depreciation, depletion and amortization (1,457,532) (1,335,145) Total property, plant and equipment, net $ 1,476,656 $ 1,585,843 At December 31, 2017 and 2016, there were no capitalized development costs associated with mines in the development phase. All past capitalized development costs are associated with mines that shifted to the production phase and thus, these costs are being amortized. We believe that the carrying value of the past development costs will be recovered. Equipment leased by us under lease agreements which are determined to be capital leases are stated at an amount equal to the present value of the minimum lease payments during the lease term, less accumulated amortization. Equipment under capital leases totaling $140.9 million included in mining equipment is amortized on the straight-line method over the shorter of its useful life or the related lease term. The provision for amortization of leased properties is included in depreciation, depletion and amortization expense. Accumulated amortization related to our capital leases was $55.6 million, $34.2 million and $7.1 million as of December 31, 2017, 2016 and 2015, respectively, and amortization expense was $24.9 million, $27.2 million and $5.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. For information regarding long-lived asset impairments please see Note 4 – Long-Lived Asset Impairments. See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for property, plant and equipment. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2017 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 7. LONG-TERM DEBT Long-term debt consists of the following at December 31: Unamortized Discount and Principal Debt Issuance Costs 2017 2016 2017 2016 (in thousands) Revolving Credit facility $ 30,000 $ 255,000 $ (7,356) $ (453) Senior notes 400,000 — (6,707) — Series B senior notes — 145,000 — (101) Term loan — 50,000 — (126) Securitization facility 72,400 100,000 — — 502,400 550,000 (14,063) (680) Less current maturities (72,400) (150,000) — 126 Total long-term debt $ 430,000 $ 400,000 $ (14,063) $ (554) Credit Facility. On January 27, 2017, our Intermediate Partnership entered into a Fourth Amended and Restated Credit Agreement (the "Credit Agreement") with various financial institutions for a revolving credit facility and term loan (the "Credit Facility"). The Credit Facility replaced the $250 million term loan ("Replaced Term Loan") and $700 million revolving credit facility ("Replaced Revolving Credit Facility") extended to the Intermediate Partnership on May 23, 2012 (the "Replaced Credit Agreement") by various banks and other lenders that would have expired on May 23, 2017. The Credit Agreement provided for a $776.5 million revolving credit facility, reducing to $494.75 million on May 23, 2017, including a sublimit of $125 million for the issuance of letters of credit and a sublimit of $15.0 million for swingline borrowings (the "Revolving Credit Facility"), and for a term loan with a remaining principal balance of $50.0 million (the "Term Loan"). The outstanding revolver balance and term loan balance under the Replaced Credit Agreement were considered advanced under the Credit Facility on January 27, 2017. On April 3, 2017, we entered into an amendment to the Credit Agreement (the "Amendment") to (a) extend the termination date of the Revolving Credit Facility as to $461.25 million of the $494.75 million of commitments to May 23, 2021, (b) eliminate the Cavalier Condition and the Senior Notes Condition (both as defined in the Credit Agreement) and (c) effectuate certain other changes. We incurred debt issuance costs in 2017 of $9.2 million in connection with the Credit Agreement. These debt issuance costs are deferred and amortized as a component of interest expense over the term of the Credit Facility. The Credit Agreement is guaranteed by all of the material direct and indirect subsidiaries of our Intermediate Partnership, and is secured by substantially all of the Intermediate Partnership's assets. The Term Loan principal balance of $50.0 million was paid in full in May 2017. Borrowings under the Credit Facility bear interest, at the option of the Intermediate Partnership, at either (i) the Base Rate at the greater of three benchmarks or (ii) a Eurodollar Rate, plus margins for (i) or (ii), as applicable, that fluctuate depending upon the ratio of Consolidated Debt to Consolidated Cash Flow (each as defined in the Credit Agreement). The interest rate, with applicable margin, under the Credit Facility was 4.49% as of December 31, 2017. At December 31, 2017, we had $8.1 million of letters of credit outstanding with $456.7 million available for borrowing under the Revolving Credit Facility. We currently incur an annual commitment fee of 0.35% on the undrawn portion of the Revolving Credit Facility. We utilize the Revolving Credit Facility, as appropriate, for working capital requirements, capital expenditures and investments, scheduled debt payments and distribution payments. The Credit Agreement contains various restrictions affecting our Intermediate Partnership and its subsidiaries including, among other things, restrictions on incurrence of additional indebtedness and liens, sale of assets, investments, mergers and consolidations and transactions with affiliates, in each case subject to various exceptions, and the payment of cash distributions by our Intermediate Partnership if such payment would result in a certain fixed charge coverage ratio (as defined in the Credit Agreement). The Amendment lowered this fixed charge ratio from less than 1.25 to 1.0 to 1.15 to 1.0 for each rolling four-quarter period and further limited the Intermediate Partnership's ability to incur certain unsecured debt. See Note 10 – Variable Interest Entities for further discussion of restrictions on the cash available for distribution. The Amendment raised the debt to cash flow ratio from 2.25 to 1.0 to 2.50 to 1.0 and also removed the requirement for the Intermediate Partnership to remain in control of a certain amount of mineable coal reserves relative to its annual production. The Credit Agreement requires the Intermediate Partnership to maintain (a) a debt to cash flow ratio of not more than 2.5 to 1.0 and (b) a cash flow to interest expense ratio of not less than 3.0 to 1.0, in each case, during the four most recently ended fiscal quarters. The debt to cash flow ratio and cash flow to interest expense ratio were 0.91 to 1.0 and 16.1 to 1.0, respectively, for the trailing twelve months ended December 31, 2017. We were in compliance with the covenants of the Credit Agreement as of December 31, 2017. Series B Senior Notes. On January 27, 2017, the Intermediate Partnership also amended the 2008 Note Purchase Agreement dated June 26, 2008, for $145.0 million of Series B Senior Notes which bore interest at 6.72% and were due to mature on June 26, 2018 with interest payable semi-annually (the "Series B Senior Notes"). The amendment provided for certain modifications to the terms and provisions of the Note Purchase Agreement, including granting liens on substantially all of the Intermediate Partnership's assets to secure its obligations under the Note Purchase Agreement on an equal basis with the obligations under the Credit Agreement. The amendment also modified certain covenants to align them with the applicable covenants in the Credit Agreement. As discussed below, we repaid the Series B Senior Notes in May 2017. Senior Notes. On April 24, 2017, the Intermediate Partnership and Alliance Finance (as co-issuer), a wholly owned subsidiary of the Intermediate Partnership, issued an aggregate principal amount of $400.0 million of senior unsecured notes due 2025 ("Senior Notes") in a private placement to qualified institutional buyers. The Senior Notes have a term of eight years, maturing on May 1, 2025 (the "Term") and accrue interest at an annual rate of 7.5%. Interest is payable semi-annually in arrears on each May 1 and November 1, commencing on November 1, 2017. The indenture governing the Senior Notes contains customary terms, events of default and covenants relating to, among other things, the incurrence of debt, the payment of distributions or similar restricted payments, undertaking transactions with affiliates and limitations on asset sales. At any time prior to May 1, 2020, the issuers of the Senior Notes may redeem up to 35% of the aggregate principal amount of the Senior Notes with the net cash proceeds of one or more equity offerings at a redemption price equal to 107.5% of the principal amount redeemed, plus accrued and unpaid interest, if any, to the redemption date. The issuers of the Senior Notes may also redeem all or a part of the notes at any time on or after May 1, 2020, at redemption prices set forth in the indenture governing the Senior Notes. At any time prior to May 1, 2020, the issuers of the Senior Notes may redeem the Senior Notes at a redemption price equal to the principal amount of the Senior Notes plus a "make-whole" premium, plus accrued and unpaid interest, if any, to the redemption date. The net proceeds from issuance of the Senior Notes and cash on hand were used to repay the Revolving Credit Facility, Term Loan and Series B Senior Notes (including a make-whole payment of $8.1 million). We incurred discount and debt issuance costs of $7.3 million in connection with issuance of the Senior Notes. These costs are deferred and are currently being amortized as a component of interest expense over the Term. Accounts Receivable Securitization . On December 5, 2014, certain direct and indirect wholly owned subsidiaries of our Intermediate Partnership entered into a $100.0 million accounts receivable securitization facility ("Securitization Facility"). Under the Securitization Facility, certain subsidiaries sell trade receivables on an ongoing basis to our Intermediate Partnership, which then sells the trade receivables to AROP Funding, a wholly owned bankruptcy-remote special purpose subsidiary of our Intermediate Partnership, which in turn borrows on a revolving basis up to $100.0 million secured by the trade receivables. After the sale, Alliance Coal, as servicer of the assets, collects the receivables on behalf of AROP Funding. The Securitization Facility bears interest based on a Eurodollar Rate. In November 2017, we extended the term of the Securitization Facility to January 2018. It was renewed in January 2018 and now matures in January 2019. At December 31, 2017, we had $72.4 million outstanding under the Securitization Facility. Cavalier Credit Agreement . On October 6, 2015, Cavalier Minerals (see Note 10 – Variable Interest Entities) entered into a credit agreement (the "Cavalier Credit Agreement") with Mineral Lending, LLC ("Mineral Lending") for a $100.0 million line of credit (the "Cavalier Credit Facility"). Mineral Lending is an entity owned by (a) Alliance Resource Holdings II, Inc. ("ARH II", the parent of ARH), (b) an entity owned by an officer of ARH who is also a director of ARH II ("ARH Officer") and (c) foundations established by the President and Chief Executive Officer of MGP and Kathleen S. Craft. There is no commitment fee under the facility. Borrowings under the Cavalier Credit Facility bear interest at a one month LIBOR rate plus 6.0% with interest payable quarterly. Repayment of the principal balance begins following the first fiscal quarter after the earlier of the date on which the aggregate amount borrowed exceeds $90.0 million or December 31, 2017, in quarterly payments of an amount equal to the greater of $1.3 million initially, escalated to $2.5 million after two years, or fifty percent of Cavalier Minerals' excess cash flow. The Cavalier Credit Facility matures September 30, 2024, at which time all amounts then outstanding are required to be repaid. To secure payment of the facility, Cavalier Minerals pledged all of its partnership interests, owned or later acquired, in AllDale Minerals. Cavalier Minerals may prepay the Cavalier Credit Facility at any time in whole or in part subject to terms and conditions described in the Cavalier Credit Agreement. As of December 31, 2017, Cavalier Minerals had not drawn on the Cavalier Credit Facility. Alliance Minerals has the right to require Cavalier Minerals to draw the full amount available under the Cavalier Credit Facility and distribute the proceeds to the members of Cavalier Minerals, including Alliance Minerals. Other. We also have an agreement with a bank to provide additional letters of credit in an amount of $5.0 million to maintain surety bonds to secure certain asset retirement obligations and our obligations for workers' compensation benefits. At December 31, 2017, we had $5.0 million in letters of credit outstanding under this agreement. Aggregate maturities of long-term debt are payable as follows: Year Ended December 31, (in thousands) 2018 $ 72,400 2019 — 2020 — 2021 30,000 2022 — Thereafter 400,000 $ 502,400 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2017 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 8. FAIR VALUE MEASUREMENTS The following table summarizes our fair value measurements within the hierarchy not included elsewhere in these notes: December 31, 2017 December 31, 2016 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in thousands) Measured on a recurring basis: Contingent consideration $ — $ — $ 6,800 $ — $ — $ 9,700 Additional disclosures: Long-term debt — 541,147 — — 559,509 — Total $ — $ 541,147 $ 6,800 $ — $ 559,509 $ 9,700 See Note 2 – Summary of Significant Accounting Policies – Fair Value Measurements for more information regarding fair value hierarchy levels. The carrying amounts for cash equivalents, accounts receivable, accounts payable, accrued and other liabilities, due from affiliates and due to affiliates approximate fair value due to the short maturity of those instruments. The estimated fair value of our long-term debt, including current maturities, is based on interest rates that we believe are currently available to us in active markets for issuance of debt with similar terms and remaining maturities (See Note 7 – Long-Term Debt). The fair value of debt, which is based upon these interest rates, is classified as a Level 2 measurement under the fair value hierarchy. The estimated fair value of the contingent consideration arrangement is based on a probability-weighted discounted cash flow model. The assumptions in the model include a risk-adjusted discount rate, forward coal sale price curves, cost of debt and probabilities of meeting certain contractual threshold coal sales prices (See Note 3 – Acquisitions). The decrease in fair value was primarily a result of changes in forward coal sale prices and is recorded in Operating expenses (excluding depreciation, depletion and amortization) in our consolidated income statement. The fair value measurement is based on significant inputs not observable in active markets and thus represents a Level 3 fair value measurement under the fair value hierarchy. |
DISTRIBUTIONS OF AVAILABLE CASH
DISTRIBUTIONS OF AVAILABLE CASH | 12 Months Ended |
Dec. 31, 2017 | |
DISTRIBUTIONS OF AVAILABLE CASH | |
DISTRIBUTIONS OF AVAILABLE CASH | 9. DISTRIBUTIONS OF AVAILABLE CASH We distribute 100% of our available cash within 45 days after the end of each quarter to unitholders of record and to our general partner. Available cash is generally defined in the partnership agreement as all cash and cash equivalents on hand at the end of each quarter less reserves established by MGP in its reasonable discretion for future cash requirements. These reserves are retained to provide for the conduct of our business, the payment of debt principal and interest and to provide funds for future distributions. These reserves are also considered in our review of certain VIEs discussed in Note 10 – Variable Interest Entities. Prior to the Exchange Transaction in July 2017 (See Note 1 – Organization and Presentation), as 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 given quarter that exceeded the minimum quarterly distribution ("MQD") and common unit arrearages, if any. The MQD was defined as $0.125 per unit ($0.50 per unit on an annual basis). Under the previous quarterly IDR provisions of our partnership agreement, 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. During the years ended December 31, 2017, 2016 and 2015, we paid to MGP incentive distributions of $37.6 million, $92.0 million and $139.8 million, respectively. The following table summarizes the quarterly per unit distribution paid during the respective quarter: Year 2017 2016 2015 First Quarter $ 0.4375 $ 0.6750 $ 0.6500 Second Quarter $ 0.4375 $ 0.4375 $ 0.6625 Third Quarter $ 0.5000 $ 0.4375 $ 0.6750 Fourth Quarter $ 0.5050 $ 0.4375 $ 0.6750 On January 26, 2018, we declared a quarterly distribution of $0.51 per unit, totaling approximately $67.3 million (including distributions to MGP with respect to its general partner interest in the Intermediate Partnership), on all our common units outstanding, which was paid on February 14, 2018, to all unitholders of record on February 7, 2018. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 12 Months Ended |
Dec. 31, 2017 | |
VARIABLE INTEREST ENTITIES | |
VARIABLE INTEREST ENTITIES | 10. VARIABLE INTEREST ENTITIES Cavalier Minerals On November 10, 2014, our subsidiary, Alliance Minerals, and Bluegrass Minerals Management, LLC ("Bluegrass Minerals") entered into a limited liability company agreement (the "Cavalier Agreement") to create Cavalier Minerals, which was formed to indirectly acquire oil and gas mineral interests, initially through its 71.7% noncontrolling ownership interest in AllDale I and subsequently through its 72.8% noncontrolling ownership interest in AllDale II. Bluegrass Minerals is owned and controlled by the ARH Officer discussed in Note 7 – Long-Term Debt and is Cavalier Minerals' managing member. Alliance Minerals and Bluegrass Minerals initially committed funding of $48.0 million and $2.0 million, respectively, to Cavalier Minerals, and Cavalier Minerals committed funding of $49.0 million to AllDale I. On October 6, 2015, Alliance Minerals and Bluegrass Minerals committed to fund an additional $96.0 million and $4.0 million, respectively, to Cavalier Minerals, and Cavalier Minerals committed to fund $100.0 million to AllDale II. Contributions in 2017 sufficiently completed funding to Cavalier Minerals for these commitments. Cavalier Minerals is not expected to call on further funding of these commitments from Alliance Minerals and Bluegrass Minerals. Contributions made from Alliance Minerals and Bluegrass Minerals to Cavalier Minerals for each period presented are as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Alliance Minerals Beginning cumulative commitment fulfilled $ 137,077 $ 63,498 $ 11,520 Capital contributions - Cash 6,035 72,334 51,552 Capital contributions - Net AllDale Minerals' distributions received by Cavalier Minerals (1) — 1,245 426 Ending cumulative commitment fulfilled 143,112 137,077 63,498 Remaining commitment 888 6,923 80,502 Total committed $ 144,000 $ 144,000 $ 144,000 Bluegrass Minerals Beginning cumulative commitment fulfilled $ 5,712 $ 2,646 $ 480 Capital contributions - Cash 251 3,014 2,148 Capital contributions - Net AllDale Minerals' distributions received by Cavalier Minerals (1) — 52 18 Ending cumulative commitment fulfilled 5,963 5,712 2,646 Remaining commitment 37 288 3,354 Total committed $ 6,000 $ 6,000 $ 6,000 (1) Represents distributions received from AllDale Minerals net of distributions reinvested and payments to Bluegrass Minerals for administration expense. In accordance with the Cavalier Agreement, Bluegrass Minerals is entitled to receive an incentive distribution from Cavalier Minerals equal to 25% of all distributions (including in liquidation) after all members have recovered their investment. The incentive distributions are reduced by certain distributions received by Bluegrass Minerals or its owner from AllDale Minerals Management, LLC ("AllDale Minerals Management"), the managing member of AllDale Minerals. Distributions paid to Alliance Minerals and Bluegrass Minerals from Cavalier Minerals for each period presented are as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Alliance Minerals $ 24,385 $ 4,546 $ — Bluegrass Minerals 1,016 189 — Alliance Minerals' ownership interest in Cavalier Minerals at December 31, 2017 and 2016 was 96%. The remainder of the equity ownership is held by Bluegrass Minerals. We have consolidated Cavalier Minerals' financial results as we concluded that Cavalier Minerals is a VIE and we are the primary beneficiary because neither Bluegrass Minerals nor Alliance Minerals individually has both the power and the benefits related to Cavalier Minerals and we are most closely aligned with Cavalier Minerals through our substantial equity ownership. Bluegrass Minerals' equity ownership of Cavalier Minerals is accounted for as noncontrolling ownership interest in our consolidated balance sheets. In addition, earnings attributable to Bluegrass Minerals are recognized as noncontrolling interest in our consolidated statements of income. WKY CoalPlay On November 17, 2014, SGP Land, LLC ("SGP Land"), a wholly owned subsidiary of SGP, and two limited liability companies ("Craft Companies") owned by irrevocable trusts established by the President and Chief Executive Officer of MGP entered into a limited liability company agreement to form WKY CoalPlay. WKY CoalPlay was formed, in part, to purchase and lease coal reserves. WKY CoalPlay is managed by the ARH Officer discussed in Note 7 – Long-Term Debt, who is also an employee of SGP Land and trustee of the irrevocable trusts owning the Craft Companies. In December 2014 and February 2015, we entered into various coal reserve leases with WKY CoalPlay. See Note 18 – Related-Party Transactions for further information on our lease terms with WKY CoalPlay. We have concluded that WKY CoalPlay is a VIE because of our ability to exercise options to acquire reserves under lease with WKY CoalPlay (Note 18 – Related-Party Transactions), which is not within the control of the equity holders and, if it occurs, could potentially limit the expected residual return to the owners of WKY CoalPlay. We do not have any economic or governance rights related to WKY CoalPlay and our options that provide us with a variable interest in WKY CoalPlay's reserve assets do not give us any rights that constitute power to direct the primary activities that most significantly impact WKY CoalPlay's economic performance. SGP Land has the sole ability to replace the manager of WKY CoalPlay at its discretion and therefore has power to direct the activities of WKY CoalPlay. Consequently, we concluded that SGP Land is the primary beneficiary of WKY CoalPlay. White Oak Prior to our acquisition of the remaining equity interests in White Oak as discussed in Note 3 – Acquisitions, White Oak was a variable interest entity of which we were not the primary beneficiary. We held a majority of the Series A Units that had certain distribution and liquidation preferences but only gave us a 40% voting interest in the primary activities of the company. We had protective rights and limited participating rights, such as minority representation on their board of directors, restrictions on indebtedness and other obligations, the ability to assume control of the board of directors in certain circumstances, such as an event of default, and the right to approve certain coal sales agreements. These protective and participating rights did not provide us the ability to unilaterally direct any of the primary activities of White Oak that most significantly impacted its economic performance and thus, we were not the primary beneficiary for consolidation purposes. Consequentially, we accounted for our Series A Units investment as an equity investment. See Note 11 – Investments for further information. Alliance Coal and the Intermediate Partnership Alliance Coal is a limited liability company designed to operate as the operating subsidiary of the Intermediate Partnership and holds the interests in the mining operations and ASI. The Intermediate Partnership is a limited partnership that holds the non-managing member interest in Alliance Coal and the sole member interests in Alliance Resource Properties, Alliance Minerals and other entities. Together Alliance Coal and the Intermediate Partnership and their subsidiaries represent virtually all the net assets of ARLP. Both the Intermediate Partnership and Alliance Coal were designed to operate as the operating subsidiaries of ARLP and to distribute available cash to ARLP so that ARLP can distribute available cash to its partners. We considered MGP's and ARLP's ownership in the Intermediate Partnership and MGP's and the Intermediate Partnership's ownership in Alliance Coal separately for the purposes of determining whether the Intermediate Partnership and Alliance Coal are VIEs. The Intermediate Partnership holds a 99.999% non-managing interest and MGP holds the 0.001% managing member interest in Alliance Coal. To determine whether Alliance Coal is a VIE, we considered that since Alliance Coal is structured as the equivalent of a limited partnership with the non-managing member 1) not having the ability to remove its managing member and 2) not participating significantly in the operational decisions, Alliance Coal represents a VIE. We determined that neither the MGP nor the Intermediate Partnership have both the power and the benefits related to Alliance Coal. We then considered which of the two was most closely aligned with Alliance Coal and thus would be designated the primary beneficiary of Alliance Coal for consolidation purposes. We determined that the Intermediate Partnership was most closely aligned with Alliance Coal and is the primary beneficiary. We based our determination of alignment on 1) the purpose and design of Alliance Coal which is to a) be the operating subsidiary of the Intermediate Partnership and b) distribute all of its available cash to the Intermediate Partnership such that the Intermediate Partnership can pay its partners and debt obligations, 2) AHGP's common control over both the Intermediate Partnership and MGP, as discussed in Note 1 – Organization and Presentation, to achieve the aforementioned purpose and design and 3) the Intermediate Partnership's debt funding for Alliance Coal for capital expenditures, operations and other purposes as needed and related risks and collateral requirements in the debt arrangements. ARLP holds a 98.9899% limited partnership interest and a 0.01% general partner interest in the Intermediate Partnership and MGP holds the 1.0001% managing general partner interest in the Intermediate Partnership. To determine whether the Intermediate Partnership is a VIE, we considered that since the Intermediate Partnership is structured as a limited partnership with the limited partner 1) not having the ability to remove its managing general partner and 2) not participating significantly in the operational decisions, the Intermediate Partnership represents a VIE. We determined that neither the MGP nor ARLP have both the power and the benefits related to Intermediate Partnership. We then considered which of the two was most closely aligned with the Intermediate Partnership and thus would be designated the primary beneficiary of the Intermediate Partnership for consolidation purposes. We determined that ARLP was most closely aligned with the Intermediate Partnership and is the primary beneficiary. We based our determination of alignment on 1) the purpose and design of the Intermediate Partnership which is to (a) be the operating subsidiary to ARLP and (b) distribute all of its available cash to ARLP to pay its partners and 2) AHGP's common control over ARLP, MGP and the Intermediate Partnership, as discussed in Note 1 – Organization and Presentation, to achieve the aforementioned purpose and design. The effect of the partnership agreements of ARLP and the Intermediate Partnership and the operating agreement of Alliance Coal (collectively the "Agreements") is that on a quarterly basis 100% of available cash from our operations must be distributed by ARLP to its partners (apart from certain nominal distributions from the Intermediate Partnership and Alliance Coal to MGP). Available cash is determined as defined in the Agreements and represents all cash with the exception of cash reserves (i) for the proper conduct of the business including reserves for future capital expenditures and for anticipated credit needs of the Partnership Group, (ii) to comply with debt obligations or (iii) to provide funds for certain subsequent distributions. MGP, as the managing member of Alliance Coal and the managing general partner of the Intermediate Partnership, is responsible for distributing this cash to ARLP so it can meet its distribution requirements. As discussed in Note 7 – Long-Term Debt, the Intermediate Partnership's debt covenants place additional restrictions on distributions to ARLP by limiting cash available for distribution from the Intermediate Partnership based on various debt covenants pertaining to the most recent preceding quarter. MGP does not have the ability, without the consent of the limited partners, to amend the Agreements. See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for variable interest entities. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2017 | |
INVESTMENTS | |
INVESTMENTS | 11. INVESTMENTS AllDale Minerals In November 2014, Cavalier Minerals (see Note 10 – Variable Interest Entities) was created to indirectly purchase, through its equity investments in AllDale Minerals, oil and gas mineral interests in various geographic locations within producing basins in the continental U.S. In February 2017, Alliance Minerals, which is included in our Other and Corporate category (see Note 21 – Segment Information), committed to directly (rather than through Cavalier Minerals) invest $30.0 million in AllDale III which was created for similar investment purposes. We account for our ownership interest in the income or loss of the AllDale Partnerships as equity method investments. We record equity income or loss based on the AllDale Partnerships' individual distribution structures. The changes in our aggregate equity method investment in the AllDale Partnerships for each of the periods presented were as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Beginning balance $ 138,817 $ 64,509 $ 11,257 Contributions 20,688 76,797 54,290 Equity investment income (loss) 13,860 3,543 (594) Distributions received (25,401) (6,032) (444) Ending balance $ 147,964 $ 138,817 $ 64,509 Kodiak On July 19, 2017, Alliance Minerals purchased $100 million of Series A-1 Preferred Interests from Kodiak, a privately-held company providing large-scale, high-utilization gas compression assets to customers operating primarily in the Permian Basin. This structured investment provides us with a quarterly cash or payment-in-kind return. Our ownership interests in Kodiak are senior to all other Kodiak equity interests and subordinate only to Kodiak's senior secured debt facility. We account for our ownership interests in Kodiak as a cost method investment. It is not practicable to estimate the fair value of our investment in Kodiak because of the lack of a quoted market price for our ownership interests. The changes in our investment in Kodiak for the year ended December 31, 2017 were as follows: Year Ended December 31, 2017 (in thousands) Beginning balance $ — Contributions 100,000 Payment-in-kind distributions received 6,398 Ending balance $ 106,398 White Oak On September 22, 2011, we entered into a series of transactions ("Initial Transactions") with White Oak to support development of a longwall mining operation, which we assumed control of in July 2015 through our acquisition of the remaining equity interests in White Oak (see Note 3 - Acquisitions). The Initial Transactions featured several components, including an equity investment in White Oak, the acquisition and lease-back of certain coal reserves and surface rights, a loan and a coal handling and preparation agreement, pursuant to which we constructed and operated Hamilton's preparation plant and other surface facilities. Our previous equity investment income or loss from White Oak is reflected in our Illinois Basin reportable segment and was recorded under the hypothetical-liquidation-at-book-value method of accounting due to the preferences to which we were entitled with respect to distributions. See Note 10 – Variable Interest Entities regarding our determination to account for White Oak as an equity investment prior to the Hamilton Acquisition. White Oak's results prior to the Hamilton Acquisition for the period from January 1, 2015 to July 31, 2015 are summarized as follows: January 1, 2015 to July 31, 2015 (in thousands) Total revenues $ 108,256 Gross loss (2,919) Loss from operations (38,148) Net loss (69,075) See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for equity investments. |
NET INCOME OF ARLP PER LIMITED
NET INCOME OF ARLP PER LIMITED PARTNER UNIT | 12 Months Ended |
Dec. 31, 2017 | |
NET INCOME OF ARLP PER LIMITED PARTNER UNIT | |
NET INCOME OF ARLP PER LIMITED PARTNER UNIT | 12. NET INCOME OF ARLP PER LIMITED PARTNER UNIT We utilize the two-class method in calculating basic and diluted earnings per unit ("EPU"). Net income of ARLP is allocated to the general partners and limited partners in accordance with their respective partnership percentages, after giving effect to any special income or expense allocations, including incentive distributions to our general partner, MGP. As discussed above in Note 1 – Organization and Presentation under Exchange Transaction , on July 28, 2017, MGP contributed to ARLP all of its IDRs and its general partner interest in ARLP in exchange for 56,100,000 ARLP common units and a non-economic general partner interest in ARLP. In conjunction with this transaction and on the same economic basis as MGP, SGP also contributed to ARLP its 0.01% general partner interests in both ARLP and the Intermediate Partnership in exchange for 7,181 ARLP common units. In connection with the Exchange Transaction, ARLP amended its partnership agreement to reflect, among other things, cancellation of the IDRs and the economic general partner interest in ARLP and issuance of a non-economic general partner interest to MGP. As of December 31, 2017, as a result of the transactions, ARLP has 130,704,217 common units outstanding. Under the IDR provisions of our 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, we no longer make distributions with respect to the IDRs. Outstanding awards under our LTIP and phantom units in notional accounts under our SERP and the Deferred Compensation Plan include rights to nonforfeitable distributions or distribution equivalents and are therefore considered participating securities. As such, we allocate undistributed and distributed earnings to these outstanding awards in our calculation of EPU. The following is a reconciliation of net income of ARLP used for calculating basic and diluted earnings per unit and the weighted-average units used in computing EPU for the years ended December 31, 2017, 2016 and 2015, respectively: Year Ended December 31, 2017 2016 2015 (in thousands, except per unit data) Net income of ARLP $ 303,638 $ 339,398 $ 306,198 Adjustments: MGP's priority distributions (1) (19,216) (76,636) (144,576) General partners' equity ownership (1) (3,688) (5,275) (3,262) General partners' special allocation of certain general and administrative expenses (2) 1,000 1,000 1,500 Limited partners' interest in net income of ARLP 281,734 258,487 159,860 Less: Distributions to participating securities (4,339) (3,391) (3,493) Undistributed earnings attributable to participating securities (1,026) (3,281) — Net income of ARLP available to limited partners $ 276,369 $ 251,815 $ 156,367 Weighted-average limited partner units outstanding – basic and diluted 98,708 74,354 74,174 Basic and diluted net income of ARLP per limited partner unit (3) $ 2.80 $ 3.39 $ 2.11 (1) Amounts for 2017 reflect the impact of the Exchange Transaction eliminating second, third and fourth quarter distributions that would have been paid for the IDRs and the 0.99% general partner interest in ARLP, both of which were held by MGP prior to the Exchange Transaction. MGP maintained its 1.0001% general partner interest in the Intermediate Partnership and thus continues to receive the Intermediate Partnership quarterly distribution notwithstanding the Exchange Transaction. Because the Exchange Transaction occurred prior to the record date for ARLP's second quarter distributions, all of the second, third and fourth quarter earnings less the Intermediate Partnership's general partner interest were allocated to ARLP's limited partners. The Exchange Transaction also converted SGP's nominal general partnership interest for its second, third and fourth quarter earnings and subsequent distributions to the limited partner interest. (2) An affiliated entity controlled by Mr. Craft made capital contributions of $1.0 million each year during 2017 and 2016 and $1.5 million during 2015 to AHGP for the purpose of funding certain general and administrative expenses. Upon AHGP's receipt of each contribution, it contributed the same to its subsidiary MGP, our general partner, which in turn contributed the same to our subsidiary, Alliance Coal. As provided under our partnership agreement, we made special allocations to MGP of certain general and administrative expenses equal to its contributions. Net income of ARLP allocated to the limited partners was not burdened by this expense. (3) Diluted EPU gives effect to all potentially dilutive common units outstanding during the period using the treasury stock method. Diluted EPU excludes all potentially dilutive units calculated under the treasury stock method if their effect is anti-dilutive. For the year ended December 31, 2017, 2016 and 2015, the combined total of LTIP, SERP and Deferred Compensation Plan units of 1,466,404, 922,386, and 734,171, respectively, were considered anti-dilutive under the treasury stock method. On a pro forma basis, as if the Exchange Transaction had taken place on January 1, 2015, the reconciliation of net income of ARLP to basic and diluted earnings per unit and the weighted-average units used in computing EPU for the years ended December 31, 2017, 2016 and 2015 are as follows: Year Ended December 31, 2017 2016 2015 (in thousands, except per unit data) Net income of ARLP $ 303,638 $ 339,398 $ 306,198 Adjustments: General partners' equity ownership (3,036) (3,397) (3,063) General partners' special allocation of certain general and administrative expenses (1) 1,000 1,000 1,500 Limited partners' interest in net income of ARLP 301,602 337,001 304,635 Less: Distributions to participating securities (4,339) (3,391) (3,493) Undistributed earnings attributable to participating securities (701) (1,594) — Net income of ARLP available to limited partners (2) $ 296,562 $ 332,016 $ 301,142 Weighted-average limited partner units outstanding – basic and diluted (2) 130,681 130,461 130,282 Pro forma basic and diluted net income of ARLP per limited partner unit (3) $ 2.27 $ 2.54 $ 2.31 (1) An affiliated entity controlled by Mr. Craft made capital contributions of $1.0 million each year during 2017 and 2016 and $1.5 million during 2015 to AHGP for the purpose of funding certain general and administrative expenses. Upon AHGP's receipt of each contribution, it contributed the same to its subsidiary MGP, our general partner, which in turn contributed the same to our subsidiary, Alliance Coal. As provided under our partnership agreement, we made special allocations to MGP of certain general and administrative expenses equal to its contributions. Net income of ARLP allocated to the limited partners was not burdened by this expense. (2) The pro forma amounts presented above reflect net income allocations as if distributions had been made for all periods presented based on the limited and general partner interests outstanding as a result of the Exchange Transaction. Accordingly, the Adjustment - General partners' equity ownership line item above no longer includes the (a) IDR distributions to MGP, (b) general partner interest distributions from ARLP to MGP and SGP and (c) general partner distributions from the Intermediate Partnership to SGP. Pro forma amounts above also reflect weighted average units outstanding as if the issuance of 56,107,181 ARLP common units in the Exchange Transaction applied to all periods presented. (3) Diluted EPU gives effect to all potentially dilutive common units outstanding during the period using the treasury stock method. Diluted EPU excludes all potentially dilutive units calculated under the treasury stock method if their effect is anti-dilutive. For the year ended December 31, 2017, 2016 and 2015, the combined total of LTIP, SERP and Deferred Compensation Plan units of 1,466,404, 922,386 and 734,171, respectively, were considered anti-dilutive under the treasury stock method. . |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2017 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 13. EMPLOYEE BENEFIT PLANS Defined Contribution Plans —Our eligible employees currently participate in a defined contribution profit sharing and savings plan ("PSSP") that we sponsor. The PSSP covers all regular full-time employees. PSSP participants may elect to make voluntary contributions to this plan up to a specified amount of their compensation. We make matching contributions based on a percent of an employee's eligible compensation and also make an additional non-matching contribution. Our contribution expense for the PSSP was approximately $18.7 million, $18.2 million and $22.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. Defined Benefit Plan —Eligible employees at certain of our mining operations participate in a defined benefit plan (the "Pension Plan") that we sponsor. The Pension Plan is currently closed to new applicants and effective January 31, 2017, participants within the Pension Plan are no longer receiving benefit accruals for service. The amendment did not materially affect pension benefits accrued prior to January 31, 2017. All participants can participate in enhanced benefits provisions under the PSSP. The benefit formula for the Pension Plan is a fixed-dollar unit based on years of service. The following sets forth changes in benefit obligations and plan assets for the years ended December 31, 2017 and 2016 and the funded status of the Pension Plan reconciled with the amounts reported in our consolidated financial statements at December 31, 2017 and 2016, respectively: 2017 2016 (dollars in thousands) Change in benefit obligations: Benefit obligations at beginning of year $ 113,482 $ 107,476 Service cost — 2,205 Interest cost 4,587 4,493 Actuarial loss 13,501 901 Benefits paid (4,272) (3,091) Plan amendments — 1,498 Benefit obligations at end of year 127,298 113,482 Change in plan assets: Fair value of plan assets at beginning of year 71,412 68,445 Employer contribution 2,971 2,608 Actual return on plan assets 11,870 3,450 Benefits paid (4,272) (3,091) Fair value of plan assets at end of year 81,981 71,412 Funded status at the end of year $ (45,317) $ (42,070) Amounts recognized in balance sheet: Non-current liability $ (45,317) $ (42,070) Amounts recognized in accumulated other comprehensive income consists of: Prior service cost $ (1,312) $ (1,498) Net actuarial loss (41,979) (38,424) $ (43,291) $ (39,922) Weighted-average assumptions to determine benefit obligations as of December 31, Discount rate Expected rate of return on plan assets Weighted-average assumptions used to determine net periodic benefit cost for the year ended December 31, Discount rate Expected return on plan assets The actuarial loss component of the change in benefit obligation in 2017 was primarily attributable to a decrease in the discount rate compared to December 31, 2016 and updated retirement and withdrawal rates, offset in part by improved life expectancies. The actuarial loss component of the change in benefit obligation in 2016 was primarily attributable to a decrease in the discount rate compared to December 31, 2015, offset in part by improved life expectancies and updated retirement and withdrawal rate estimates. The expected long-term rate of return used to determine our pension liability is based on a 1.5% active management premium in addition to an asset allocation assumption of: Asset allocation As of December 31, 2017 assumption Equity securities Fixed income securities Real estate The actual return on plan assets was 18.0% and 5.9% for the years ended December 31, 2017 and 2016, respectively. Year Ended December 31, 2017 2016 2015 (in thousands) Components of net periodic benefit cost: Service cost $ — $ 2,205 $ 2,473 Interest cost 4,587 4,493 4,296 Expected return on plan assets (4,978) (5,138) (5,590) Amortization of prior service cost 186 — — Amortization of net loss 3,054 2,952 3,354 Net periodic benefit cost $ 2,849 $ 4,512 $ 4,533 2017 2016 (in thousands) Other changes in plan assets and benefit obligation recognized in accumulated other comprehensive loss: Prior service cost $ — $ (1,498) Net actuarial loss (6,610) (2,589) Reversal of amortization item: Prior service cost 186 — Net actuarial loss 3,054 2,952 Total recognized in accumulated other comprehensive loss (3,370) (1,135) Net periodic benefit cost (2,849) (4,512) Total recognized in net periodic benefit cost and accumulated other comprehensive loss $ (6,219) $ (5,647) Estimated future benefit payments as of December 31, 2017 are as follows: Year Ended December 31, (in thousands) 2018 $ 4,238 2019 4,651 2020 5,053 2021 5,420 2022 5,696 2023-2027 32,329 $ 57,387 We expect to contribute $3.8 million to the Pension Plan in 2018. The estimated net actuarial loss and prior service cost for the Pension Plan that will be amortized from AOCL into net periodic benefit cost during the 2018 fiscal year is $3.8 million and $0.2 million, respectively. The Compensation Committee has appointed an investment manager with full investment authority with respect to Pension Plan investments subject to investment guidelines and compliance with ERISA or other applicable laws. The investment manager employs a series of asset allocation strategy phases to glide the portfolio risk commensurate with both plan characteristics and market conditions. The objective of the allocation policy is to reach and maintain fully funded status. The total portfolio allocation will be adjusted as the funded ratio of the Pension Plan changes and market conditions warrant. The target allocation includes investments in equity and fixed income commingled investment funds. Total account performance is reviewed at least annually, using a dynamic benchmark approach to track investment performance. General asset allocation guidelines at December 31, 2017 are as follows: Percentage of Total Portfolio Minimum Target Maximum Equity securities Fixed income securities Real estate Equity securities include domestic equity securities, developed international securities, emerging markets equity securities and real estate investment trust. Fixed income securities include domestic and international investment grade fixed income securities, high yield securities and emerging markets fixed income securities. Fixed income futures may also be utilized within the fixed income securities asset allocation. The following information discloses the fair values of our Pension Plan assets, by asset category, for the periods indicated: December 31, 2017 December 31, 2016 (in thousands) Cash and cash equivalents (a) $ 1,439 $ 1,137 Commingled investment funds measured at net asset value (b): Equities - U.S. large-cap 26,031 21,082 Equities - U.S. small-cap 6,120 6,531 Equities - International developed markets 15,015 11,074 Equities - International emerging markets 6,528 4,614 Fixed income - Investment grade 13,546 16,823 Fixed income - High yield 4,325 4,543 Real estate 3,754 4,259 Other 5,223 1,349 Total $ 81,981 $ 71,412 (a) Cash and cash equivalents represents a Level 1 fair value measurement. See Note 2 – Summary of Significant Accounting Policies – Fair Value Measurements for more information regarding the definitions of fair value hierarchy levels. (b) Investments measured at fair value using the net asset value per share (or its equivalent) have not been classified within the fair value hierarchy. The fair values of all commingled investment funds are determined based on the net asset values per unit of each of the funds. The net asset values per unit represent the aggregate value of the fund's assets at fair value less liabilities, divided by the number of units outstanding. See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for pension benefits. |
COMPENSATION PLANS
COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2017 | |
COMPENSATION PLANS | |
COMPENSATION PLANS | 14. COMPENSATION PLANS Long-Term Incentive Plan We have the LTIP for certain employees and officers of MGP and its affiliates who perform services for us. The LTIP awards are grants of non-vested "phantom" or notional units, also referred to as "restricted units", which upon satisfaction of time and performance based vesting requirements, entitle the LTIP participant to receive ARLP common units. Annual grant levels and vesting provisions for designated participants are recommended by the President and Chief Executive Officer of MGP, subject to review and approval of the Compensation Committee. Vesting of all grants outstanding is subject to the satisfaction of certain financial tests, which management currently believes is probable. Grants issued to LTIP participants are expected to cliff vest on January 1st of the third year following issuance of the grants. We account for forfeitures of non-vested LTIP grants as they occur. We expect to settle the non-vested LTIP grants by delivery of ARLP common units, except for the portion of the grants that will satisfy tax withholding obligations of LTIP participants. As provided under the distribution equivalent rights ("DERs") provisions of the LTIP and the terms of the LTIP awards, all non-vested grants include contingent rights to receive quarterly distributions in cash or at the discretion of the Compensation Committee, in lieu of cash, phantom units credited to a bookkeeping account with value, equal to the cash distributions we make to unitholders during the vesting period. A summary of non-vested LTIP grants as of and for the years ended December 31, 2017, 2016 and 2015 is as follows: Number of units Weighted average grant date fair value per unit Intrinsic value (in thousands) Non-vested grants at January 1, 2015 843,340 $ $ 36,306 Granted Vested (1) Forfeited Non-vested grants at December 31, 2015 939,793 12,678 Granted Vested (1) Forfeited Non-vested grants at December 31, 2016 1,604,748 36,027 Granted Vested (1) Forfeited Non-vested grants at December 31, 2017 33,372 (1) During the years ended December 31, 2017, 2016 and 2015, we issued 222,011, 176,319, and 128,150, respectively, unrestricted common units to the LTIP participants. The remaining vested units were settled in cash to satisfy the individual statutory minimum tax obligations of the LTIP participants. For the years ended December 31, 2017, 2016 and 2015, our LTIP expense was $11.0 million, $12.7 million and $11.2 million, respectively. The total obligation associated with the LTIP as of December 31, 2017 and 2016 was $21.8 million and $25.1 million, respectively, and is included in the partners' capital Limited partners-common unitholders line item in our consolidated balance sheets. As of December 31, 2017, there was $11.4 million in total unrecognized compensation expense related to the non-vested LTIP grants that are expected to vest. That expense is expected to be recognized over a weighted-average period of 1.1 years. On January 24, 2018, the Compensation Committee determined that the vesting requirements for the 2015 grants of 290,706 restricted units (which was net of 12,459 forfeitures) had been satisfied as of January 1, 2018. As a result of this vesting, on February 8, 2018, we issued 191,858 unrestricted common units to the LTIP participants. The remaining units were settled in cash to satisfy tax withholding obligations of the LTIP participants. On January 24, 2018, the Compensation Committee also authorized additional grants of 526,305 restricted units, of which 511,305 units were granted. After consideration of the January 1, 2018 vesting and subsequent issuance of 191,858 common units, approximately 2.1 million units remain available under the LTIP for issuance in the future, assuming all grants issued in 2018, 2017 and 2016 and currently outstanding are settled with common units, without reduction for tax withholding, and no future forfeitures occur and DERs continue being paid in cash versus additional phantom units. Supplemental Executive Retirement Plan and Directors Deferred Compensation Plan We utilize the SERP to provide deferred compensation benefits for certain officers and key employees. All allocations made to participants under the SERP are made in the form of "phantom" ARLP units and SERP distributions will be settled in the form of ARLP common units. The SERP is administered by the Compensation Committee. Our directors participate in the Deferred Compensation Plan. Pursuant to the Deferred Compensation Plan, for amounts deferred either automatically or at the election of the director, a notional account is established and credited with notional common units of ARLP, described in the Deferred Compensation Plan as "phantom" units. Distributions from the Deferred Compensation Plan will be settled in the form of ARLP common units. For both the SERP and Deferred Compensation Plan, when quarterly cash distributions are made with respect to ARLP common units, an amount equal to such quarterly distribution is credited to each participant's notional account as additional phantom units. All grants of phantom units under the SERP and Deferred Compensation Plan vest immediately. A summary of SERP and Deferred Compensation Plan activity as of and for the years ended December 31, 2017, 2016 and 2015 is as follows: Number of units Weighted average grant date fair value per unit Intrinsic value (in thousands) Phantom units outstanding as of January 1, 2015 368,981 $ $ 15,885 Granted 60,160 Phantom units outstanding as of December 31, 2015 429,141 5,789 Granted Issued Phantom units outstanding as of December 31, 2016 494,018 11,091 Granted 67,766 Phantom units outstanding as of December 31, 2017 561,784 11,067 Total SERP and Deferred Compensation Plan expense was $1.4 million, $1.2 million and $1.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017 and 2016, the total obligation associated with the SERP and Deferred Compensation Plan was $16.1 million and $14.7 million, respectively, and is included in the partners' capital Limited partners-common unitholders line item in our consolidated balance sheets. On February 8, 2018, we issued 7,181 ARLP common units to a participant under the SERP. Units issued to this participant were net of units settled in cash to satisfy tax withholding obligations. See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for unit-based compensation. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
SUPPLEMENTAL CASH FLOW INFORMATION | 15. SUPPLEMENTAL CASH FLOW INFORMATION Year Ended December 31, 2017 2016 2015 (in thousands) Cash Paid For: Interest $ 31,692 $ 29,274 $ 30,438 Income taxes $ 210 $ 10 $ 21 Non-Cash Activity: Accounts payable for purchase of property, plant and equipment $ 15,636 $ 8,232 $ 12,634 Assets acquired by capital lease $ — $ 37,089 $ 99,543 Market value of common units vested in Long-Term Incentive Plan and Deferred Compensation Plan before minimum statutory tax withholding requirements $ 8,149 $ 3,642 $ 7,389 Acquisition of businesses: Fair value of assets assumed, net of cash acquired $ — $ 1,011 $ 519,384 Contingent consideration — — (20,907) Settlement of pre-existing relationships — — (124,379) Previously held equity-method investment — — (122,764) Cash paid, net of cash acquired — (1,011) (74,953) Fair value of liabilities assumed $ — $ — $ 176,381 |
ASSET RETIREMENT OBLIGATIONS
ASSET RETIREMENT OBLIGATIONS | 12 Months Ended |
Dec. 31, 2017 | |
ASSET RETIREMENT OBLIGATIONS | |
ASSET RETIREMENT OBLIGATIONS | 16. ASSET RETIREMENT OBLIGATIONS The majority of our operations are governed by various state statutes and the Federal Surface Mining Control and Reclamation Act of 1977, which establish reclamation and mine closing standards. These regulations require, among other things, restoration of property in accordance with specified standards and an approved reclamation plan. The following table presents the activity affecting the asset retirement and mine closing liability: Year Ended December 31, 2017 2016 (in thousands) Beginning balance $ 125,701 $ 123,685 Accretion expense 3,793 3,769 Payments (1,046) (379) Allocation of liability associated with acquisitions, mine development and change in assumptions 2,152 (1,374) Ending balance $ 130,600 $ 125,701 For the year ended December 31, 2017, the allocation of liability associated with acquisition, mine development and change in assumptions was a net increase of $2.2 million. This increase was attributable to the net impact of increased expansion and disturbances of refuse sites primarily at the Hamilton and River View mines, offset in part by overall changes in inflation and discount rates, current estimates of the costs and scope of remaining reclamation work, reclamation work completed and fluctuations in projected mine life estimates. For the year ended December 31, 2016, the allocation of liability associated with acquisition, mine development and change in assumptions was a net decrease of $1.4 million. This decrease was primarily attributable to the net impact of overall general changes in inflation and discount rates, current estimates of the costs and scope of remaining reclamation work, reclamation work completed and fluctuations in projected mine life estimates, offset in part by increased expansion and disturbances of refuse sites primarily at the Warrior and Gibson County Coal mines. The impact of discounting our estimated cash flows resulted in reducing the accrual for asset retirement obligations by $114.0 million and $110.7 million at December 31, 2017 and 2016, respectively. Estimated payments of asset retirement obligations as of December 31, 2017 are as follows: Year Ended December 31, (in thousands) 2018 $ 3,850 2019 454 2020 433 2021 — 2022 1,256 Thereafter 238,604 Aggregate undiscounted asset retirement obligations 244,597 Effect of discounting (113,997) Total asset retirement obligations 130,600 Less: current portion (3,850) Asset retirement obligations $ 126,750 Federal and state laws require bonds to secure our obligations to reclaim lands used for mining and are typically renewable on a yearly basis. As of December 31, 2017 and 2016, we had approximately $172.9 million and $171.8 million, respectively, in surety bonds outstanding to secure the performance of our reclamation obligations. See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for asset retirement obligations. |
ACCRUED WORKERS' COMPENSATION A
ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS | 12 Months Ended |
Dec. 31, 2017 | |
WORKERS' COMPENSATION AND PNEUMOCONIOSIS | |
ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS | 17. ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS We provide income replacement and medical treatment for work-related traumatic injury claims as required by applicable state laws. Workers' compensation laws also compensate survivors of workers who suffer employment related deaths. Certain of our mine operating entities are liable under state statutes and the Federal Coal Mine Health and Safety Act of 1969, as amended, to pay benefits for black lung disease (or pneumoconiosis) to eligible employees and former employees and their dependents. Both pneumoconiosis and traumatic claims are covered through our self-insured programs. The following is a reconciliation of the changes in workers' compensation liability (including current and long-term liability balances) at December 31, 2017 and 2016: 2017 2016 (in thousands) Beginning balance $ 48,131 $ 54,558 Accruals increase 17,066 10,450 Payments (10,769) (10,415) Interest accretion 1,681 1,967 Valuation gain (1,670) (8,429) Ending balance $ 54,439 $ 48,131 The discount rate used to calculate the estimated present value of future obligations for workers' compensation was 3.22%, 3.52% and 3.63% at December 31, 2017, 2016 and 2015, respectively. The 2017 valuation gain was primarily attributable to favorable changes in claims development partially offset by the decrease in the discount rate used to calculate the estimated present value of future obligations. The 2016 valuation gain was primarily attributable to favorable changes in claims development partially offset by the decrease in the discount rate used to calculate the estimated present value of future obligations. As of December 31, 2017 and 2016, we had $89.2 million and $89.1 million, respectively, in surety bonds and letters of credit outstanding to secure workers' compensation obligations. We limit our exposure to traumatic injury claims by purchasing a high deductible insurance policy that starts paying benefits after deductibles for the particular claim year have been met. Our workers' compensation liability above is presented on a gross basis and does not include our expected receivables on our insurance policy. Our receivables for traumatic injury claims under this policy as of December 31, 2017 are $9.0 million and are included in Other long-term assets on our consolidated balance sheet. The following is a reconciliation of the changes in pneumoconiosis benefit obligations at December 31, 2017 and 2016: 2017 2016 (in thousands) Benefit obligations at beginning of year $ 64,988 $ 61,693 Service cost 2,255 2,578 Interest cost 2,555 2,506 Actuarial loss 7,938 205 Benefits and expenses paid (2,877) (1,994) Benefit obligations at end of year $ 74,859 $ 64,988 The following is a reconciliation of the changes in the pneumoconiosis benefit obligation recognized in AOCL for the years ended December 31, 2017, 2016 and 2015: 2017 2016 2015 (in thousands) Net actuarial loss $ (7,938) $ (205) $ (750) Reversal of amortization item: Net actuarial gain (2,092) (2,643) (451) Total recognized in accumulated other comprehensive loss $ (10,030) $ (2,848) $ (1,201) The discount rate used to calculate the estimated present value of future obligations for pneumoconiosis benefits was 3.49%, 3.97% and 4.16% at December 31, 2017, 2016 and 2015, respectively. 2017 2016 2015 (in thousands) Amount recognized in accumulated other comprehensive loss consists of: Net actuarial loss (gain) $ 8,648 $ (1,382) $ (4,230) The actuarial loss component of the change in benefit obligations in 2017 was primarily attributable to the decrease in the discount rate used to calculate the estimated present value of the future obligations, an increase in the assumed future medical benefits, and closure of a state fund which historically shared indemnity costs on state pneumoconiosis claims. The actuarial loss component of the change in benefit obligations in 2016 was primarily attributable to the decrease in the discount rate used to calculate the estimated present value of the future obligations which was partially offset by favorable claims development changes. Summarized below is information about the amounts recognized in the accompanying consolidated balance sheets for pneumoconiosis and workers' compensation benefits at December 31, 2017 and 2016: 2017 2016 (in thousands) Workers' compensation claims $ 54,439 $ 48,131 Pneumoconiosis benefit claims 74,859 64,988 Total obligations 129,298 113,119 Less current portion (10,729) (9,897) Non-current obligations $ 118,569 $ 103,222 Both the pneumoconiosis benefit and workers' compensation obligations were unfunded at December 31, 2017 and 2016. The pneumoconiosis benefit and workers' compensation expense consists of the following components for the years ended December 31, 2017, 2016 and 2015: 2017 2016 2015 (in thousands) Service cost $ 2,255 $ 2,578 $ 3,081 Interest cost 2,555 2,506 2,094 Net amortization (2,092) (2,643) (451) Total pneumoconiosis expense 2,718 2,441 4,724 Workers' compensation expense 12,215 9,063 9,759 Total expense $ 14,933 $ 11,504 $ 14,483 See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for workers' compensation and pneumoconiosis benefits. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
RELATED-PARTY TRANSACTIONS | |
RELATED-PARTY TRANSACTIONS | 18. RELATED-PARTY TRANSACTIONS We have continuing related-party transactions with MGP and its affiliates. The Board of Directors and its Conflicts Committee review our related-party transactions that involve a potential conflict of interest between our general partner or its affiliates and ARLP or its subsidiaries or another partner to determine that such transactions are fair and reasonable to ARLP. As a result of these reviews, the Board of Directors and the Conflicts Committee approved each of the transactions described below that had such potential conflict of interest as fair and reasonable to ARLP. White Oak — On September 22, 2011, we entered into the Initial Transactions (See Note 11 – Investments) with White Oak and related entities to support development of a longwall mining operation. The Initial Transactions and subsequent transactions with White Oak involved several components, including an equity investment containing certain distribution and liquidation preferences, the acquisition and lease-back of certain reserves and surface rights which generated royalties of $11.4 million in 2015, a coal handling and services agreement which generated throughput revenues of $28.2 million in 2015, a coal supply agreement, export marketing and transportation agreements and certain debt agreements. On July 31, 2015, we purchased the remaining equity interests in White Oak. See Note 3 – Acquisitions for a detailed discussion of this acquisition. In addition to the agreements discussed above, White Oak also had agreements with our subsidiaries for the purchase of various services and products, including for coal handling services provided by our Mt. Vernon transloading facility. For the year ended December 31, 2015, we recorded revenues of $4.6 million, for services and products provided by Mt. Vernon and Matrix Design to White Oak, which are included in Other sales and operating revenues on our consolidated statements of income. Affiliate Royalty Agreements The following table summarizes advanced royalties outstanding and related payments and recoupments under our affiliate royalty agreements: WKY CoalPlay Towhead Webster Henderson WKY SGP Coal Coal Coal CoalPlay Henderson Henderson Tunnel & Union Webster Henderson & Union Ridge Counties, KY County, KY County, KY Counties, KY Total Acquired Acquired Acquired Acquired Acquired 2005 December 2014 December 2014 December 2014 February 2015 (in thousands) As of January 1, 2015 $ 10,706 $ — $ — $ — $ — $ 10,706 Payments 3,000 3,598 2,568 2,522 2,131 13,819 Recoupment (8,293) — (42) — — (8,335) As of December 31, 2015 5,413 3,598 2,526 2,522 2,131 16,190 Payments 3,000 3,598 2,568 2,522 2,131 13,819 Recoupment (8,413) (1) (1,775) — — (10,189) As of December 31, 2016 — 7,195 3,319 5,044 4,262 19,820 Payments 6,000 3,598 2,568 2,522 2,131 16,819 Recoupment (3,000) (109) (531) — (6) (3,646) As of December 31, 2017 $ 3,000 $ 10,684 $ 5,356 $ 7,566 $ 6,387 $ 32,993 SGP — In January 2005, we acquired Tunnel Ridge from ARH. In connection with this acquisition, we assumed a coal lease with SGP. Under the terms of the lease, Tunnel Ridge has paid SGP and will continue to pay SGP an annual minimum royalty of $3.0 million until the earlier of January 1, 2033 or the exhaustion of the mineable and merchantable leased coal. In December 2016, Tunnel Ridge had recouped all past annual advances and made the first earned royalty payment to SGP, which was nominal. During 2017, Tunnel Ridge incurred $7.2 million in earned royalties of which $0.8 million was payable to SGP in January 2018 and paid its annual minimum of $3.0 million to SGP in January 2017 which was fully recouped by March 2017. Tunnel Ridge also paid the $3.0 million annual minimum due on January 1, 2018 in late December 2017 which will be fully recouped by March 2018. WKY CoalPlay — In February 2015, WKY CoalPlay entered into a coal lease agreement with Alliance Resource Properties regarding coal reserves located in Henderson and Union Counties, Kentucky. The lease has an initial term of 20 years and provides for earned royalty payments to WKY CoalPlay of 4.0% of the coal sales price and annual minimum royalty payments of $2.1 million. All annual minimum royalty payments are recoupable from future earned royalties. Alliance Resource Properties also was granted an option to acquire the leased reserves at any time during a three-year period beginning in February 2018 for a purchase price that would provide WKY CoalPlay a 7.0% internal rate of return on its investment in these reserves taking into account payments previously made under the lease (See Note 10 - Variable Interest Entities). In December 2014, WKY CoalPlay's subsidiaries, Towhead Coal Reserves, LLC ("Towhead Coal"), Webster Coal Reserves, LLC ("Webster Coal"), and Henderson Coal Reserves, LLC ("Henderson Coal") entered into coal lease agreements with Alliance Resource Properties. The leases with Towhead Coal and Henderson Coal have initial terms of 20 years and provide for earned royalty payments of 4.0% of the coal sales price to both and annual minimum royalty payments of $3.6 million and $2.5 million, respectively. The lease with Webster Coal has an initial term of 7 years and provides for earned royalty payments of 4.0% of the coal sales price and annual minimum royalty payments of $2.6 million. All annual minimum royalty payments for each agreement are recoupable from future earned royalties related to their respective agreements. Each agreement grants Alliance Resource Properties an option to acquire the leased reserves at any time during a three-year period beginning in December 2017 for a purchase price that would provide WKY CoalPlay a 7.0% internal rate of return on its investment in the reserves taking into account payments previously made under the leases (See Note 10 – Variable Interest Entities). SGP Land — In 2001, SGP Land, as successor in interest to an unaffiliated third party, entered into an amended mineral lease with MC Mining. Under the terms of the lease, MC Mining was required to pay an annual minimum royalty of $0.3 million until $6.0 million of cumulative annual minimum and/or earned royalty payments had been paid. The cumulative annual minimum lease requirement of $6.0 million was met in 2015. MC Mining paid to SGP Land earned royalties of $0.6 million in each of the years ended December 31, 2017 and 2016 and $1.9 million in the year ended December 31, 2015. Cavalier Minerals – As discussed in Note 10 – Variable Interest Entities, Alliance Minerals has a limited partnership interest in Cavalier and we consolidate Cavalier Minerals which holds limited partner interests in the AllDale Minerals entities, which were created to purchase oil and gas mineral interests in various geographical locations within producing basins in the continental U.S. See Note 11 - Investments for information on payments made and distributions received. Mineral Lending– See Note 7 - Long-Term Debt for discussion of the Cavalier Credit Agreement and Mineral Lending. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 19. Commitments — We lease buildings and equipment under operating lease agreements that provide for the payment of both minimum and contingent rentals. We also have a noncancelable lease with SGP and a noncancelable lease with a third party for equipment under a capital lease obligation. In 2015, we acquired equipment and other assets under operating and capital lease agreements as a result of the Hamilton and Patriot acquisitions (See Note 3 – Acquisitions). Future minimum lease payments are as follows: Other Operating Leases Capital Year Ending December 31, Lease Affiliate Others Total (in thousands) 2018 $ 32,378 $ 240 $ 9,827 $ 10,067 2019 48,953 — 5,826 5,826 2020 8,866 — 1,366 1,366 2021 966 — — — 2022 917 — — — Thereafter — — — — Total future minimum lease payments $ 92,080 $ 240 $ 17,019 $ 17,259 Less: amount representing interest (6,376) Present value of future minimum lease payments 85,704 Less: current portion (28,613) Long-term capital lease obligation $ 57,091 Rental expense (including rental expense incurred under operating lease agreements) was $16.1 million, $17.0 million and $11.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. Contractual Commitments — In connection with planned capital projects, we have contractual commitments of approximately $64.3 million at December 31, 2017. As of December 31, 2017, we had $1.3 million in commitments to purchase coal from external production sources in 2018. In February 2017, Alliance Minerals committed to invest $30.0 million in AllDale III. As of December 31, 2017, Alliance Minerals had a remaining commitment to AllDale III of $15.6 million. For more information on Alliance Minerals and AllDale III, see Note 11 – Investments. On October 29, 2015, we entered into a sale-leaseback transaction whereby we sold certain mining equipment for $100.0 million and concurrently entered into a lease agreement for the sold equipment with a four-year term. Under the lease agreement, we will pay an initial monthly rent of $1.9 million. A balloon payment equal to 20% of the equipment cost is due at the end of the lease term. As a result of this transaction, we recognized a deferred gain of $5.0 million which is being amortized over the lease term. On June 29, 2016, we entered into various sale-leaseback transactions for certain mining equipment and received $33.9 million in proceeds. The lease agreements have terms ranging from three to four years with initial monthly rentals totaling $0.7 million. Balloon payments equal to 20% of the equipment cost under lease are due at the end of each lease term. As a result of this transaction, we recognized a deferred loss of $7.9 million which is being amortized over the life of the equipment. We have recognized these sales-leaseback transactions as capital leases and included future payments within future minimum lease payments presented above. General Litigation — Various lawsuits, claims and regulatory proceedings incidental to our business are pending against the ARLP Partnership. We record an accrual for a potential loss related to these matters when, in management's opinion, such loss is probable and reasonably estimable. Based on known facts and circumstances, we believe the ultimate outcome of these outstanding lawsuits, claims and regulatory proceedings will not have a material adverse effect on our financial condition, results of operations or liquidity. However, if the results of these matters were different from management's current opinion and in amounts greater than our accruals, then they could have a material adverse effect. Other —Effective October 1, 2017, we renewed our annual property and casualty insurance program. Our property insurance was procured from our wholly owned captive insurance company, Wildcat Insurance. Wildcat Insurance charged certain of our subsidiaries for the premiums on this program and in return purchased reinsurance for the program in the standard market. The maximum limit in the commercial property program is $100.0 million per occurrence, excluding a $1.5 million deductible for property damage, a 75, 90 or 120 day waiting period for underground business interruption depending on the mining complex and an additional $10.0 million overall aggregate deductible. We can make no assurances that we will not experience significant insurance claims in the future that could have a material adverse effect on our business, financial condition, results of operations and ability to purchase property insurance in the future. |
CONCENTRATION OF CREDIT RISK AN
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS | 12 Months Ended |
Dec. 31, 2017 | |
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS | |
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS | 20. We have significant long-term coal supply agreements, some of which contain prospective price adjustment provisions designed to reflect changes in market conditions, labor and other production costs and, in the infrequent circumstance when the coal is sold other than free on board the mine, changes in transportation rates. For the year ended December 31, 2017, we had no customer from which total revenues including transportation revenues were at least ten percent of our total revenues, and therefore considered to be a major customer. For the years ended December 31, 2016 and 2015, the Illinois Basin and Appalachia segments as well as Other and Corporate had total revenues from major customers as follows: Year Ended December 31, 2016 2015 (in thousands) Customer A $ 253,465 $ 343,483 Customer B 241,255 305,048 Customer C 265,642 312,150 Trade accounts receivable from these customers totaled approximately $42.5 million and $48.4 million at December 31, 2016 and 2015, respectively. Our bad debt experience has historically been insignificant. Financial conditions of our customers could result in a material change to our bad debt expense in future periods. The coal supply agreements with these major customers expire in 2018 for customer A, and 2020 for customers B and C. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 21. We operate in the eastern U.S. as a producer and marketer of coal to major utilities and industrial users. We aggregate multiple operating segments into two reportable segments, Illinois Basin and Appalachia, and we have an "all other" category referred to as Other and Corporate. Our reportable segments correspond to major coal producing regions in the eastern U.S. Similar economic characteristics for our operating segments within each of these two reportable segments generally include coal quality, geology, coal marketing opportunities, mining and transportation methods and regulatory issues. The Illinois Basin reportable segment is comprised of multiple operating segments, including currently operating mining complexes (a) Webster County Coal's Dotiki mining complex, (b) Gibson County Coal's mining complex, which includes the Gibson North (currently idled) and Gibson South mines, (c) Warrior's mining complex, (d) River View's mining complex and (e) the Hamilton mining complex. The Gibson North mine was idled in the fourth quarter of 2015 in response to market conditions but is expected to resume production in 2018. The Illinois Basin reportable segment also includes White County Coal's Pattiki mining complex, Hopkins County Coal's mining complex, which includes the Elk Creek mine, the Pleasant View surface mineable reserves and the Fies underground project, Sebree's mining complex, which includes the Onton mine, Steamport and certain reserves, CR Services, CR Machine Shop, certain properties and equipment of Alliance Resource Properties, ARP Sebree, ARP Sebree South and UC Coal and its subsidiaries, UC Mining and UC Processing. The Pattiki mine ceased production in December 2016. The Elk Creek mine depleted its reserves in March 2016 and ceased production on April 1, 2016. Our Onton mine has been idled since the fourth quarter of 2015 in response to market conditions. UC Coal equipment assets acquired in 2015 continue to be deployed as needed at various Illinois Basin operating mines. The Appalachia reportable segment is comprised of multiple operating segments, including the Mettiki mining complex, the Tunnel Ridge mining complex and the MC Mining mining complex. The Mettiki mining complex includes Mettiki (WV)'s Mountain View mine and Mettiki (MD)'s preparation plant. Other and Corporate includes marketing and administrative activities, ASI and its subsidiaries, Matrix Design and Alliance Design Group, LLC (collectively Matrix Design and Alliance Design are referred to as the "Matrix Group"), ASI's ownership of aircraft, our Mt. Vernon dock activities, Alliance Coal's coal brokerage activity, MAC (see Note 3 – Acquisitions), certain of Alliance Resource Properties' land and mineral interest activities, Pontiki's prior workers' compensation and pneumoconiosis liabilities, Wildcat Insurance, Alliance Minerals, and its affiliate, Cavalier Minerals (see Note 10 – Variable Interest Entities), both of which hold equity investments in various AllDale Partnerships (see Note 11 – Investments), AROP Funding and our new subsidiary formed March 30, 2017, Alliance Finance (both discussed in Note 7 – Long-Term Debt). On July 19, 2017, Alliance Minerals purchased $100 million of Series A-1 Preferred Interests from Kodiak (see Note 11 – Investments). Reportable segment results as of and for the years ended December 31, 2017, 2016 and 2015 are presented below. Illinois Other and Elimination Basin Appalachia Corporate (1) Consolidated (in thousands) Year Ended December 31, 2017 Revenues - Outside $ 1,059,381 $ 623,720 $ 113,119 $ — $ Revenues - Intercompany 56,097 2,321 15,924 — Total revenues (2) 1,115,478 626,041 129,043 (74,342) 1,796,220 Segment Adjusted EBITDA Expense (3) 688,468 385,802 83,490 Segment Adjusted EBITDA (4) 391,426 234,124 65,810 Total assets 1,429,078 470,892 506,437 Capital expenditures 94,252 48,358 2,478 — Year Ended December 31, 2016 Revenues - Outside $ 1,275,543 $ 541,108 $ 114,802 $ — $ Revenues - Intercompany 61,617 3,806 17,752 — Total revenues (2) 1,337,160 544,914 132,554 (83,175) 1,931,453 Segment Adjusted EBITDA Expense (3) 761,644 346,712 89,594 Segment Adjusted EBITDA (4) 552,284 191,487 46,339 Total assets 1,460,924 480,745 404,153 Capital expenditures (5) 52,505 36,213 2,338 — Year Ended December 31, 2015 Revenues - Outside $ 1,527,596 $ 584,962 $ 161,175 $ — $ Revenues - Intercompany 108,621 11,337 19,869 — Total revenues (2) 1,636,217 596,299 181,044 (139,827) 2,273,733 Segment Adjusted EBITDA Expense (3) 961,611 398,071 153,720 Segment Adjusted EBITDA (4) 604,808 186,518 26,189 Total assets 1,694,044 517,972 263,817 Capital expenditures (5) 145,352 61,279 6,166 — (1) The elimination column represents the elimination of intercompany transactions and is primarily comprised of sales from the Matrix Group and MAC to our mining operations, coal sales and purchases between operations within different segments, sales of receivables to AROP Funding and insurance premiums paid to Wildcat Insurance. (2) Revenues included in the Other and Corporate column are primarily attributable to the Matrix Group revenues, Mt. Vernon transloading revenues, administrative service revenues from affiliates, MAC revenues, Wildcat Insurance revenues and brokerage coal sales. (3) Segment Adjusted EBITDA Expense includes operating expenses, coal purchases and other income. Transportation expenses are excluded as these expenses are passed through to our customers and consequently we do not realize any gain or loss on transportation revenues. We review Segment Adjusted EBITDA Expense per ton for cost trends. Results presented for Segment Adjusted EBITDA Expense for the years ended December 31, 2016 and 2015 have been recast to reflect a reclassification of depreciation and depletion capitalized into coal inventory as adjustments to Depreciation, depletion and amortization rather than Operating expenses (excluding depreciation, depletion and amortization) . The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to Operating expenses (excluding depreciation, depletion and amortization): Year Ended December 31, 2017 2016 2015 (in thousands) Segment Adjusted EBITDA Expense $ 1,092,187 $ 1,125,637 $ 1,386,155 Outside coal purchases — (1,514) (327) Other income 2,980 725 955 Operating expenses (excluding depreciation, depletion and amortization) $ 1,095,167 $ 1,124,848 $ 1,386,783 (4) Segment Adjusted EBITDA is defined as net income (prior to the allocation of noncontrolling interest) before net interest expense, income taxes, depreciation, depletion and amortization, asset impairment, net acquisition gain, debt extinguishment loss and general and administrative expenses. Management therefore is able to focus solely on the evaluation of segment operating profitability as it relates to our revenues and operating expenses, which are primarily controlled by our segments. Results presented for Segment Adjusted EBITDA for the years ended December 31, 2016 and 2015 have been recast to reflect a reclassification of depreciation and depletion capitalized into coal inventory as adjustments to Depreciation, depletion and amortization rather than Operating expenses (excluding depreciation, depletion and amortization) . Consolidated Segment Adjusted EBITDA is reconciled to net income as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Consolidated Segment Adjusted EBITDA $ 682,591 $ 779,248 $ 804,935 General and administrative (61,760) (72,529) (67,484) Depreciation, depletion and amortization (268,981) (336,509) (323,983) Asset impairment — — (100,130) Interest expense, net (39,291) (30,659) (29,694) Acquisition gain, net — — 22,548 Debt extinguishment loss (8,148) — — Income tax expense (210) (13) (21) Net income $ 304,201 $ 339,538 $ 306,171 (5) Capital expenditures shown above exclude the Hamilton Acquisition on July 31, 2015, the Patriot acquisition on February 3, 2015, the MAC acquisition on January 1, 2015 and the payment for acquisition of customer contracts in 2016 (see consolidated statements of cash flows). . |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2017 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 22. A summary of our consolidated quarterly operating results in 2017 and 2016 is as follows: Quarter Ended March 31, June 30, September 30, December 31, 2017 2017 (1) 2017 2017 (in thousands, except unit and per unit data) Revenues $ 461,080 $ 398,720 $ 453,189 $ 483,231 Income from operations 107,532 78,760 64,828 77,492 Income before income taxes 105,038 63,356 61,431 74,586 Net income of ARLP 104,902 63,230 61,271 74,235 Basic and diluted net income of ARLP per limited partner unit $ 1.10 $ 0.82 $ 0.52 $ 0.55 Weighted-average number of units outstanding – basic and diluted (2) 74,503,298 74,597,036 114,237,979 130,704,217 Quarter Ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 (in thousands, except unit and per unit data) Revenues $ 412,829 $ 439,150 $ 552,074 $ 527,400 Income from operations 54,847 90,361 96,431 124,303 Income before income taxes 47,299 82,717 89,831 119,704 Net income of ARLP 47,310 82,713 89,780 119,595 Basic and diluted net income of ARLP per limited partner unit $ 0.36 $ 0.82 $ 0.91 $ 1.30 Weighted-average number of units outstanding – basic and diluted 74,291,114 74,375,025 74,375,025 74,375,025 (1) Our June 30, 2017 quarterly results were affected by a debt extinguishment loss of $8.1 million related to early repayment of our Series B Senior Notes in May 2017 (Note 7 – Long-Term Debt). (2) Weighted-average number of units outstanding – basic and diluted were impacted by the Exchange Transaction in the quarters ended September 30, 2017 and December 31, 2017. See Note 1 – Organization and Presentation for more information regarding the Exchange Transaction. . |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 23. Other than those events described below and in Notes 7, 9 and 14, there were no subsequent events. Simplification Transactions On February 22, 2018, our Board of Directors and the board of directors of AHGP's general partner approved a simplification agreement (the "Simplification Agreement") pursuant to which, through a series of transactions (i) AHGP would become a wholly owned subsidiary of ARLP, (ii) all of the issued and outstanding AHGP common units would be canceled and converted into the right to receive all of the ARLP common units held by AHGP and its subsidiaries (collectively, the "Simplification Transactions") and (iii) MGP will remain the sole general partner of ARLP, and no control, management, or governance changes are otherwise expected to occur. The consummation of the Simplification Transactions is subject to the SEC declaring the effectiveness of a registration statement on Form S-4 under the Securities Act of 1933 to register the ARLP common units that will be distributed to former unitholders of AHGP and the affirmative vote or consent of the holders of a majority of the outstanding AHGP common units. Certain unitholders of AHGP that beneficially own a majority of the outstanding AHGP common units have entered into a unitholder support agreement pursuant to which such unitholders have agreed to execute a written consent approving the Simplification Agreement within two business days after the registration statement on Form S-4 is declared effective by the SEC. We currently believe that the Simplification Transactions will not result in any gain or loss on our financial statements, but anticipate this will result in a change in reporting entity requiring us to recast our historical financial statements reflecting the resulting structure as if it had always been the structure for the periods covered by such financial statements. Settlement of Litigation On February 18, 2018 we reached agreement with a customer and certain of its affiliates to settle breach of contract litigation we initiated in January 2015. The agreement includes a $93.0 million payment to us and certain future coal supply commitments. In addition, we will acquire certain coal reserves for $2.0 million from an affiliate of the customer. As a result of certain costs related to this settlement, we expect to realize approximately $80 million from the recovery. We expect the settlement to be concluded in early March 2018. This is a non-recognized subsequent event for the 2017 fiscal year. Once the settlement is finalized, we will assess the accounting impact on future periods. |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2017 | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015 Balance At Additions Beginning Charged to Balance At of Year Income Deductions End of Year (in thousands) 2017 Allowance for doubtful accounts $ — $ — $ — $ — 2016 Allowance for doubtful accounts $ — $ — $ — $ — 2015 Allowance for doubtful accounts $ — $ — $ — $ — |
SUMMARY OF SIGNIFICANT ACCOUN33
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Presentation | Presentation The consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of December 31, 2017 and 2016, and results of our operations, comprehensive income, cash flows and changes in partners' capital for each of the three years in the period ended December 31, 2017. All of our intercompany transactions and accounts have been eliminated. |
Estimates | Estimates — The preparation of consolidated financial statements in conformity with generally accepted accounting principles of the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results could differ from those estimates. Significant estimates and assumptions include: · Impairment assessments of investments, property, plant and equipment, and goodwill; · Asset retirement obligations; · Pension valuation variables; · Workers' compensation and pneumoconiosis valuation variables; · Acquisition related purchase price allocations; and · Life of mine assumptions. These significant estimates and assumptions are discussed throughout these notes to the consolidated financial statements. |
Consolidation | Consolidation — The consolidated financial statements present the consolidated financial position, results of operations and cash flows of ARLP, the Intermediate Partnership (a subsidiary of ARLP and a variable interest entity of which ARLP is the primary beneficiary), Alliance Coal (a subsidiary of the Intermediate Partnership and a variable interest entity of which the Intermediate Partnership is the primary beneficiary) and other directly and indirectly wholly- and majority-owned subsidiaries of the Intermediate Partnership and Alliance Coal. The Intermediate Partnership, Alliance Coal and their wholly- and majority-owned subsidiaries represent virtually all the net assets of the ARLP Partnership. MGP's interests in both Alliance Coal and the Intermediate Partnership are reported as general partner interest in the ARLP Partnership. MGP's previous 0.99% managing general partner interest and IDR in ARLP and SGP's previous 0.01% interest in both ARLP and the Intermediate Partnership, all held prior to the Exchange Transaction, are also reported with the general partner interest in ARLP. All intercompany transactions and accounts have been eliminated. See Note 10 – Variable Interest Entities for more information regarding ARLP's consolidation of the Intermediate Partnership and Alliance Coal. See Note 9 – Distributions of Available Cash for more information regarding MGP's IDR in ARLP. See Note 1 – Organization and Presentation for more information regarding the Exchange Transaction. |
Fair Value of Financial Instruments | Fair Value Measurements — We apply fair value measurements to certain assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value is based upon assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and risks inherent in valuation techniques and inputs to valuations. Fair value measurements assume that the transaction occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability (the market for which the reporting entity would be able to maximize the amount received or minimize the amount paid). Valuation techniques used in our fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our own market assumptions. We use the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: · Level 1 – Quoted prices for identical assets and liabilities in active markets that we have the ability to access at the measurement date. · Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations whose inputs are observable or whose significant value drivers are observable. · Level 3 – Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for the asset or liability. The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement requires judgment, considering factors specific to the asset or liability. Significant fair value measurements are used in our significant estimates and are discussed throughout these notes. See Note 8 – Fair Value Measurements for discussion of recurring fair value measurements not otherwise disclosed in these consolidated financial statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents — Cash and cash equivalents include cash on hand and on deposit, including highly liquid investments with maturities of three months or less. |
Cash Management | Cash Management — The cash flows from operating activities section of our consolidated statements of cash flows reflects adjustments for $14.0 million and $10.6 million representing book overdrafts at December 31, 2017 and 2015. We did not have material book overdrafts at December 31, 2016. |
Inventories | Inventories — Coal inventories are stated at the lower of cost or net realizable value on a first-in, first-out basis. Supply inventories are stated at an average cost basis, less a reserve for obsolete and surplus items. |
Business Combinations | Business Combinations — For acquisitions accounted for as a business combination, we record the assets acquired, including identified intangible assets and liabilities assumed at their fair value, which in many instances involves estimates based on third-party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques. |
Goodwill | Goodwill — Goodwill represents the excess of cost over the fair value of net assets of acquired businesses. Goodwill is not amortized, but instead is evaluated for impairment periodically. We evaluate goodwill for impairment annually on November 30th, or more often if events or circumstances indicate that goodwill might be impaired. The reporting unit or units used to evaluate and measure goodwill for impairment are determined primarily from the manner in which the business is managed or operated. A reporting unit is an operating segment or a component that is one level below an operating segment. There were no impairments of goodwill during 2017 or 2016. |
Property, Plant and Equipment | Property, Plant and Equipment — Expenditures which extend the useful lives of existing plant and equipment assets are capitalized. Interest costs associated with major asset additions are capitalized during the construction period. Maintenance and repairs that do not extend the useful life or increase productivity of the asset are charged to operating expense as incurred. Exploration expenditures are charged to operating expense as incurred, including costs related to drilling and study costs incurred to convert or upgrade mineral resources to reserves. Land, machinery and equipment under capital lease agreements are capitalized and amortized over the useful lives of the assets given that in each case, ownership transfers at the end of the lease term. Preparation plants and processing facilities are depreciated using the units-of-production method. Other plant and equipment assets are depreciated principally using the straight-line method over the estimated useful lives of the assets, ranging from 1 to 22 years, limited by the remaining estimated life of each mine. Depreciable lives for the mining equipment range from 1 to 22 years. Depreciable lives for buildings, office equipment and improvements range from 1 to 24 years. Gains or losses arising from retirements are included in operating expenses. Depletable lives for mineral rights, assuming current production expectations, range from 1 to 22 years. Depletion of mineral rights is provided on the basis of tonnage mined in relation to estimated recoverable tonnage, which equals estimated proven and probable reserves. Therefore, our mineral rights are depleted based on only proven and probable reserves derived in accordance with Industry Guide 7. At December 31, 2017 and 2016, land and mineral rights include $34.5 million and $34.4 million, respectively, representing the carrying value of coal reserves attributable to properties where we or a third party to which we lease reserves are not currently engaged in mining operations or leasing to third parties, and therefore, the coal reserves are not currently being depleted. We believe that the carrying value of these reserves will be recovered. Our accounting for operating leases not currently capitalized is expected to change upon the adoption of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) ("ASU 2016-02"), as discussed below under New Accounting Standards Issued and Not Yet Adopted . |
Mine Development Costs | Mine Development Costs — Mine development costs are capitalized until production, other than production incidental to the mine development process, commences and are amortized on a units of production method based on the estimated proven and probable reserves. Mine development costs represent costs incurred in establishing access to mineral reserves and include costs associated with sinking or driving shafts and underground drifts, permanent excavations, roads and tunnels. The end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete. Coal extracted during the development phase is incidental to the mine's production capacity and is not considered to shift the mine into the production phase. |
Long-Lived Assets | Long-Lived Assets — We review the carrying value of long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount may not be recoverable based upon estimated undiscounted future cash flows. To the extent the carrying amount is not recoverable, the amount of impairment is measured by the difference between the carrying value and the fair value of the asset (See Note 4 – Long-Lived Asset Impairments). |
Intangibles | Intangibles — Intangibles subject to amortization include contracts with covenants not to compete, customer contracts acquired from other parties and mining permits. Intangibles other than customer contracts are amortized on a straight-line basis over their useful life. Intangibles for customer contracts are amortized on a per unit basis over the terms of the contracts. Amortization expense attributable to intangibles was $10.5 million, $18.1 million and $15.1 million for the years ending December 31, 2017, 2016 and 2015, respectively. Our intangibles are included in Prepaid expenses and other assets , Other long-term assets , Other current liabilities and Other liabilities on our consolidated balance sheets at December 31, 2017 and 2016. Our intangibles at December 31 are summarized as follows: December 31, 2017 December 31, 2016 Accumulated Intangibles, Accumulated Intangibles, Original Cost Amortization Net Original Cost Amortization Net (in thousands) Non-compete agreements $ 9,697 $ (7,378) $ 2,319 $ 14,542 $ (10,974) $ 3,568 Customer contracts and other, net 48,970 (36,462) 12,508 54,978 (33,300) 21,678 Mining permits 1,500 (178) 1,322 1,500 (104) 1,396 Total $ 60,167 $ (44,018) $ 16,149 $ 71,020 $ (44,378) $ 26,642 Amortization expense attributable to intangible assets is estimated as follows: Year Ended December 31, (in thousands) 2018 $ 6,918 2019 7,737 2020 391 2021 74 2022 74 Thereafter 955 |
Investments | Investments —Our investments and ownership interests in which we do not have a controlling financial interest are accounted for under either the cost method of accounting if we do not have the ability to exercise significant influence over the entity, or under the equity method of accounting if we have the ability to exercise significant influence over the entity. Historical cost is used to account for investments accounted for under the cost method and distributions received on those investments are recorded as income unless those distributions are considered a return on investment in which case the historical cost is reduced. Our cost method investment includes Kodiak Gas Services, LLC ("Kodiak"). See Note 11 – Investments for further discussion of this cost method investment. Investments accounted for under the equity method are initially recorded at cost, and the difference between the basis of our investment and the underlying equity in the net assets of the joint venture at the investment date, if any, is amortized over the lives of the related assets that gave rise to the difference. In the event our ownership entitles us to a disproportionate sharing of income or loss, our equity investment income or loss is allocated based on the hypothetical liquidation at book value ("HLBV") method of accounting. Under the HLBV method, equity investment income or loss is allocated based on the difference between our claim on the net assets of the equity method investee at the end and beginning of the period, with consideration of certain eliminating entries regarding differences of accounting for various related-party transactions, after taking into account contributions and distributions, if any. Our share of the net assets of the equity method investee is calculated as the amount we would receive if the equity method investee were to liquidate all of its assets at net book value and distribute the resulting cash to creditors, other investors and us according to the respective priorities. None of our current equity investments use the HLBV method. Our last use of this method was in 2015 for our equity method investment in White Oak Resources LLC ("White Oak"). Our equity method investments include AllDale Minerals, LP ("AllDale I"), and AllDale Minerals II, LP ("AllDale II") (collectively "AllDale Minerals"), both held by our affiliate Cavalier Minerals JV, LLC ("Cavalier Minerals") and additionally, we have an equity method investment in AllDale Minerals III, LP ("AllDale III") which is held through our subsidiary, Alliance Minerals. AllDale III, together with AllDale Minerals is considered the "AllDale Partnerships." During 2015, our equity method investments also included White Oak prior to our acquisition of its remaining equity interests on July 31, 2015. See Note 11 – Investments for further discussion of these equity method investments. For discussion of the White Oak acquisition, see Note 3 – Acquisitions. We review our investments and ownership interests accounted for under both the equity method of accounting and the cost method of accounting for impairment whenever events or changes in circumstances indicate a loss in the value of the investment may be other-than-temporary. |
Advance Royalties, net | Advance Royalties, net — Rights to coal mineral leases are often acquired and/or maintained through advance royalty payments. Where royalty payments represent prepayments recoupable against future production, they are recorded as an asset, with amounts expected to be recouped within one year classified as a current asset. As mining occurs on these leases, the royalty prepayments are charged to operating expenses. We assess the recoverability of royalty prepayments based on estimated future production. We have recorded a $6.1 million and $6.2 million allowance against these prepayments as of December 31, 2017 and 2016, respectively. Royalty prepayments estimated to be nonrecoverable are expensed. Our Advance royalties, net at December 31 are summarized as follows: 2017 2016 (in thousands) Advance royalties, affiliates (see Note 18 – Related-Party Transactions) $ 32,993 $ 19,820 Advance royalties, third-parties 11,177 10,759 Total advance royalties, net $ 44,170 $ 30,579 |
Asset Retirement Obligations | Asset Retirement Obligations — The majority of our operations are governed by various state statutes and the Federal Surface Mining Control and Reclamation Act of 1977, which establish reclamation and mine closing standards. These regulations require, among other things, restoration of property in accordance with specified standards and an approved reclamation plan. We record a liability for the fair value of the estimated cost of future mine asset retirement and closing procedures, escalated for inflation then discounted, on a present value basis in the period incurred or acquired and a corresponding amount is capitalized by increasing the carrying amount of the related long-lived asset. Those costs relate to permanently sealing portals at underground mines and to reclaiming the final pits and support surface acreage for both our underground mines and past surface mines. Examples of these types of costs, common to both types of mining, include, but are not limited to, removing or covering refuse piles and settling ponds, water treatment obligations, and dismantling preparation plants, other facilities and roadway infrastructure. Accounting for asset retirement obligations also requires depreciation of the capitalized asset retirement cost and accretion of the asset retirement obligation over time. The depreciation is generally determined on a units-of-production basis and accretion is generally recognized over the life of the producing assets. As changes in estimates occur (such as mine plan revisions, changes in estimated costs or changes in timing of the performance of reclamation activities), the revisions to the obligation and asset are recognized at the appropriate credit-adjusted, risk-free interest rate. Federal and state laws require bonds to secure our obligations to reclaim lands used for mining and are typically renewable on a yearly basis. See Note 16 – Asset Retirement Obligations for more information. |
Pension Benefits | Pension Benefits — The funded status of our pension benefit plan is recognized separately in our consolidated balance sheets as either an asset or liability. The funded status is the difference between the fair value of plan assets and the plan's benefit obligation. Pension obligations and net periodic benefit costs are actuarially determined and impacted by various assumptions and estimates including expected return on assets, discount rates, mortality assumptions, employee turnover rates and retirement dates. We evaluate our assumptions periodically and make adjustments to these assumptions and the recorded liability as necessary (See Note 13 – Employee Benefit Plans). The discount rate is determined for our pension benefit plan based on an approach specific to our plan. The year-end discount rate is determined considering a yield curve comprised of high-quality corporate bonds and the timing of the expected benefit cash flows. The expected long-term rate of return on plan assets is determined based on broad equity and bond indices, the investment goals and objectives, the target investment allocation and on the average annual total return for each asset class. Unrecognized actuarial gains and losses and unrecognized prior service costs and credits are deferred and recorded in accumulated other comprehensive loss ("AOCL") until amortized as a component of net periodic benefit cost. Unrecognized actuarial gains and losses in excess of 10% of the greater of the benefit obligation or the market-related value of plan assets are amortized over the participants' average remaining future years of service. |
Workers' Compensation and Pneumoconiosis (Black Lung) Benefits | Workers ' Compensation and Pneumoconiosis (Black Lung) Benefits — We are liable for workers' compensation benefits for traumatic injuries and benefits for black lung disease (or pneumoconiosis). Both traumatic claims and pneumoconiosis benefits are covered through our self-insured programs. In addition, certain of our mine operating entities are liable under state statutes and the Federal Coal Mine Health and Safety Act of 1969, as amended, to pay pneumoconiosis benefits to eligible employees and former employees and their dependents. We provide income replacement and medical treatment for work-related traumatic injury claims as required by applicable state laws. Workers' compensation laws also compensate survivors of workers who suffer employment related deaths. Our liability for traumatic injury claims is the estimated present value of current workers' compensation benefits, based on our actuarial estimates. Our actuarial calculations are based on a blend of actuarial projection methods and numerous assumptions including claim development patterns, mortality, medical costs and interest rates. Our pneumoconiosis benefits liability is calculated using the service cost method based on the actuarial present value of the estimated pneumoconiosis obligation. Our actuarial calculations are based on numerous assumptions including disability incidence, medical costs, mortality, death benefits, dependents and discount rates. Actuarial gains or losses are amortized over the remaining service period of active miners. See Note 17 – Accrued Workers' Compensation and Pneumoconiosis Benefits for more information on Workers' Compensation and Pneumoconiosis Benefits. |
Revenue Recognition | Revenue Recognition — Revenues from coal sales are recognized when title passes to the customer as the coal is shipped. Some coal supply agreements provide for price adjustments based on variations in quality characteristics of the coal shipped. In certain cases, a customer's analysis of the coal quality is binding and the results of the analysis are received on a delayed basis. In these cases, we estimate the amount of the quality adjustment and adjust the estimate to actual when the information is provided by the customer. Historically, such adjustments have not been material. Non-coal sales revenues primarily consist of transloading fees, administrative service revenues from our affiliates, mine safety services and products, royalties and throughput fees earned from White Oak prior to July 31, 2015 as disclosed in Note 3 – Acquisitions, other coal contract fees and other handling and service fees. Transportation revenues are recognized in connection with us incurring the corresponding costs of transporting coal to customers through third-party carriers for which we are directly reimbursed through customer billings. As discussed below, we do not expect the new revenue recognition standard introduced by ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09") will result in a material change to our pattern of revenue recognition when it becomes effective. |
Common Unit-Based Compensation | Common Unit-Based Compensation — We have the Long-Term Incentive Plan ("LTIP") for certain employees and officers of MGP and its affiliates who perform services for us. The LTIP awards are grants of non-vested "phantom" or notional units, also referred to as "restricted units", which upon satisfaction of time and performance based vesting requirements, entitle the LTIP participant to receive ARLP common units. Annual grant levels and vesting provisions for designated participants are recommended by the President and Chief Executive Officer of MGP, subject to review and approval of the compensation committee of our general partner ("Compensation Committee"). Vesting of all grants outstanding is subject to the satisfaction of certain financial tests, which management currently believes is probable. Grants issued to LTIP participants are expected to cliff vest on January 1st of the third year following issuance of the grants. We account for forfeitures of non-vested LTIP grants as they occur. We expect to settle the non-vested LTIP grants by delivery of ARLP common units, except for the portion of the grants that will satisfy tax withholding obligations of the LTIP participants. As provided under the distribution equivalent rights provisions of the LTIP and the terms of the LTIP awards, all non-vested grants include contingent rights to receive quarterly distributions in cash or at the discretion of the Compensation Committee, in lieu of cash, phantom units credited to a bookkeeping account with value, equal to the cash distributions we make to unitholders during the vesting period. We utilize the Supplemental Executive Retirement Plan ("SERP") to provide deferred compensation benefits for certain officers and key employees. All allocations made to participants under the SERP are made in the form of "phantom" ARLP units and SERP distributions will be settled in the form of ARLP common units. The SERP is administered by the Compensation Committee. Our directors participate in the MGP Amended and Restated Deferred Compensation Plan for Directors ("Deferred Compensation Plan"). Pursuant to the Deferred Compensation Plan, for amounts deferred either automatically or at the election of the director, a notional account is established and credited with notional common units of ARLP, described in the Deferred Compensation Plan as "phantom" units. Distributions from the Deferred Compensation Plan will be settled in the form of ARLP common units. For both the SERP and Deferred Compensation Plan, when quarterly cash distributions are made with respect to ARLP common units, an amount equal to such quarterly distribution is credited to each participant's notional account as additional phantom units. All grants of phantom units under the SERP and Deferred Compensation Plan vest immediately. The fair value of restricted common unit grants under the LTIP, SERP and the Deferred Compensation Plan are determined on the grant date of the award and recognized as compensation expense on a pro rata basis for LTIP and SERP awards, as appropriate, over the requisite service period. Compensation expense is fully recognized on the grant date for quarterly distributions credited to SERP accounts and Deferred Compensation Plan awards. The corresponding liability is classified as equity and included in limited partners' capital in the consolidated financial statements (See Note 14 – Compensation Plans). |
Income Taxes | Income Taxes —We are not a taxable entity for federal or state income tax purposes; the tax effect of our activities accrues to the unitholders. Although publicly traded partnerships as a general rule will be taxed as corporations, we qualify for an exemption because at least 90% of our income consists of qualifying income, as defined in Section 7704(c) of the Internal Revenue Code. Net income for financial statement purposes may differ significantly from taxable income reportable to unitholders as a result of differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements under our partnership agreement. Individual unitholders have different investment bases depending upon the timing and price of acquisition of their partnership units. Furthermore, each unitholder's tax accounting, which is partially dependent upon the unitholder's tax position, differs from the accounting followed in our consolidated financial statements. Accordingly, the aggregate difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined because information regarding each unitholder's tax attributes in our partnership is not available to us. Our subsidiaries, ASI and Wildcat Insurance, are subject to federal and state income taxes. A valuation allowance is established if it is more likely than not that a deferred tax asset will not be realized. The Tax Cuts and Jobs Act of 2017 signed into law on December 22, 2017 is not expected to have a material impact on our consolidated financial statements. Our tax counsel has provided an opinion that ARLP, the Intermediate Partnership and Alliance Coal will each be treated as a partnership. However, as is customary, no ruling has been or will be requested from the Internal Revenue Service ("IRS") regarding our classification as a partnership for federal income tax purposes. |
Variable Interest Entities ("VIE") | Variable Interest Entity ("VIE") — VIEs are primarily entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders, as a group, lack one or more of the following characteristics: (a) direct or indirect ability to make decisions, (b) obligation to absorb expected losses or (c) right to receive expected residual returns. A VIE must be evaluated quantitatively and qualitatively to determine the primary beneficiary, which is the reporting entity that has (a) the power to direct activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. To determine a VIE's primary beneficiary, we perform a qualitative assessment to determine which party, if any, has the power to direct activities of the VIE and the obligation to absorb losses and/or receive its benefits. This assessment involves identifying the activities that most significantly impact the VIE's economic performance and determine whether it, or another party, has the power to direct those activities. When evaluating whether we are the primary beneficiary of a VIE, we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties. See Note 10 – Variable Interest Entities for further information. |
New Accounting Standards | New Accounting Standards Issued and Adopted – In January 2017, the Financial Accounting Standards Board (the "FASB") issued ASU 2017-04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). The ASU simplifies the subsequent measurement of goodwill by eliminating the need for an entity to determine the implied fair value of goodwill to calculate an impairment charge. Under the new guidance an entity compares the fair value of the reporting unit containing the goodwill to its carrying value and records any excess carrying value as an impairment charge. This new standard is applied prospectively and is effective for annual and interim periods beginning after December 15, 2019; however, early adoption is permitted. We have early adopted this new standard and will apply the guidance to any future goodwill impairment assessments. The adoption of ASU 2017-04 did not have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies the accounting for several aspects of share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, flexibility in the accounting for forfeitures and classification on the statement of cash flows. ASU 2016-09 was effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The adoption of ASU 2016-09 did not have a material impact on our consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU 2015-11 simplifies the subsequent measurement of inventory. It replaces the current lower of cost or market test with the lower of cost or net realizable value test. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new standard was applied prospectively and was effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods, with early adoption permitted. The adoption of ASU 2015-11 did not have a material impact on our consolidated financial statements. New Accounting Standards Issued and Not Yet Adopted – In March 2017, the FASB issued ASU 2017-07, Compensation–Retirement Benefits (Topic 715) ("ASU 2017-07"). ASU 2017-07 requires that an employer disaggregate the service cost component from the other components of net benefit cost. It also provides explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allows only the service cost component of net benefit cost to be eligible for capitalization. The new guidance will be applied retroactively to all periods presented. ASU 2017-07 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. We do not anticipate ASU 2017-07 will have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments to require the use of a new forward-looking "expected loss" model that generally will result in earlier recognition of allowances for losses. The new standard will require disclosure of significantly more information related to these items. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for the fiscal year beginning after December 15, 2018, including interim periods. We are currently evaluating the effect of adopting ASU 2016-13, but do not anticipate it will have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 which increases transparency and comparability among organizations by requiring lessees to record right-to-use assets and corresponding lease liabilities on the balance sheet and disclosing key information about lease arrangements. The new guidance will classify leases as either finance or operating (similar to current standard's "capital" or "operating" classification), with classification affecting the pattern of income recognition in the statement of income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We have developed an assessment team to determine the effect of adopting ASU 2016-02. As part of the assessment process, we have reached out to various business units to begin the education process regarding the new standard, compile a population of leases, and assess systems and internal controls. We continue to monitor closely the activities of the FASB and various non-authoritative groups with respect to implementation issues that could affect our evaluation. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). ASU 2016-01 will require entities to measure equity investments at fair value and recognize any changes in fair value in net income. The guidance removes the cost method of accounting for equity investments without a readily determinable fair value but provides a new measurement alternative where entities may choose to measure those investments at cost, less any impairment, plus or minus any changes resulting from observable price changes in transactions for the same issuer. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We do not anticipate ASU 2016-01 will have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09 which is a new revenue recognition standard that provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the new standard is as follows: An entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We developed an assessment team to determine the effect of adopting ASU 2014-09. As part of our assessment process, we applied the five-step analysis outlined in the new standard to certain contracts representative of the majority of our coal sales contracts and determined that our pattern of recognition is consistent between both the new and existing standards. We also reviewed the expanded disclosure requirements under the new standard and have determined the additional information to be disclosed. In addition, we reviewed our business processes, systems and internal controls over financial reporting to support the new recognition and disclosure requirements under the new standard. We do not expect that the adoption of the new standard will have a material impact on our consolidated financial statements, but will require expanded disclosures including presenting, by type and by segment, revenues for all periods presented and expected revenues by year for performance obligations that are unsatisfied or partially unsatisfied as of the date of presentation. We have elected the modified retrospective transition method which allows a cumulative effect adjustment to equity as of the date of adoption. Because we do not anticipate a change in our pattern of revenue recognition, we anticipate that the transition will not have a material impact on our consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of intangible assets | December 31, 2017 December 31, 2016 Accumulated Intangibles, Accumulated Intangibles, Original Cost Amortization Net Original Cost Amortization Net (in thousands) Non-compete agreements $ 9,697 $ (7,378) $ 2,319 $ 14,542 $ (10,974) $ 3,568 Customer contracts and other, net 48,970 (36,462) 12,508 54,978 (33,300) 21,678 Mining permits 1,500 (178) 1,322 1,500 (104) 1,396 Total $ 60,167 $ (44,018) $ 16,149 $ 71,020 $ (44,378) $ 26,642 |
Schedule of estimated amortization expense attributable to intangible assets | Year Ended December 31, (in thousands) 2018 $ 6,918 2019 7,737 2020 391 2021 74 2022 74 Thereafter 955 |
Summary of advance royalties | 2017 2016 (in thousands) Advance royalties, affiliates (see Note 18 – Related-Party Transactions) $ 32,993 $ 19,820 Advance royalties, third-parties 11,177 10,759 Total advance royalties, net $ 44,170 $ 30,579 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
White Oak | |
Acquisitions | |
Schedule of consideration transferred | (in thousands) Cash on hand $ 50,000 Contingent consideration 14,800 Settlement of pre-existing relationships 124,379 Previously held equity-method investment 121,155 Total consideration transferred $ 310,334 |
Summary of fair value allocation of assets acquired and liabilities assumed | (in thousands) Cash and cash equivalents $ 3,125 Trade receivables 3,018 Prepaid expenses 3,942 Inventories 7,240 Other current assets 9,456 Property, plant and equipment 299,214 Advance royalties 3,349 Deposits 6,981 Other assets 12,829 Total identifiable assets acquired 349,154 Accounts payable (31,181) Accrued expenses (20,987) Deferred revenue (517) Current maturities, long-term debt (29,529) Long-term debt, excluding current maturities (63,973) Other long-term liabilities (12,175) Asset retirement obligations (12,484) Total liabilities assumed (170,846) Net identifiable assets acquired $ 178,308 Goodwill 132,026 Net assets acquired $ 310,334 |
Schedule of recognized intangible assets and liabilities acquired | Weighted-average Account in table (in thousands) amortization period above Customer contracts and intangibles Current above-market contracts $ 9,333 Other current assets Non-current above-market contracts 3,671 Other assets Current below-market contracts (4,702) Accrued expenses Non-current below-market contracts (1,525) Other long-term liabilities Total customer contract intangibles 6,777 3 years Mining permit 1,500 20 years Other assets Total intangibles acquired $ 8,277 |
Schedule of revenue and earnings since acquisition date and pro forma condensed consolidated income statement | The amounts of revenue and earnings inclusive of the $22.5 million in net gains associated with the settlement of pre-existing relationships and the Re-Measurement Loss, both discussed above, included in the Partnership's consolidated statement of income from the Hamilton Acquisition Date to the period ending December 31, 2015 are as follows: (in thousands) Revenue $ 75,251 Net income 20,687 The following represents the pro forma revenue and net income for the year ended December 31, 2015 as if Hamilton had been included in the consolidated results of the Partnership since January 1, 2015. These amounts have been calculated after applying the Partnership's accounting. Additionally, the Partnership's results have been adjusted to remove the effect of its equity investment in White Oak and the pre-existing relationships that it had in White Oak. (in thousands) Total revenues As reported $ 2,273,733 Pro forma 2,337,380 Net income As reported $ 306,171 Pro forma 295,219 |
Patriot Coal Corporation | |
Acquisitions | |
Summary of consideration transferred and fair value allocation of assets acquired and liabilities assumed | (in thousands) Consideration transferred $ 47,874 Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: Inventories 1,994 Property, plant and equipment, including mineral rights and leased equipment 32,029 Customer contracts, net 19,193 Asset retirement obligation (2,255) Other liabilities (3,087) Net tangible and intangible assets acquired $ 47,874 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES | |
Schedule of inventories | 2017 2016 (in thousands) Coal $ 22,825 $ 29,242 Supplies (net of reserve for obsolescence of $5,149 and $4,940, respectively) 37,450 31,809 Total inventories, net $ 60,275 $ 61,051 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of property, plant and equipment | 2017 2016 (in thousands) Mining equipment and processing facilities $ 1,847,037 $ 1,854,001 Land and mineral rights 449,152 439,236 Buildings, office equipment and improvements 310,167 304,696 Construction and mine development in progress 47,223 26,025 Mine development costs 280,609 297,030 Property, plant and equipment, at cost 2,934,188 2,920,988 Less accumulated depreciation, depletion and amortization (1,457,532) (1,335,145) Total property, plant and equipment, net $ 1,476,656 $ 1,585,843 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
LONG-TERM DEBT | |
Schedule of long-term debt | Unamortized Discount and Principal Debt Issuance Costs 2017 2016 2017 2016 (in thousands) Revolving Credit facility $ 30,000 $ 255,000 $ (7,356) $ (453) Senior notes 400,000 — (6,707) — Series B senior notes — 145,000 — (101) Term loan — 50,000 — (126) Securitization facility 72,400 100,000 — — 502,400 550,000 (14,063) (680) Less current maturities (72,400) (150,000) — 126 Total long-term debt $ 430,000 $ 400,000 $ (14,063) $ (554) |
Schedule of aggregate maturities of long-term debt | Year Ended December 31, (in thousands) 2018 $ 72,400 2019 — 2020 — 2021 30,000 2022 — Thereafter 400,000 $ 502,400 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FAIR VALUE MEASUREMENTS | |
Summary of fair value measurements within the hierarchy | December 31, 2017 December 31, 2016 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in thousands) Measured on a recurring basis: Contingent consideration $ — $ — $ 6,800 $ — $ — $ 9,700 Additional disclosures: Long-term debt — 541,147 — — 559,509 — Total $ — $ 541,147 $ 6,800 $ — $ 559,509 $ 9,700 |
DISTRIBUTIONS OF AVAILABLE CA40
DISTRIBUTIONS OF AVAILABLE CASH (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
DISTRIBUTIONS OF AVAILABLE CASH | |
Summary of quarterly per unit distribution paid | Year 2017 2016 2015 First Quarter $ 0.4375 $ 0.6750 $ 0.6500 Second Quarter $ 0.4375 $ 0.4375 $ 0.6625 Third Quarter $ 0.5000 $ 0.4375 $ 0.6750 Fourth Quarter $ 0.5050 $ 0.4375 $ 0.6750 |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
VARIABLE INTEREST ENTITIES | |
Schedule of contributions and commitments | Year Ended December 31, 2017 2016 2015 (in thousands) Alliance Minerals Beginning cumulative commitment fulfilled $ 137,077 $ 63,498 $ 11,520 Capital contributions - Cash 6,035 72,334 51,552 Capital contributions - Net AllDale Minerals' distributions received by Cavalier Minerals (1) — 1,245 426 Ending cumulative commitment fulfilled 143,112 137,077 63,498 Remaining commitment 888 6,923 80,502 Total committed $ 144,000 $ 144,000 $ 144,000 Bluegrass Minerals Beginning cumulative commitment fulfilled $ 5,712 $ 2,646 $ 480 Capital contributions - Cash 251 3,014 2,148 Capital contributions - Net AllDale Minerals' distributions received by Cavalier Minerals (1) — 52 18 Ending cumulative commitment fulfilled 5,963 5,712 2,646 Remaining commitment 37 288 3,354 Total committed $ 6,000 $ 6,000 $ 6,000 (1) Represents distributions received from AllDale Minerals net of distributions reinvested and payments to Bluegrass Minerals for administration expense. |
Schedule of distributions | Year Ended December 31, 2017 2016 2015 (in thousands) Alliance Minerals $ 24,385 $ 4,546 $ — Bluegrass Minerals 1,016 189 — |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INVESTMENTS | |
Schedule of changes in cost method investment | Year Ended December 31, 2017 (in thousands) Beginning balance $ — Contributions 100,000 Payment-in-kind distributions received 6,398 Ending balance $ 106,398 |
AllDale Partnerships | |
INVESTMENTS | |
Schedule of changes in equity investment | Year Ended December 31, 2017 2016 2015 (in thousands) Beginning balance $ 138,817 $ 64,509 $ 11,257 Contributions 20,688 76,797 54,290 Equity investment income (loss) 13,860 3,543 (594) Distributions received (25,401) (6,032) (444) Ending balance $ 147,964 $ 138,817 $ 64,509 |
White Oak | |
INVESTMENTS | |
Schedule of Equity Method Investments | January 1, 2015 to July 31, 2015 (in thousands) Total revenues $ 108,256 Gross loss (2,919) Loss from operations (38,148) Net loss (69,075) |
NET INCOME OF ARLP PER LIMITE43
NET INCOME OF ARLP PER LIMITED PARTNER UNIT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
NET INCOME OF ARLP PER LIMITED PARTNER UNIT | |
Reconciliation of net income and EPU calculations | Year Ended December 31, 2017 2016 2015 (in thousands, except per unit data) Net income of ARLP $ 303,638 $ 339,398 $ 306,198 Adjustments: MGP's priority distributions (1) (19,216) (76,636) (144,576) General partners' equity ownership (1) (3,688) (5,275) (3,262) General partners' special allocation of certain general and administrative expenses (2) 1,000 1,000 1,500 Limited partners' interest in net income of ARLP 281,734 258,487 159,860 Less: Distributions to participating securities (4,339) (3,391) (3,493) Undistributed earnings attributable to participating securities (1,026) (3,281) — Net income of ARLP available to limited partners $ 276,369 $ 251,815 $ 156,367 Weighted-average limited partner units outstanding – basic and diluted 98,708 74,354 74,174 Basic and diluted net income of ARLP per limited partner unit (3) $ 2.80 $ 3.39 $ 2.11 (1) Amounts for 2017 reflect the impact of the Exchange Transaction eliminating second, third and fourth quarter distributions that would have been paid for the IDRs and the 0.99% general partner interest in ARLP, both of which were held by MGP prior to the Exchange Transaction. MGP maintained its 1.0001% general partner interest in the Intermediate Partnership and thus continues to receive the Intermediate Partnership quarterly distribution notwithstanding the Exchange Transaction. Because the Exchange Transaction occurred prior to the record date for ARLP's second quarter distributions, all of the second, third and fourth quarter earnings less the Intermediate Partnership's general partner interest were allocated to ARLP's limited partners. The Exchange Transaction also converted SGP's nominal general partnership interest for its second, third and fourth quarter earnings and subsequent distributions to the limited partner interest. (2) An affiliated entity controlled by Mr. Craft made capital contributions of $1.0 million each year during 2017 and 2016 and $1.5 million during 2015 to AHGP for the purpose of funding certain general and administrative expenses. Upon AHGP's receipt of each contribution, it contributed the same to its subsidiary MGP, our general partner, which in turn contributed the same to our subsidiary, Alliance Coal. As provided under our partnership agreement, we made special allocations to MGP of certain general and administrative expenses equal to its contributions. Net income of ARLP allocated to the limited partners was not burdened by this expense. (3) Diluted EPU gives effect to all potentially dilutive common units outstanding during the period using the treasury stock method. Diluted EPU excludes all potentially dilutive units calculated under the treasury stock method if their effect is anti-dilutive. For the year ended December 31, 2017, 2016 and 2015, the combined total of LTIP, SERP and Deferred Compensation Plan units of 1,466,404, 922,386, and 734,171, respectively, were considered anti-dilutive under the treasury stock method. |
Pro Forma | |
NET INCOME OF ARLP PER LIMITED PARTNER UNIT | |
Reconciliation of net income and EPU calculations | Year Ended December 31, 2017 2016 2015 (in thousands, except per unit data) Net income of ARLP $ 303,638 $ 339,398 $ 306,198 Adjustments: General partners' equity ownership (3,036) (3,397) (3,063) General partners' special allocation of certain general and administrative expenses (1) 1,000 1,000 1,500 Limited partners' interest in net income of ARLP 301,602 337,001 304,635 Less: Distributions to participating securities (4,339) (3,391) (3,493) Undistributed earnings attributable to participating securities (701) (1,594) — Net income of ARLP available to limited partners (2) $ 296,562 $ 332,016 $ 301,142 Weighted-average limited partner units outstanding – basic and diluted (2) 130,681 130,461 130,282 Pro forma basic and diluted net income of ARLP per limited partner unit (3) $ 2.27 $ 2.54 $ 2.31 (1) An affiliated entity controlled by Mr. Craft made capital contributions of $1.0 million each year during 2017 and 2016 and $1.5 million during 2015 to AHGP for the purpose of funding certain general and administrative expenses. Upon AHGP's receipt of each contribution, it contributed the same to its subsidiary MGP, our general partner, which in turn contributed the same to our subsidiary, Alliance Coal. As provided under our partnership agreement, we made special allocations to MGP of certain general and administrative expenses equal to its contributions. Net income of ARLP allocated to the limited partners was not burdened by this expense. (2) The pro forma amounts presented above reflect net income allocations as if distributions had been made for all periods presented based on the limited and general partner interests outstanding as a result of the Exchange Transaction. Accordingly, the Adjustment - General partners' equity ownership line item above no longer includes the (a) IDR distributions to MGP, (b) general partner interest distributions from ARLP to MGP and SGP and (c) general partner distributions from the Intermediate Partnership to SGP. Pro forma amounts above also reflect weighted average units outstanding as if the issuance of 56,107,181 ARLP common units in the Exchange Transaction applied to all periods presented. (3) Diluted EPU gives effect to all potentially dilutive common units outstanding during the period using the treasury stock method. Diluted EPU excludes all potentially dilutive units calculated under the treasury stock method if their effect is anti-dilutive. For the year ended December 31, 2017, 2016 and 2015, the combined total of LTIP, SERP and Deferred Compensation Plan units of 1,466,404, 922,386 and 734,171, respectively, were considered anti-dilutive under the treasury stock method. . |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) - Defined benefit pension plan | 12 Months Ended |
Dec. 31, 2017 | |
Employee Benefit Plans | |
Summary of benefit plans for employees | 2017 2016 (dollars in thousands) Change in benefit obligations: Benefit obligations at beginning of year $ 113,482 $ 107,476 Service cost — 2,205 Interest cost 4,587 4,493 Actuarial loss 13,501 901 Benefits paid (4,272) (3,091) Plan amendments — 1,498 Benefit obligations at end of year 127,298 113,482 Change in plan assets: Fair value of plan assets at beginning of year 71,412 68,445 Employer contribution 2,971 2,608 Actual return on plan assets 11,870 3,450 Benefits paid (4,272) (3,091) Fair value of plan assets at end of year 81,981 71,412 Funded status at the end of year $ (45,317) $ (42,070) Amounts recognized in balance sheet: Non-current liability $ (45,317) $ (42,070) Amounts recognized in accumulated other comprehensive income consists of: Prior service cost $ (1,312) $ (1,498) Net actuarial loss (41,979) (38,424) $ (43,291) $ (39,922) Weighted-average assumptions to determine benefit obligations as of December 31, Discount rate Expected rate of return on plan assets Weighted-average assumptions used to determine net periodic benefit cost for the year ended December 31, Discount rate Expected return on plan assets |
Schedule of long-term rate of return assumptions | Asset allocation As of December 31, 2017 assumption Equity securities Fixed income securities Real estate |
Components of net periodic benefit cost | Year Ended December 31, 2017 2016 2015 (in thousands) Components of net periodic benefit cost: Service cost $ — $ 2,205 $ 2,473 Interest cost 4,587 4,493 4,296 Expected return on plan assets (4,978) (5,138) (5,590) Amortization of prior service cost 186 — — Amortization of net loss 3,054 2,952 3,354 Net periodic benefit cost $ 2,849 $ 4,512 $ 4,533 |
Schedule of other changes in plan assets and benefit obligation recognized in accumulated other comprehensive income | 2017 2016 (in thousands) Other changes in plan assets and benefit obligation recognized in accumulated other comprehensive loss: Prior service cost $ — $ (1,498) Net actuarial loss (6,610) (2,589) Reversal of amortization item: Prior service cost 186 — Net actuarial loss 3,054 2,952 Total recognized in accumulated other comprehensive loss (3,370) (1,135) Net periodic benefit cost (2,849) (4,512) Total recognized in net periodic benefit cost and accumulated other comprehensive loss $ (6,219) $ (5,647) |
Schedule of estimated future benefit payments | Year Ended December 31, (in thousands) 2018 $ 4,238 2019 4,651 2020 5,053 2021 5,420 2022 5,696 2023-2027 32,329 $ 57,387 |
Schedule of asset allocation guidelines, actual asset allocations and fair value of Pension Plan assets | General asset allocation guidelines at December 31, 2017 are as follows: Percentage of Total Portfolio Minimum Target Maximum Equity securities Fixed income securities Real estate Equity securities include domestic equity securities, developed international securities, emerging markets equity securities and real estate investment trust. Fixed income securities include domestic and international investment grade fixed income securities, high yield securities and emerging markets fixed income securities. Fixed income futures may also be utilized within the fixed income securities asset allocation. The following information discloses the fair values of our Pension Plan assets, by asset category, for the periods indicated: December 31, 2017 December 31, 2016 (in thousands) Cash and cash equivalents (a) $ 1,439 $ 1,137 Commingled investment funds measured at net asset value (b): Equities - U.S. large-cap 26,031 21,082 Equities - U.S. small-cap 6,120 6,531 Equities - International developed markets 15,015 11,074 Equities - International emerging markets 6,528 4,614 Fixed income - Investment grade 13,546 16,823 Fixed income - High yield 4,325 4,543 Real estate 3,754 4,259 Other 5,223 1,349 Total $ 81,981 $ 71,412 (a) Cash and cash equivalents represents a Level 1 fair value measurement. See Note 2 – Summary of Significant Accounting Policies – Fair Value Measurements for more information regarding the definitions of fair value hierarchy levels. (b) Investments measured at fair value using the net asset value per share (or its equivalent) have not been classified within the fair value hierarchy. The fair values of all commingled investment funds are determined based on the net asset values per unit of each of the funds. The net asset values per unit represent the aggregate value of the fund's assets at fair value less liabilities, divided by the number of units outstanding. |
COMPENSATION PLANS (Tables)
COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
ARLP LTIP | |
Compensation Plans | |
Summary of activity in share-based plans | Number of units Weighted average grant date fair value per unit Intrinsic value (in thousands) Non-vested grants at January 1, 2015 843,340 $ $ 36,306 Granted Vested (1) Forfeited Non-vested grants at December 31, 2015 939,793 12,678 Granted Vested (1) Forfeited Non-vested grants at December 31, 2016 1,604,748 36,027 Granted Vested (1) Forfeited Non-vested grants at December 31, 2017 33,372 (1) During the years ended December 31, 2017, 2016 and 2015, we issued 222,011, 176,319, and 128,150, respectively, unrestricted common units to the LTIP participants. The remaining vested units were settled in cash to satisfy the individual statutory minimum tax obligations of the LTIP participants. |
SERP and Deferred Compensation Plans | |
Compensation Plans | |
Summary of activity in share-based plans | Number of units Weighted average grant date fair value per unit Intrinsic value (in thousands) Phantom units outstanding as of January 1, 2015 368,981 $ $ 15,885 Granted 60,160 Phantom units outstanding as of December 31, 2015 429,141 5,789 Granted Issued Phantom units outstanding as of December 31, 2016 494,018 11,091 Granted 67,766 Phantom units outstanding as of December 31, 2017 561,784 11,067 |
SUPPLEMENTAL CASH FLOW INFORM46
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
Schedule of supplemental cash flow information | Year Ended December 31, 2017 2016 2015 (in thousands) Cash Paid For: Interest $ 31,692 $ 29,274 $ 30,438 Income taxes $ 210 $ 10 $ 21 Non-Cash Activity: Accounts payable for purchase of property, plant and equipment $ 15,636 $ 8,232 $ 12,634 Assets acquired by capital lease $ — $ 37,089 $ 99,543 Market value of common units vested in Long-Term Incentive Plan and Deferred Compensation Plan before minimum statutory tax withholding requirements $ 8,149 $ 3,642 $ 7,389 Acquisition of businesses: Fair value of assets assumed, net of cash acquired $ — $ 1,011 $ 519,384 Contingent consideration — — (20,907) Settlement of pre-existing relationships — — (124,379) Previously held equity-method investment — — (122,764) Cash paid, net of cash acquired — (1,011) (74,953) Fair value of liabilities assumed $ — $ — $ 176,381 |
ASSET RETIREMENT OBLIGATIONS (T
ASSET RETIREMENT OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
ASSET RETIREMENT OBLIGATIONS | |
Schedule of activity affecting the asset retirement and mine closing liability | Year Ended December 31, 2017 2016 (in thousands) Beginning balance $ 125,701 $ 123,685 Accretion expense 3,793 3,769 Payments (1,046) (379) Allocation of liability associated with acquisitions, mine development and change in assumptions 2,152 (1,374) Ending balance $ 130,600 $ 125,701 |
Schedule of estimated payments of asset retirement obligations | Year Ended December 31, (in thousands) 2018 $ 3,850 2019 454 2020 433 2021 — 2022 1,256 Thereafter 238,604 Aggregate undiscounted asset retirement obligations 244,597 Effect of discounting (113,997) Total asset retirement obligations 130,600 Less: current portion (3,850) Asset retirement obligations $ 126,750 |
ACCRUED WORKERS' COMPENSATION48
ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Workers Compensation And Pneumoconiosis Benefits | |
Reconciliation of changes in workers' compensation liability | 2017 2016 (in thousands) Beginning balance $ 48,131 $ 54,558 Accruals increase 17,066 10,450 Payments (10,769) (10,415) Interest accretion 1,681 1,967 Valuation gain (1,670) (8,429) Ending balance $ 54,439 $ 48,131 |
Reconciliation of changes in pneumoconiosis benefit obligation | 2017 2016 (in thousands) Benefit obligations at beginning of year $ 64,988 $ 61,693 Service cost 2,255 2,578 Interest cost 2,555 2,506 Actuarial loss 7,938 205 Benefits and expenses paid (2,877) (1,994) Benefit obligations at end of year $ 74,859 $ 64,988 |
Components of pneumoconiosis and workers' compensation expense | 2017 2016 2015 (in thousands) Service cost $ 2,255 $ 2,578 $ 3,081 Interest cost 2,555 2,506 2,094 Net amortization (2,092) (2,643) (451) Total pneumoconiosis expense 2,718 2,441 4,724 Workers' compensation expense 12,215 9,063 9,759 Total expense $ 14,933 $ 11,504 $ 14,483 |
Pneumoconiosis benefits | |
Accrued Workers Compensation And Pneumoconiosis Benefits | |
Reconciliation of changes in the pneumoconiosis benefit obligation recognized in AOCI | 2017 2016 2015 (in thousands) Net actuarial loss $ (7,938) $ (205) $ (750) Reversal of amortization item: Net actuarial gain (2,092) (2,643) (451) Total recognized in accumulated other comprehensive loss $ (10,030) $ (2,848) $ (1,201) |
Schedule of amount recognized in accumulated other comprehensive income | 2017 2016 2015 (in thousands) Amount recognized in accumulated other comprehensive loss consists of: Net actuarial loss (gain) $ 8,648 $ (1,382) $ (4,230) |
Summary of information about amounts recognized in the consolidated balance sheets | 2017 2016 (in thousands) Workers' compensation claims $ 54,439 $ 48,131 Pneumoconiosis benefit claims 74,859 64,988 Total obligations 129,298 113,119 Less current portion (10,729) (9,897) Non-current obligations $ 118,569 $ 103,222 |
RELATED-PARTY TRANSACTIONS (Tab
RELATED-PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
RELATED-PARTY TRANSACTIONS | |
Summary of advanced royalties outstanding | WKY CoalPlay Towhead Webster Henderson WKY SGP Coal Coal Coal CoalPlay Henderson Henderson Tunnel & Union Webster Henderson & Union Ridge Counties, KY County, KY County, KY Counties, KY Total Acquired Acquired Acquired Acquired Acquired 2005 December 2014 December 2014 December 2014 February 2015 (in thousands) As of January 1, 2015 $ 10,706 $ — $ — $ — $ — $ 10,706 Payments 3,000 3,598 2,568 2,522 2,131 13,819 Recoupment (8,293) — (42) — — (8,335) As of December 31, 2015 5,413 3,598 2,526 2,522 2,131 16,190 Payments 3,000 3,598 2,568 2,522 2,131 13,819 Recoupment (8,413) (1) (1,775) — — (10,189) As of December 31, 2016 — 7,195 3,319 5,044 4,262 19,820 Payments 6,000 3,598 2,568 2,522 2,131 16,819 Recoupment (3,000) (109) (531) — (6) (3,646) As of December 31, 2017 $ 3,000 $ 10,684 $ 5,356 $ 7,566 $ 6,387 $ 32,993 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
CONTINGENCIES | |
Schedule of future minimum lease payments, Capital Lease | Other Operating Leases Capital Year Ending December 31, Lease Affiliate Others Total (in thousands) 2018 $ 32,378 $ 240 $ 9,827 $ 10,067 2019 48,953 — 5,826 5,826 2020 8,866 — 1,366 1,366 2021 966 — — — 2022 917 — — — Thereafter — — — — Total future minimum lease payments $ 92,080 $ 240 $ 17,019 $ 17,259 Less: amount representing interest (6,376) Present value of future minimum lease payments 85,704 Less: current portion (28,613) Long-term capital lease obligation $ 57,091 |
Schedule of future minimum lease payments, Other Operating Leases | Other Operating Leases Capital Year Ending December 31, Lease Affiliate Others Total (in thousands) 2018 $ 32,378 $ 240 $ 9,827 $ 10,067 2019 48,953 — 5,826 5,826 2020 8,866 — 1,366 1,366 2021 966 — — — 2022 917 — — — Thereafter — — — — Total future minimum lease payments $ 92,080 $ 240 $ 17,019 $ 17,259 Less: amount representing interest (6,376) Present value of future minimum lease payments 85,704 Less: current portion (28,613) Long-term capital lease obligation $ 57,091 |
CONCENTRATION OF CREDIT RISK 51
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS | |
Schedule of total revenues from major customers | Year Ended December 31, 2016 2015 (in thousands) Customer A $ 253,465 $ 343,483 Customer B 241,255 305,048 Customer C 265,642 312,150 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SEGMENT INFORMATION | |
Schedule of reportable segment results | Illinois Other and Elimination Basin Appalachia Corporate (1) Consolidated (in thousands) Year Ended December 31, 2017 Revenues - Outside $ 1,059,381 $ 623,720 $ 113,119 $ — $ Revenues - Intercompany 56,097 2,321 15,924 — Total revenues (2) 1,115,478 626,041 129,043 (74,342) 1,796,220 Segment Adjusted EBITDA Expense (3) 688,468 385,802 83,490 Segment Adjusted EBITDA (4) 391,426 234,124 65,810 Total assets 1,429,078 470,892 506,437 Capital expenditures 94,252 48,358 2,478 — Year Ended December 31, 2016 Revenues - Outside $ 1,275,543 $ 541,108 $ 114,802 $ — $ Revenues - Intercompany 61,617 3,806 17,752 — Total revenues (2) 1,337,160 544,914 132,554 (83,175) 1,931,453 Segment Adjusted EBITDA Expense (3) 761,644 346,712 89,594 Segment Adjusted EBITDA (4) 552,284 191,487 46,339 Total assets 1,460,924 480,745 404,153 Capital expenditures (5) 52,505 36,213 2,338 — Year Ended December 31, 2015 Revenues - Outside $ 1,527,596 $ 584,962 $ 161,175 $ — $ Revenues - Intercompany 108,621 11,337 19,869 — Total revenues (2) 1,636,217 596,299 181,044 (139,827) 2,273,733 Segment Adjusted EBITDA Expense (3) 961,611 398,071 153,720 Segment Adjusted EBITDA (4) 604,808 186,518 26,189 Total assets 1,694,044 517,972 263,817 Capital expenditures (5) 145,352 61,279 6,166 — (1) The elimination column represents the elimination of intercompany transactions and is primarily comprised of sales from the Matrix Group and MAC to our mining operations, coal sales and purchases between operations within different segments, sales of receivables to AROP Funding and insurance premiums paid to Wildcat Insurance. (2) Revenues included in the Other and Corporate column are primarily attributable to the Matrix Group revenues, Mt. Vernon transloading revenues, administrative service revenues from affiliates, MAC revenues, Wildcat Insurance revenues and brokerage coal sales. (3) Segment Adjusted EBITDA Expense includes operating expenses, coal purchases and other income. Transportation expenses are excluded as these expenses are passed through to our customers and consequently we do not realize any gain or loss on transportation revenues. We review Segment Adjusted EBITDA Expense per ton for cost trends. Results presented for Segment Adjusted EBITDA Expense for the years ended December 31, 2016 and 2015 have been recast to reflect a reclassification of depreciation and depletion capitalized into coal inventory as adjustments to Depreciation, depletion and amortization rather than Operating expenses (excluding depreciation, depletion and amortization) . The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to Operating expenses (excluding depreciation, depletion and amortization): Year Ended December 31, 2017 2016 2015 (in thousands) Segment Adjusted EBITDA Expense $ 1,092,187 $ 1,125,637 $ 1,386,155 Outside coal purchases — (1,514) (327) Other income 2,980 725 955 Operating expenses (excluding depreciation, depletion and amortization) $ 1,095,167 $ 1,124,848 $ 1,386,783 (4) Segment Adjusted EBITDA is defined as net income (prior to the allocation of noncontrolling interest) before net interest expense, income taxes, depreciation, depletion and amortization, asset impairment, net acquisition gain, debt extinguishment loss and general and administrative expenses. Management therefore is able to focus solely on the evaluation of segment operating profitability as it relates to our revenues and operating expenses, which are primarily controlled by our segments. Results presented for Segment Adjusted EBITDA for the years ended December 31, 2016 and 2015 have been recast to reflect a reclassification of depreciation and depletion capitalized into coal inventory as adjustments to Depreciation, depletion and amortization rather than Operating expenses (excluding depreciation, depletion and amortization) . Consolidated Segment Adjusted EBITDA is reconciled to net income as follows: Year Ended December 31, 2017 2016 2015 (in thousands) Consolidated Segment Adjusted EBITDA $ 682,591 $ 779,248 $ 804,935 General and administrative (61,760) (72,529) (67,484) Depreciation, depletion and amortization (268,981) (336,509) (323,983) Asset impairment — — (100,130) Interest expense, net (39,291) (30,659) (29,694) Acquisition gain, net — — 22,548 Debt extinguishment loss (8,148) — — Income tax expense (210) (13) (21) Net income $ 304,201 $ 339,538 $ 306,171 (5) Capital expenditures shown above exclude the Hamilton Acquisition on July 31, 2015, the Patriot acquisition on February 3, 2015, the MAC acquisition on January 1, 2015 and the payment for acquisition of customer contracts in 2016 (see consolidated statements of cash flows). |
Reconciliation of consolidated Segment Adjusted EBITDA Expense to operating expenses (excluding depreciation, depletion and amortization) | Year Ended December 31, 2017 2016 2015 (in thousands) Segment Adjusted EBITDA Expense $ 1,092,187 $ 1,125,637 $ 1,386,155 Outside coal purchases — (1,514) (327) Other income 2,980 725 955 Operating expenses (excluding depreciation, depletion and amortization) $ 1,095,167 $ 1,124,848 $ 1,386,783 |
Reconciliation of consolidated Segment Adjusted EBITDA to net income | Year Ended December 31, 2017 2016 2015 (in thousands) Consolidated Segment Adjusted EBITDA $ 682,591 $ 779,248 $ 804,935 General and administrative (61,760) (72,529) (67,484) Depreciation, depletion and amortization (268,981) (336,509) (323,983) Asset impairment — — (100,130) Interest expense, net (39,291) (30,659) (29,694) Acquisition gain, net — — 22,548 Debt extinguishment loss (8,148) — — Income tax expense (210) (13) (21) Net income $ 304,201 $ 339,538 $ 306,171 |
SELECTED QUARTERLY FINANCIAL 53
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |
Summary of consolidated quarterly operating results | Quarter Ended March 31, June 30, September 30, December 31, 2017 2017 (1) 2017 2017 (in thousands, except unit and per unit data) Revenues $ 461,080 $ 398,720 $ 453,189 $ 483,231 Income from operations 107,532 78,760 64,828 77,492 Income before income taxes 105,038 63,356 61,431 74,586 Net income of ARLP 104,902 63,230 61,271 74,235 Basic and diluted net income of ARLP per limited partner unit $ 1.10 $ 0.82 $ 0.52 $ 0.55 Weighted-average number of units outstanding – basic and diluted (2) 74,503,298 74,597,036 114,237,979 130,704,217 Quarter Ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 (in thousands, except unit and per unit data) Revenues $ 412,829 $ 439,150 $ 552,074 $ 527,400 Income from operations 54,847 90,361 96,431 124,303 Income before income taxes 47,299 82,717 89,831 119,704 Net income of ARLP 47,310 82,713 89,780 119,595 Basic and diluted net income of ARLP per limited partner unit $ 0.36 $ 0.82 $ 0.91 $ 1.30 Weighted-average number of units outstanding – basic and diluted 74,291,114 74,375,025 74,375,025 74,375,025 (1) Our June 30, 2017 quarterly results were affected by a debt extinguishment loss of $8.1 million related to early repayment of our Series B Senior Notes in May 2017 (Note 7 – Long-Term Debt). (2) Weighted-average number of units outstanding – basic and diluted were impacted by the Exchange Transaction in the quarters ended September 30, 2017 and December 31, 2017. See Note 1 – Organization and Presentation for more information regarding the Exchange Transaction. |
ORGANIZATION AND PRESENTATION -
ORGANIZATION AND PRESENTATION - Organization (Details) - shares | 7 Months Ended | 12 Months Ended | |||
Jul. 27, 2017 | Jul. 26, 2017 | Dec. 31, 2017 | Jul. 28, 2017 | Dec. 31, 2016 | |
Ownership interests | |||||
Common units outstanding | 130,704,217 | 130,704,217 | 74,375,025 | ||
SGP | AHGP | |||||
Ownership interests | |||||
Number of common units owned | 20,641,168 | ||||
AHGP | |||||
Ownership interests | |||||
Common units outstanding | 59,863,000 | ||||
ARLP | SGP | |||||
Ownership interests | |||||
Ownership percentage by general partners | 0.01% | ||||
ARLP | MGP | |||||
Ownership interests | |||||
Ownership percentage by general partners | 0.99% | ||||
Intermediate Partnership | SGP | |||||
Ownership interests | |||||
Ownership percentage by general partners | 0.01% | 0.01% | |||
Intermediate Partnership | MGP | |||||
Ownership interests | |||||
Ownership percentage by general partners | 1.0001% | ||||
Alliance Coal | MGP | |||||
Ownership interests | |||||
Ownership percentage by general partners | 0.001% | ||||
MGP | AHGP | |||||
Ownership interests | |||||
Ownership interest held (as a percent) | 100.00% | ||||
ARLP | SGP | |||||
Ownership interests | |||||
Number of common units owned | 7,181 | ||||
ARLP | AHGP | |||||
Ownership interests | |||||
Units owned by parent | 87,188,338 |
ORGANIZATION AND PRESENTATION55
ORGANIZATION AND PRESENTATION - Exchange Transaction (Details) - USD ($) $ in Millions | Jul. 28, 2017 | Jul. 27, 2017 | Jul. 26, 2017 | Dec. 31, 2017 |
ARLP | SGP | ||||
Ownership interests | ||||
Number of common units owned | 7,181 | |||
ARLP | MGP II | ||||
Ownership interests | ||||
Number of common units owned | 56,100,000 | |||
Exchange Transaction | General Partners' Capital (Deficit) | ||||
Ownership interests | ||||
Partners' capital, Exchange Transaction reclassification | $ 306.7 | |||
Exchange Transaction | Limited Partners' Capital | ||||
Ownership interests | ||||
Partners' capital, Exchange Transaction reclassification | $ (306.7) | |||
Exchange Transaction | MGP | ||||
Ownership interests | ||||
Common units issued in exchange | 56,100,000 | |||
Exchange Transaction | SGP | ||||
Ownership interests | ||||
Common units issued in exchange | 7,181 | |||
Ownership percentage by general partners | 0.01% | |||
ARLP | MGP | ||||
Ownership interests | ||||
Ownership percentage by general partners | 0.99% | |||
ARLP | SGP | ||||
Ownership interests | ||||
Ownership percentage by general partners | 0.01% | |||
ARLP | Exchange Transaction | MGP | ||||
Ownership interests | ||||
Ownership percentage by general partners | 0.99% | |||
ARLP | Exchange Transaction | SGP | ||||
Ownership interests | ||||
Ownership percentage by general partners | 0.01% | |||
Intermediate Partnership | MGP | ||||
Ownership interests | ||||
Ownership percentage by general partners | 1.0001% | |||
Intermediate Partnership | SGP | ||||
Ownership interests | ||||
Ownership percentage by general partners | 0.01% | 0.01% | ||
MGP II | AHGP | ||||
Ownership interests | ||||
Ownership interest held (as a percent) | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUN56
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Consolidation (Details) | 7 Months Ended | 12 Months Ended | |
Jul. 27, 2017 | Jul. 26, 2017 | Dec. 31, 2017 | |
MGP | ARLP | |||
Ownership interests | |||
Ownership percentage by general partners | 0.99% | ||
MGP | Intermediate Partnership | |||
Ownership interests | |||
Ownership percentage by general partners | 1.0001% | ||
SGP | ARLP | |||
Ownership interests | |||
Ownership percentage by general partners | 0.01% | ||
SGP | Intermediate Partnership | |||
Ownership interests | |||
Ownership percentage by general partners | 0.01% | 0.01% |
SUMMARY OF SIGNIFICANT ACCOUN57
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Management | |||
Book overdrafts | $ 14 | $ 10.6 | |
Goodwill | |||
Impairments of goodwill | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN58
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Tangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment | ||
Coal reserves not subject to depletion | $ 34.5 | $ 34.4 |
Plant and equipment assets, other than preparation plants and processing facilities | Minimum | ||
Property, Plant and Equipment | ||
Estimated useful life | 1 year | |
Plant and equipment assets, other than preparation plants and processing facilities | Maximum | ||
Property, Plant and Equipment | ||
Estimated useful life | 22 years | |
Mining Equipment | Minimum | ||
Property, Plant and Equipment | ||
Estimated useful life | 1 year | |
Mining Equipment | Maximum | ||
Property, Plant and Equipment | ||
Estimated useful life | 22 years | |
Buildings, Office Equipment And Improvements | Minimum | ||
Property, Plant and Equipment | ||
Estimated useful life | 1 year | |
Buildings, Office Equipment And Improvements | Maximum | ||
Property, Plant and Equipment | ||
Estimated useful life | 24 years | |
Land And Mineral Rights | Minimum | ||
Property, Plant and Equipment | ||
Estimated useful life | 1 year | |
Land And Mineral Rights | Maximum | ||
Property, Plant and Equipment | ||
Estimated useful life | 22 years |
SUMMARY OF SIGNIFICANT ACCOUN59
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible Assets | |||
Amortization expense attributable to intangible assets | $ 10,500 | $ 18,100 | $ 15,100 |
Original Cost | 60,167 | 71,020 | |
Accumulated Amortization | (44,018) | (44,378) | |
Intangibles, Net | 16,149 | 26,642 | |
Estimated amortization expense attributable to intangible assets | |||
2,018 | 6,918 | ||
2,019 | 7,737 | ||
2,020 | 391 | ||
2,021 | 74 | ||
2,022 | 74 | ||
Thereafter | 955 | ||
Noncompete agreement | |||
Intangible Assets | |||
Original Cost | 9,697 | 14,542 | |
Accumulated Amortization | (7,378) | (10,974) | |
Intangibles, Net | 2,319 | 3,568 | |
Customer contracts, net | |||
Intangible Assets | |||
Original Cost | 48,970 | 54,978 | |
Accumulated Amortization | (36,462) | (33,300) | |
Intangibles, Net | 12,508 | 21,678 | |
Permits | |||
Intangible Assets | |||
Original Cost | 1,500 | 1,500 | |
Accumulated Amortization | (178) | (104) | |
Intangibles, Net | $ 1,322 | $ 1,396 |
SUMMARY OF SIGNIFICANT ACCOUN60
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Investments (Details) | 12 Months Ended |
Dec. 31, 2017instrument | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of investments using HBLV to allocate equity in earnings or losses | 0 |
SUMMARY OF SIGNIFICANT ACCOUN61
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advance Royalties (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Advance Royalties | ||
Allowance against royalty prepayments | $ 6,100 | $ 6,200 |
Advance royalties, affiliates (see Note 18 - Related Party Transactions) | 32,993 | 19,820 |
Advance royalties, third-parties | 11,177 | 10,759 |
Total advance royalties, net | $ 44,170 | $ 30,579 |
SUMMARY OF SIGNIFICANT ACCOUN62
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Pension Benefits and Income Taxes (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Percentage of qualifying income for tax purposes | 90.00% |
Defined benefit pension plan | |
Employee Benefit Plans | |
Threshold for amortization of unrecognized actuarial gains and losses (as a percent) | 10.00% |
ACQUISITIONS - White Oak - Cons
ACQUISITIONS - White Oak - Consideration, Gains and Losses (Details) - USD ($) $ in Thousands | Jul. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2017 |
Acquisitions | |||
Contingent consideration | $ 20,907 | ||
Settlement of pre-existing relationships | 124,379 | ||
Previously held equity-method investment | 122,764 | ||
Acquisition gain, net | $ 22,548 | ||
White Oak | |||
Acquisitions | |||
Remaining equity interest acquired (as a percent) | 60.00% | ||
Cash on hand | $ 50,000 | ||
Contingent consideration | 14,800 | ||
Settlement of pre-existing relationships | 124,379 | ||
Previously held equity-method investment | 121,155 | ||
Total consideration | $ 310,334 | ||
Ownership interest in acquiree (as a percent) | 100.00% | ||
Maximum amount of contingent consideration payable | $ 110,000 | ||
Prior equity interest (as a percent) | 40.00% | ||
Re-measurement loss | $ 52,300 | ||
Settlement of existing account balances | 49,600 | ||
Net gain for above-market terms associated with pre-existing contractual agreements | 74,800 | ||
Acquisition gain, net | $ 22,500 |
ACQUISITIONS - White Oak - Asse
ACQUISITIONS - White Oak - Assets and Liabilities (Details) - USD ($) $ in Thousands | Jul. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 |
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | |||
Goodwill | $ 136,399 | $ 136,399 | |
White Oak | |||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | |||
Cash and cash equivalents | $ 3,125 | ||
Trade receivables | 3,018 | ||
Prepaid expenses | 3,942 | ||
Inventories | 7,240 | ||
Other current assets | 9,456 | ||
Property, plant and equipment | 299,214 | ||
Advance royalties | 3,349 | ||
Deposits | 6,981 | ||
Other assets | 12,829 | ||
Total identifiable assets acquired | 349,154 | ||
Accounts payable | (31,181) | ||
Accrued expenses | (20,987) | ||
Deferred revenue | (517) | ||
Current maturities, long-term debt | (29,529) | ||
Long-term debt, excluding current maturities | (63,973) | ||
Other long-term liabilities | (12,175) | ||
Asset retirement obligations | (12,484) | ||
Total liabilities assumed | (170,846) | ||
Net identifiable assets acquired | 178,308 | ||
Goodwill | 132,026 | ||
Net tangible and intangible assets acquired | 310,334 | ||
White Oak | Total intangibles acquired | |||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | |||
Net identifiable assets acquired | 8,277 | ||
White Oak | Customer contracts, net | |||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | |||
Net identifiable assets acquired | $ 6,777 | ||
Weighted-average amortization period | 3 years | ||
White Oak | Customer contracts, net | Below-market contracts | |||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | |||
Accrued expenses | $ (4,702) | ||
Other long-term liabilities | (1,525) | ||
White Oak | Customer contracts, net | Above-market contracts | |||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | |||
Other current assets | 9,333 | ||
Other assets | 3,671 | ||
White Oak | Permits | |||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | |||
Other assets | $ 1,500 | ||
Weighted-average amortization period | 20 years |
ACQUISITIONS - White Oak - Pro
ACQUISITIONS - White Oak - Pro Forma (Details) - USD ($) $ in Thousands | Jul. 31, 2015 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Acquisitions, additional information | |||||||||||||
Acquisition gain, net | $ 22,548 | ||||||||||||
Pro forma condensed consolidated income statement | |||||||||||||
Total revenues, As reported | $ 483,231 | $ 453,189 | $ 398,720 | $ 461,080 | $ 527,400 | $ 552,074 | $ 439,150 | $ 412,829 | $ 1,796,220 | $ 1,931,453 | 2,273,733 | ||
Net income | $ 304,201 | $ 339,538 | 306,171 | ||||||||||
White Oak | |||||||||||||
Acquisitions, additional information | |||||||||||||
Acquisition gain, net | $ 22,500 | ||||||||||||
Revenue of acquired business included in consolidated statements of income | $ 75,251 | ||||||||||||
Net income of acquired business included in consolidated statements of income | $ 20,687 | ||||||||||||
Pro forma condensed consolidated income statement | |||||||||||||
Total revenues, Pro forma | 2,337,380 | ||||||||||||
Net income, Pro forma | $ 295,219 |
ACQUISITIONS - Patriot (Details
ACQUISITIONS - Patriot (Details) $ in Thousands, T in Millions | Feb. 03, 2015USD ($)T | Dec. 31, 2014USD ($)propertyT | Feb. 28, 2015USD ($) | Feb. 02, 2015USD ($) | Dec. 31, 2015USD ($) |
Acquisitions | |||||
Liabilities assumed in acquisition | $ 20,907 | ||||
Coal Reserves in Henderson and Union Counties, Kentucky | WKY CoalPlay | Variable Interest Entity, Not Primary Beneficiary | Coal lease | |||||
Acquisitions | |||||
Coal reserves leased from related party (in tons) | T | 39.1 | ||||
WKY CoalPlay | Coal Reserves in Henderson and Union Counties, Kentucky | Central States, a subsidiary of Patriot | |||||
Acquisitions | |||||
Coal reserves, rights purchased (in tons) | T | 39.1 | ||||
Purchase price | $ 25,000 | ||||
Patriot Coal Corporation | |||||
Acquisitions | |||||
Number of mining operations | property | 2 | ||||
Consideration transferred | $ 47,874 | ||||
Coal reserves (in tons) | T | 84.1 | ||||
Non-reserve coal deposits (in tons) | T | 43.2 | ||||
Purchase price paid in cash | $ 20,500 | $ 19,200 | $ 2,100 | ||
Increase to purchase price from prior cash paid and agreement for contingent consideration | 8,300 | ||||
Liabilities assumed in acquisition | $ 2,300 | 6,200 | |||
Patriot Coal Corporation | Customer contracts, net | |||||
Acquisitions | |||||
Initial purchase price for coal supply agreements | 21,000 | ||||
Amount paid into escrow | $ 9,300 | ||||
Escrow deposit released | $ 7,500 | ||||
Escrow deposit returned | 1,800 | ||||
Consideration transferred | $ 19,200 | ||||
Coal to be delivered under acquired supply agreements (in tons) | T | 5.1 | ||||
Revenues generated since the Initial Closing Date | $ 130,500 |
ACQUISITIONS - Patriot Assets a
ACQUISITIONS - Patriot Assets and Liabilities (Details) - Patriot Coal Corporation - USD ($) $ in Thousands | Feb. 03, 2015 | Feb. 28, 2015 | Dec. 31, 2017 |
Acquisitions | |||
Consideration transferred | $ 47,874 | ||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | |||
Inventories | 1,994 | ||
Property, plant and equipment, including mineral rights and leased facilities | 32,029 | ||
Customer contracts, net | 19,193 | ||
Asset retirement obligation | (2,255) | ||
Other liabilities | (3,087) | ||
Net tangible and intangible assets acquired | $ 47,874 | ||
Customer contracts, net | |||
Acquisitions | |||
Consideration transferred | $ 19,200 | ||
Customer contracts, net | Minimum | |||
Acquisitions, additional information | |||
Average term of the contracts | 1 year | ||
Customer contracts, net | Maximum | |||
Acquisitions, additional information | |||
Average term of the contracts | 3 years |
ACQUISITIONS - MAC (Details)
ACQUISITIONS - MAC (Details) - USD ($) $ in Thousands | Jan. 01, 2015 | Mar. 31, 2006 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2014 |
Acquisitions | |||||
Goodwill | $ 136,399 | $ 136,399 | |||
MAC | |||||
Acquisitions | |||||
Balance of equity investment | $ 1,600 | ||||
White County Coal | |||||
Acquisitions | |||||
Purchase of equity investment | $ 1,000 | ||||
MAC | |||||
Acquisitions | |||||
Equity interest (as a percent) | 50.00% | ||||
Remaining equity interest acquired (as a percent) | 50.00% | ||||
Purchase price paid in cash | $ 5,500 | ||||
Liabilities assumed | 200 | ||||
Assets acquired | 7,300 | ||||
Goodwill | $ 4,200 |
LONG-LIVED ASSET IMPAIRMENTS (D
LONG-LIVED ASSET IMPAIRMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2015 | |
Asset impairment charges | |||
Asset impairment charges | $ 100,130 | ||
Appalachia | MC Mining | |||
Asset impairment charges | |||
Asset impairment charges | $ 19,500 | ||
Appalachia | Capitalized payments associated with surrendered lease | |||
Asset impairment charges | |||
Asset impairment charges | 3,000 | ||
Illinois Basin | Onton | |||
Asset impairment charges | |||
Asset impairment charges | $ 66,900 | ||
Illinois Basin | Assets associated with surrendered lease agreement | |||
Asset impairment charges | |||
Asset impairment charges | $ 10,700 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
INVENTORIES | ||
Coal | $ 22,825 | $ 29,242 |
Supplies (net of reserve for obsolescence of $5,149 and $4,940, respectively) | 37,450 | 31,809 |
Total inventories, net | 60,275 | 61,051 |
Reserve for obsolescence | $ 5,149 | $ 4,940 |
PROPERTY, PLANT AND EQUIPMENT -
PROPERTY, PLANT AND EQUIPMENT - Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
PROPERTY, PLANT AND EQUIPMENT | ||
Property, plant and equipment, at cost | $ 2,934,188 | $ 2,920,988 |
Less accumulated depreciation, depletion and amortization | (1,457,532) | (1,335,145) |
Total property, plant and equipment, net | 1,476,656 | 1,585,843 |
Mining Equipment and Processing Facilities | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Property, plant and equipment, at cost | 1,847,037 | 1,854,001 |
Land And Mineral Rights | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Property, plant and equipment, at cost | 449,152 | 439,236 |
Buildings, Office Equipment And Improvements | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Property, plant and equipment, at cost | 310,167 | 304,696 |
Construction and mine development in progress | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Property, plant and equipment, at cost | 47,223 | 26,025 |
Mine development costs | ||
PROPERTY, PLANT AND EQUIPMENT | ||
Property, plant and equipment, at cost | $ 280,609 | $ 297,030 |
PROPERTY, PLANT AND EQUIPMENT72
PROPERTY, PLANT AND EQUIPMENT - Amortization (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Mine development costs | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Capitalized development costs of mines in development phase | $ 0 | $ 0 | |
Mining Equipment and Processing Facilities | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Equipment under capital leases | 140.9 | ||
Accumulated amortization related to capital leases | 55.6 | 34.2 | $ 7.1 |
Amortization expense related to capital leases | $ 24.9 | $ 27.2 | $ 5.7 |
LONG-TERM DEBT - Components (De
LONG-TERM DEBT - Components (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Principal | ||
Aggregate maturities of long-term debt | $ 502,400 | $ 550,000 |
Less current maturities | (72,400) | (150,000) |
Total long-term debt | 430,000 | 400,000 |
Unamortized Discount and Debt Issuance Costs | ||
Unamortized debt issuance costs including current and non-current | (14,063) | (680) |
Less current maturities | 126 | |
Total unamortized debt issuance costs | (14,063) | (554) |
Revolving credit facility | ||
Principal | ||
Aggregate maturities of long-term debt | 30,000 | |
Unamortized Discount and Debt Issuance Costs | ||
Unamortized debt issuance costs including current and non-current | (7,356) | |
ARLP Series B Senior Notes | ||
Principal | ||
Aggregate maturities of long-term debt | 145,000 | |
Unamortized Discount and Debt Issuance Costs | ||
Unamortized debt issuance costs including current and non-current | (101) | |
Replaced Credit facility | ||
Principal | ||
Aggregate maturities of long-term debt | 255,000 | |
Unamortized Discount and Debt Issuance Costs | ||
Unamortized debt issuance costs including current and non-current | (453) | |
Replaced ARLP Term Loan | ||
Principal | ||
Aggregate maturities of long-term debt | 50,000 | |
Unamortized Discount and Debt Issuance Costs | ||
Unamortized debt issuance costs including current and non-current | (126) | |
Senior notes due 2025 | ||
Principal | ||
Aggregate maturities of long-term debt | 400,000 | |
Unamortized Discount and Debt Issuance Costs | ||
Unamortized debt issuance costs including current and non-current | (6,707) | |
Securitization Facility | ||
Principal | ||
Aggregate maturities of long-term debt | $ 72,400 | $ 100,000 |
LONG-TERM DEBT - Credit Facilit
LONG-TERM DEBT - Credit Facility (Details) | Jan. 27, 2017USD ($) | May 31, 2017USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | May 23, 2017USD ($) | Apr. 03, 2017USD ($) | Jan. 26, 2017USD ($) |
Long-Term Debt | ||||||||
Debt issuance costs incurred | $ 16,487,000 | $ 101,000 | ||||||
Payments on term loan | $ 50,000,000 | $ 156,250,000 | $ 108,502,000 | |||||
ARLP Debt Arrangements | ||||||||
Long-Term Debt | ||||||||
ARLP debt arrangements requirements, period over which the ratios are required to be maintained | 12 months | |||||||
ARLP Debt Arrangements | Intermediate Partnership | ||||||||
Long-Term Debt | ||||||||
ARLP debt arrangements requirements, period over which the ratios are required to be maintained | 12 months | |||||||
ARLP Debt Arrangements | Intermediate Partnership | Maximum | ||||||||
Long-Term Debt | ||||||||
ARLP debt arrangements requirements, fixed charge coverage ratio | 1.15 | |||||||
ARLP debt arrangements requirements, debt to cash flow ratio | 2.50 | |||||||
ARLP Debt Arrangements | Intermediate Partnership | Maximum | Before amendment | ||||||||
Long-Term Debt | ||||||||
ARLP debt arrangements requirements, fixed charge coverage ratio | 1.25 | |||||||
ARLP debt arrangements requirements, debt to cash flow ratio | 2.25 | |||||||
ARLP Debt Arrangements | Intermediate Partnership | Minimum | ||||||||
Long-Term Debt | ||||||||
ARLP debt arrangements requirements, cash flow to interest expense ratio | 3 | |||||||
ARLP Debt Arrangements | Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Actual debt to cash flow ratio for trailing twelve months | 0.91 | |||||||
Actual cash flow to interest expense ratio for trailing twelve months | 16.1 | |||||||
Revolving credit facility | Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Line of credit facility, available for borrowing | $ 456,700,000 | |||||||
Debt issuance costs incurred | $ 9,200,000 | |||||||
Number of benchmarks | item | 3 | |||||||
Letters of credit outstanding | $ 8,100,000 | |||||||
Annual commitment fee percentage, undrawn portion | 0.35% | |||||||
Revolving credit facility | Credit Agreement | Debt Redemption Period, period one | ||||||||
Long-Term Debt | ||||||||
Maximum borrowing capacity | $ 776,500,000 | |||||||
Revolving credit facility | Credit Agreement | Debt Redemption Period, period two | ||||||||
Long-Term Debt | ||||||||
Maximum borrowing capacity | $ 494,750,000 | |||||||
Revolving credit facility | Credit Agreement | Eurodollar Rate | ||||||||
Long-Term Debt | ||||||||
Effective interest rate (as a percent) | 4.49% | |||||||
Revolving credit facility | Amendment | ||||||||
Long-Term Debt | ||||||||
Maximum borrowing capacity | $ 461,250,000 | |||||||
Letters of credit subfacility | Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Maximum borrowing capacity | 125,000,000 | |||||||
Swingline subfacility | Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Maximum borrowing capacity | 15,000,000 | |||||||
Term loan | Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Principal amount | $ 50,000,000 | |||||||
Payments on term loan | $ 50,000,000 | |||||||
Replaced Credit facility | Replaced Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Maximum borrowing capacity | $ 700,000,000 | |||||||
Replaced ARLP Term Loan | Replaced Credit Agreement | ||||||||
Long-Term Debt | ||||||||
Principal amount | $ 250,000,000 |
LONG-TERM DEBT - Series B Senio
LONG-TERM DEBT - Series B Senior Notes (Details) - ARLP Series B Senior Notes - ARLP Debt Arrangements | Jan. 27, 2017USD ($) |
Long-Term Debt | |
Principal amount | $ 145,000,000 |
Interest rate (as a percent) | 6.72% |
LONG-TERM DEBT - Senior Notes d
LONG-TERM DEBT - Senior Notes due 2025 (Details) - USD ($) | Apr. 24, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Issuance of Senior Notes | |||
Make-whole payment | $ 8,148,000 | ||
Discount and debt issuance costs incurred | 14,063,000 | $ 680,000 | |
Senior notes due 2025 | |||
Issuance of Senior Notes | |||
Discount and debt issuance costs incurred | $ 6,707,000 | ||
Senior notes due 2025 | Senior Notes | |||
Issuance of Senior Notes | |||
Discount and debt issuance costs incurred | $ 7,300,000 | ||
ARLP Debt Arrangements | Senior Notes | |||
Issuance of Senior Notes | |||
Make-whole payment | 8,100,000 | ||
Intermediate Partnership and Alliance Finance | Senior notes due 2025 | Senior Notes | |||
Issuance of Senior Notes | |||
Principal amount | $ 400 | ||
Term | 8 years | ||
Interest rate (as a percent) | 7.50% | ||
Percentage of debt that may be redeemed prior to May 1, 2020 | 35.00% | ||
Redemption price expressed as a percentage of principal | 107.50% |
LONG-TERM DEBT - Accounts Recei
LONG-TERM DEBT - Accounts Receivable Securitization and Hamilton (Details) - Securitization Facility - USD ($) | Dec. 31, 2017 | Dec. 05, 2014 |
Long-Term Debt | ||
Maximum borrowing capacity | $ 100,000,000 | |
Line of credit facility outstanding amount | $ 72,400,000 |
LONG-TERM DEBT - Sale-Leaseback
LONG-TERM DEBT - Sale-Leaseback (Details) - USD ($) $ in Thousands | Oct. 29, 2015 | Dec. 31, 2016 | Dec. 31, 2015 |
Sale-leaseback transaction | |||
Proceeds from sale-leaseback transactions | $ 33,881 | $ 100,000 | |
Sale-leaseback of mining equipment, October 2015 | |||
Sale-leaseback transaction | |||
Proceeds from sale-leaseback transactions | $ 100,000 |
LONG-TERM DEBT - Cavalier and O
LONG-TERM DEBT - Cavalier and Other (Details) - USD ($) | Oct. 06, 2015 | Dec. 31, 2017 |
Cavalier Credit Agreement | ||
Long-Term Debt | ||
Credit facility amount | $ 100,000,000 | |
Annual commitment fee percentage, undrawn portion | 0.00% | |
Threshold aggregate borrowings to trigger principal repayment | $ 90,000,000 | |
Period for initial amount of payments | 2 years | |
Cavalier Credit Agreement | Minimum | ||
Long-Term Debt | ||
Initial quarterly payments | $ 1,300,000 | |
Quarterly payments after initial period | $ 2,500,000 | |
Quarterly payments as a percentage of excess cash flow | 50.00% | |
Cavalier Credit Agreement | One-month LIBOR | ||
Long-Term Debt | ||
Basis spread for variable interest rate (as a percent) | 6.00% | |
Other | ||
Long-Term Debt | ||
Credit facility amount | $ 5,000,000 | |
Letters of credit outstanding | $ 5,000,000 |
LONG-TERM DEBT - Maturities (De
LONG-TERM DEBT - Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Aggregate maturities of long-term debt | ||
2,018 | $ 72,400 | |
2,021 | 30,000 | |
Thereafter | 400,000 | |
Aggregate maturities of long-term debt | $ 502,400 | $ 550,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Significant Observable Inputs (Level 2) | ||
FAIR VALUE MEASUREMENTS | ||
Long-term debt | $ 541,147 | $ 559,509 |
Total | 541,147 | 559,509 |
Significant Unobservable Inputs (Level 3) | ||
FAIR VALUE MEASUREMENTS | ||
Total | 6,800 | 9,700 |
Recurring | Significant Unobservable Inputs (Level 3) | ||
FAIR VALUE MEASUREMENTS | ||
Contingent consideration | $ 6,800 | $ 9,700 |
DISTRIBUTIONS OF AVAILABLE CA82
DISTRIBUTIONS OF AVAILABLE CASH - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Distribution Made to Member or Limited Partner | |||
Percentage of available cash distributed | 100.00% | ||
Period following quarter end for distribution of available cash | 45 days | ||
Minimum quarterly distribution (in dollars per unit) | $ 0.125 | ||
Minimum annual distribution (in dollars per unit) | $ 0.50 | ||
MGP | |||
Distribution Made to Member or Limited Partner | |||
Managing general partner incentive distributions (in dollars) | $ 37.6 | $ 92 | $ 139.8 |
MGP | Excess Of $0.1375 Per Unit | |||
Distribution Made to Member or Limited Partner | |||
General partner incentive distribution percentage | 15.00% | ||
Threshold distribution of net income per unit (in dollars per unit) | $ 0.1375 | ||
MGP | Excess Of $0.15625 Per Unit | |||
Distribution Made to Member or Limited Partner | |||
General partner incentive distribution percentage | 25.00% | ||
Threshold distribution of net income per unit (in dollars per unit) | $ 0.15625 | ||
MGP | Excess Of $0.1875 Per Unit | |||
Distribution Made to Member or Limited Partner | |||
General partner incentive distribution percentage | 50.00% | ||
Threshold distribution of net income per unit (in dollars per unit) | $ 0.1875 |
DISTRIBUTIONS OF AVAILABLE CA83
DISTRIBUTIONS OF AVAILABLE CASH - Quarterly Distributions (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 14, 2018 | Jan. 26, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 |
DISTRIBUTIONS OF AVAILABLE CASH | ||||||||||||||
Quarterly distribution paid (in dollars per unit) | $ 0.51 | $ 0.5050 | $ 0.5000 | $ 0.4375 | $ 0.4375 | $ 0.4375 | $ 0.4375 | $ 0.4375 | $ 0.6750 | $ 0.6750 | $ 0.6750 | $ 0.6625 | $ 0.6500 | |
Distribution declared (in dollars per unit) | $ 0.51 | |||||||||||||
Approximate distribution to be paid, including incentive distributions (in dollars) | $ 67.3 |
VARIABLE INTEREST ENTITIES - Ca
VARIABLE INTEREST ENTITIES - Cavalier Minerals (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Oct. 06, 2015 | Nov. 10, 2014 |
Cavalier Minerals | All Dale I | |||||
Variable Interest Entities | |||||
Noncontrolling ownership interest (as a percent) | 71.70% | ||||
Cavalier Minerals | All Dale II | |||||
Variable Interest Entities | |||||
Noncontrolling ownership interest (as a percent) | 72.80% | ||||
Funding Commitments | Cavalier Minerals | All Dale I | |||||
Variable Interest Entities | |||||
Funding commitment | $ 49,000 | ||||
Funding Commitments | Cavalier Minerals | All Dale II | |||||
Variable Interest Entities | |||||
Funding commitment | $ 100,000 | ||||
Funding Commitments | Alliance Minerals | Cavalier Minerals | |||||
Variable Interest Entities | |||||
Funding commitment | $ 888 | $ 6,923 | $ 80,502 | ||
Funding Commitments | Bluegrass Minerals | Cavalier Minerals | |||||
Variable Interest Entities | |||||
Funding commitment | $ 37 | $ 288 | $ 3,354 | ||
Initial Funding Commitment | Bluegrass Minerals | Cavalier Minerals | |||||
Variable Interest Entities | |||||
Funding commitment | 2,000 | ||||
Additional Funding Commitment | Bluegrass Minerals | Cavalier Minerals | |||||
Variable Interest Entities | |||||
Funding commitment | 4,000 | ||||
Variable Interest Entity, Primary Beneficiary | Initial Funding Commitment | Alliance Minerals | Cavalier Minerals | |||||
Variable Interest Entities | |||||
Funding commitment | $ 48,000 | ||||
Variable Interest Entity, Primary Beneficiary | Additional Funding Commitment | Alliance Minerals | Cavalier Minerals | |||||
Variable Interest Entities | |||||
Funding commitment | $ 96,000 |
VARIABLE INTEREST ENTITIES - 85
VARIABLE INTEREST ENTITIES - Cavalier Minerals Commitments (Details) - Cavalier Minerals - Funding Commitments - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Alliance Minerals | |||
Variable Interest Entities | |||
Beginning cumulative commitment fulfilled | $ 137,077 | $ 63,498 | $ 11,520 |
Capital contributions - Cash | 6,035 | 72,334 | 51,552 |
Capital contributions - AllDale Minerals' distributions received by Cavalier Minerals | 1,245 | 426 | |
Ending cumulative commitment fulfilled | 143,112 | 137,077 | 63,498 |
Remaining commitment | 888 | 6,923 | 80,502 |
Total committed | 144,000 | 144,000 | 144,000 |
Bluegrass Minerals | |||
Variable Interest Entities | |||
Beginning cumulative commitment fulfilled | 5,712 | 2,646 | 480 |
Capital contributions - Cash | 251 | 3,014 | 2,148 |
Capital contributions - AllDale Minerals' distributions received by Cavalier Minerals | 52 | 18 | |
Ending cumulative commitment fulfilled | 5,963 | 5,712 | 2,646 |
Remaining commitment | 37 | 288 | 3,354 |
Total committed | $ 6,000 | $ 6,000 | $ 6,000 |
VARIABLE INTEREST ENTITIES - 86
VARIABLE INTEREST ENTITIES - Cavalier Minerals Distributions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Variable Interest Entities | |||
Distributions paid to Partners | $ 240,812 | $ 247,915 | $ 346,799 |
Cavalier Minerals | Alliance Minerals | |||
Variable Interest Entities | |||
Distributions paid to Partners | $ 24,385 | 4,546 | |
Cavalier Minerals | Bluegrass Minerals | |||
Variable Interest Entities | |||
Incentive distribution for noncontrolling owners (as a percent) | 25.00% | ||
Distributions paid to Partners | $ 1,016 | $ 189 | |
Variable Interest Entity, Primary Beneficiary | Alliance Minerals | Cavalier Minerals | |||
Variable Interest Entities | |||
Ownership interest in VIE (as a percent) | 96.00% | 96.00% |
VARIABLE INTEREST ENTITIES - Ot
VARIABLE INTEREST ENTITIES - Other VIEs (Details) $ in Thousands | Jul. 30, 2015 | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Nov. 17, 2014company |
Variable Interest Entities | ||||
Advance royalties | $ | $ 44,170 | $ 30,579 | ||
Percentage of available cash distributed | 100.00% | |||
MGP | Alliance Coal | ||||
Variable Interest Entities | ||||
Ownership percentage by general partners | 0.001% | |||
MGP | Intermediate Partnership | ||||
Variable Interest Entities | ||||
Ownership percentage by general partners | 1.0001% | |||
Variable Interest Entity, Not Primary Beneficiary | White Oak | ||||
Variable Interest Entities | ||||
Ownership interest in VIE (as a percent) | 40.00% | |||
Variable Interest Entity, Primary Beneficiary | Intermediate Partnership | ||||
Variable Interest Entities | ||||
Ownership percentage by limited partners | 98.9899% | |||
Ownership percentage by general partners | 0.01% | |||
Variable Interest Entity, Primary Beneficiary | Intermediate Partnership | Alliance Coal | ||||
Variable Interest Entities | ||||
Ownership interest in VIE (as a percent) | 99.999% | |||
WKY CoalPlay | Variable Interest Entity, Not Primary Beneficiary | ||||
Variable Interest Entities | ||||
Number of limited liability companies related to MGP, that formed the related party together with SGP Land | company | 2 |
INVESTMENTS - AllDale (Details)
INVESTMENTS - AllDale (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Feb. 28, 2017 | |
Changes in equity method investment | ||||
Beginning balance | $ 138,817 | |||
Equity investment income (loss) | 13,860 | $ 3,543 | $ (49,046) | |
Ending balance | 147,964 | 138,817 | ||
AllDale Partnerships | ||||
Changes in equity method investment | ||||
Beginning balance | 138,817 | 64,509 | 11,257 | |
Contributions | 20,688 | 76,797 | 54,290 | |
Equity investment income (loss) | 13,860 | 3,543 | (594) | |
Distributions received | (25,401) | (6,032) | (444) | |
Ending balance | $ 147,964 | $ 138,817 | $ 64,509 | |
Funding Commitments | All Dale Minerals III | Alliance Minerals | ||||
Equity method investments, additional information | ||||
Investment commitment | $ 30,000 |
INVESTMENTS - Kodiak (Details)
INVESTMENTS - Kodiak (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Jul. 19, 2017 | |
Changes in investment | ||
Contributions | $ 100,000 | |
Payment-in-kind distributions received | 6,398 | |
Ending balance | 106,398 | |
Kodiak | Series A-1 Preferred Interests | Alliance Minerals | ||
Cost method investments | ||
Investment in affiliate | $ 100,000 | |
Changes in investment | ||
Beginning balance | 0 | |
Contributions | 100,000 | |
Payment-in-kind distributions received | 6,398 | |
Ending balance | $ 106,398 |
INVESTMENTS - White Oak (Detail
INVESTMENTS - White Oak (Details) - White Oak $ in Thousands | 7 Months Ended |
Jul. 31, 2015USD ($) | |
Equity method investments results | |
Total revenues | $ 108,256 |
Gross loss | (2,919) |
Loss from operations | (38,148) |
Net loss | $ (69,075) |
NET INCOME OF ARLP PER LIMITE91
NET INCOME OF ARLP PER LIMITED PARTNER UNIT - Exchange Transaction (Details) - shares | Jul. 28, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Ownership interests | |||
ARLP common units outstanding | 130,704,217 | 130,704,217 | 74,375,025 |
ARLP | MGP | |||
Ownership interests | |||
Ownership percentage by general partners | 0.99% | ||
AHGP | |||
Ownership interests | |||
ARLP common units outstanding | 59,863,000 | ||
Intermediate Partnership | MGP | |||
Ownership interests | |||
Ownership percentage by general partners | 1.0001% | ||
Exchange Transaction | MGP | |||
Ownership interests | |||
Common units issued in exchange | 56,100,000 | ||
Exchange Transaction | SGP | |||
Ownership interests | |||
Common units issued in exchange | 7,181 | ||
Ownership percentage by general partners | 0.01% |
NET INCOME OF ARLP PER LIMITE92
NET INCOME OF ARLP PER LIMITED PARTNER UNIT - Incentive Distributions (Details) - MGP | 12 Months Ended |
Dec. 31, 2017$ / shares | |
Excess Of $0.1375 Per Unit | |
Incentive distributions | |
General partner incentive distribution percentage | 15.00% |
Threshold distribution of net income per unit (in dollars per unit) | $ 0.1375 |
Excess Of $0.15625 Per Unit | |
Incentive distributions | |
General partner incentive distribution percentage | 25.00% |
Threshold distribution of net income per unit (in dollars per unit) | $ 0.15625 |
Excess Of $0.1875 Per Unit | |
Incentive distributions | |
General partner incentive distribution percentage | 50.00% |
Threshold distribution of net income per unit (in dollars per unit) | $ 0.1875 |
NET INCOME OF ARLP PER LIMITE93
NET INCOME OF ARLP PER LIMITED PARTNER UNIT - Reconciliation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||
Net income of ARLP | $ 74,235 | $ 61,271 | $ 63,230 | $ 104,902 | $ 119,595 | $ 89,780 | $ 82,713 | $ 47,310 | $ 303,638 | $ 339,398 | $ 306,198 |
Managing general partner priority distributions | (19,216) | (76,636) | (144,576) | ||||||||
General partners' equity ownership | (3,688) | (5,275) | (3,262) | ||||||||
General partners' special allocation of certain general and administrative expenses | 1,000 | 1,000 | 1,500 | ||||||||
LIMITED PARTNERS' INTEREST IN NET INCOME OF ARLP | 281,734 | 258,487 | 159,860 | ||||||||
Distributions to participating securities | (4,339) | (3,391) | (3,493) | ||||||||
Undistributed earnings attributable to participating securities | (1,026) | (3,281) | |||||||||
Net income of ARLP available to limited partners | $ 276,369 | $ 251,815 | $ 156,367 | ||||||||
Weighted average limited partner units outstanding - basic (in units) | 130,704,217 | 114,237,979 | 74,597,036 | 74,503,298 | 74,375,025 | 74,375,025 | 74,375,025 | 74,291,114 | 98,707,696 | 74,354,162 | 74,174,389 |
Weighted average limited partner units outstanding - diluted (in units) | 130,704,217 | 114,237,979 | 74,597,036 | 74,503,298 | 74,375,025 | 74,375,025 | 74,375,025 | 74,291,114 | 98,707,696 | 74,354,162 | 74,174,389 |
Basic net income of ARLP per limited partner unit (in dollars per unit) | $ 0.55 | $ 0.52 | $ 0.82 | $ 1.10 | $ 1.30 | $ 0.91 | $ 0.82 | $ 0.36 | $ 2.80 | $ 3.39 | $ 2.11 |
Diluted net income of ARLP per limited partner unit (in dollars per unit) | $ 0.55 | $ 0.52 | $ 0.82 | $ 1.10 | $ 1.30 | $ 0.91 | $ 0.82 | $ 0.36 | $ 2.80 | $ 3.39 | $ 2.11 |
Anti-dilutive under the treasury stock method (in units) | 1,466,404 | 922,386 | 734,171 | ||||||||
Pro Forma | |||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||
Anti-dilutive under the treasury stock method (in units) | 1,466,404 | 922,386 | 734,171 | ||||||||
ARLP | MGP | |||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||
Ownership percentage by general partners | 0.99% | ||||||||||
Intermediate Partnership | MGP | |||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||
Ownership percentage by general partners | 1.0001% | ||||||||||
AHGP | Affiliated entity controlled by Mr. Craft | |||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||
Contributions from affiliates for general and administrative expenses | $ 1,000 | $ 1,000 | $ 1,500 | ||||||||
AHGP | Affiliated entity controlled by Mr. Craft | Pro Forma | |||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||
Contributions from affiliates for general and administrative expenses | 1,000 | 1,000 | 1,500 | ||||||||
Exchange Transaction | Pro Forma | |||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||
Net income of ARLP | 303,638 | 339,398 | 306,198 | ||||||||
General partners' equity ownership | (3,036) | (3,397) | (3,063) | ||||||||
General partners' special allocation of certain general and administrative expenses | 1,000 | 1,000 | 1,500 | ||||||||
LIMITED PARTNERS' INTEREST IN NET INCOME OF ARLP | 301,602 | 337,001 | 304,635 | ||||||||
Distributions to participating securities | (4,339) | (3,391) | (3,493) | ||||||||
Undistributed earnings attributable to participating securities | (701) | (1,594) | |||||||||
Net income of ARLP available to limited partners | $ 296,562 | $ 332,016 | $ 301,142 | ||||||||
Weighted average limited partner units outstanding - basic (in units) | 130,681,000 | 130,461,000 | 130,282,000 | ||||||||
Weighted average limited partner units outstanding - diluted (in units) | 130,681,000 | 130,461,000 | 130,282,000 | ||||||||
Pro forma basic net income of ARLP per limited partner unit (3) (in dollars per share) | $ 2.27 | $ 2.54 | $ 2.31 | ||||||||
Pro forma diluted net income of ARLP per limited partner unit (3) (in dollars per share) | $ 2.27 | $ 2.54 | $ 2.31 | ||||||||
Common units issued in exchange | 56,107,181 |
EMPLOYEE BENEFIT PLANS - Define
EMPLOYEE BENEFIT PLANS - Defined Contribution (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
PSSP | |||
Defined Contribution Plans | |||
Contribution expense | $ 18.7 | $ 18.2 | $ 22.6 |
EMPLOYEE BENEFIT PLANS - Benefi
EMPLOYEE BENEFIT PLANS - Benefit Obligations, Plan Assets and Reported Amounts (Details) - Defined benefit pension plan - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Change in benefit obligations: | |||
Benefit obligations at beginning of year | $ 113,482 | $ 107,476 | |
Service cost | 2,205 | $ 2,473 | |
Interest cost | 4,587 | 4,493 | 4,296 |
Actuarial (gain) loss | 13,501 | 901 | |
Benefits paid | (4,272) | (3,091) | |
Plan amendments | 1,498 | ||
Benefit obligations at end of year | 127,298 | 113,482 | 107,476 |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 71,412 | 68,445 | |
Employer contribution payments | 2,971 | 2,608 | |
Actual return on plan assets | 11,870 | 3,450 | |
Benefits paid | (4,272) | (3,091) | |
Fair value of plan assets at end of year | 81,981 | 71,412 | $ 68,445 |
Funded status at the end of year | (45,317) | (42,070) | |
Amounts recognized in balance sheet: | |||
Non-current liability | (45,317) | (42,070) | |
Amount recognized in accumulated other comprehensive loss consists of: | |||
Prior service cost | (1,312) | (1,498) | |
Net actuarial gain (loss) | (41,979) | (38,424) | |
Amounts recognized in accumulated other comprehensive income | $ (43,291) | $ (39,922) | |
Weighted-average assumptions to determine benefit obligations | |||
Discount rate | 3.54% | 4.06% | |
Expected rate of return on plan assets | 7.00% | 7.00% | |
Weighted-average assumptions used to determine net periodic benefit cost | |||
Discount rate | 4.06% | 4.27% | |
Expected return on plan assets | 7.00% | 7.50% |
EMPLOYEE BENEFIT PLANS - Assump
EMPLOYEE BENEFIT PLANS - Assumptions (Details) - Defined benefit pension plan | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Asset allocation assumptions | ||
Active management premium percentage | 1.50% | |
Asset allocation assumption | 100.00% | |
Actual return on plan assets (as a percent) | 18.00% | 5.90% |
Equity securities | ||
Asset allocation assumptions | ||
Asset allocation assumption | 62.00% | |
Fixed income securities | ||
Asset allocation assumptions | ||
Asset allocation assumption | 33.00% | |
Real estate | ||
Asset allocation assumptions | ||
Asset allocation assumption | 5.00% |
EMPLOYEE BENEFIT PLANS - Period
EMPLOYEE BENEFIT PLANS - Periodic Benefit Cost and Other Changes (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive loss: | ||||
Total adjustments | $ (13,400) | $ (3,983) | $ 1,290 | |
Defined benefit pension plan | ||||
Components of net periodic benefit cost: | ||||
Service cost | 2,205 | 2,473 | ||
Interest cost | 4,587 | 4,493 | 4,296 | |
Expected return on plan assets | (4,978) | (5,138) | (5,590) | |
Amortization of prior service cost | 186 | |||
Amortization of net actuarial loss | 3,054 | 2,952 | 3,354 | |
Net periodic benefit cost | 2,849 | 4,512 | 4,533 | |
Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive loss: | ||||
Prior service cost | (1,498) | |||
Net actuarial loss | (6,610) | (2,589) | (863) | |
Reversal of amortization item: Prior service cost | [1] | 186 | ||
Reversal of amortization item: net actuarial loss | [1] | 3,054 | 2,952 | 3,354 |
Total adjustments | (3,370) | (1,135) | 2,491 | |
Net periodic benefit cost | (2,849) | (4,512) | $ (4,533) | |
Total recognized in net periodic benefit cost and accumulated other comprehensive loss | $ (6,219) | $ (5,647) | ||
[1] | Amortization of prior service cost and actuarial gain or loss is included in the computation of net periodic benefit cost (see Notes 13 and 17 for additional details). |
EMPLOYEE BENEFIT PLANS - Estima
EMPLOYEE BENEFIT PLANS - Estimated Benefit Payments (Details) - Defined benefit pension plan $ in Thousands | Dec. 31, 2017USD ($) |
Estimated future benefit payments | |
2,018 | $ 4,238 |
2,019 | 4,651 |
2,020 | 5,053 |
2,021 | 5,420 |
2,022 | 5,696 |
2023-2027 | 32,329 |
Estimated future benefit payments | 57,387 |
Expected contribution for pension plan in next year | 3,800 |
Estimated net actuarial loss for pension plan amortized from AOCI into net periodic benefit cost in next year | 3,800 |
Estimated prior service cost for pension plan amortized from AOCI into net periodic benefit cost in next year | $ 200 |
EMPLOYEE BENEFIT PLANS - Asset
EMPLOYEE BENEFIT PLANS - Asset Allocations (Details) - Defined benefit pension plan | Dec. 31, 2017 |
Equity securities | |
Employee Benefit Plans | |
Target allocation | 62.00% |
Equity securities | Minimum | |
Employee Benefit Plans | |
Target allocation | 45.00% |
Equity securities | Maximum | |
Employee Benefit Plans | |
Target allocation | 80.00% |
Fixed income securities | |
Employee Benefit Plans | |
Target allocation | 33.00% |
Fixed income securities | Minimum | |
Employee Benefit Plans | |
Target allocation | 10.00% |
Fixed income securities | Maximum | |
Employee Benefit Plans | |
Target allocation | 55.00% |
Real estate | |
Employee Benefit Plans | |
Target allocation | 5.00% |
Real estate | Minimum | |
Employee Benefit Plans | |
Target allocation | 0.00% |
Real estate | Maximum | |
Employee Benefit Plans | |
Target allocation | 10.00% |
EMPLOYEE BENEFIT PLANS - Fair V
EMPLOYEE BENEFIT PLANS - Fair Value of Plan Assets (Details) - Defined benefit pension plan - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Employee Benefit Plans | |||
Defined benefit plan, fair value of plan assets | $ 81,981 | $ 71,412 | $ 68,445 |
Cash And Cash Equivalents | Quoted Prices In Active Markets For Identical Assets (Level 1) | |||
Employee Benefit Plans | |||
Defined benefit plan, fair value of plan assets | 1,439 | 1,137 | |
Equities - U.S. large-cap | |||
Employee Benefit Plans | |||
Commingled investment funds measured at net asset value | 26,031 | 21,082 | |
Equities - U.S. small-cap | |||
Employee Benefit Plans | |||
Commingled investment funds measured at net asset value | 6,120 | 6,531 | |
Equities - International developed markets | |||
Employee Benefit Plans | |||
Commingled investment funds measured at net asset value | 15,015 | 11,074 | |
Equities - International emerging markets | |||
Employee Benefit Plans | |||
Commingled investment funds measured at net asset value | 6,528 | 4,614 | |
Fixed income - Investment grade | |||
Employee Benefit Plans | |||
Commingled investment funds measured at net asset value | 13,546 | 16,823 | |
Fixed income - High yield | |||
Employee Benefit Plans | |||
Commingled investment funds measured at net asset value | 4,325 | 4,543 | |
Real estate | |||
Employee Benefit Plans | |||
Commingled investment funds measured at net asset value | 3,754 | 4,259 | |
Other | |||
Employee Benefit Plans | |||
Commingled investment funds measured at net asset value | $ 5,223 | $ 1,349 |
COMPENSATION PLANS - LTIP Grant
COMPENSATION PLANS - LTIP Grants Activity (Details) - ARLP LTIP - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of non-vested grants (in units) | ||||
Balance at the beginning of the period (in units) | 1,604,748 | 939,793 | 843,340 | |
Granted (in units) | 475,310 | 960,992 | 303,165 | |
Vested (in units) | (350,516) | (284,272) | (202,778) | |
Forfeited (in units) | (35,516) | (11,765) | (3,934) | |
Balance at the end of the period (in units) | 1,694,026 | 1,604,748 | 939,793 | |
Weighted average grant date fair value per unit | ||||
Balance at the beginning of the period (in dollars per unit) | $ 23.19 | $ 36.80 | $ 37.16 | |
Granted (in dollars per unit) | 23.17 | 12.38 | 37.18 | |
Vested (in dollars per unit) | 40.73 | 31.51 | 38.85 | |
Forfeited (in dollars per unit) | 20.01 | 26.39 | 36.49 | |
Balance at the end of the period (in dollars per unit) | $ 19.62 | $ 23.19 | $ 36.80 | |
Intrinsic value (in dollars) | ||||
Intrinsic value of outstanding grants (in dollars) | $ 33,372 | $ 36,027 | $ 12,678 | $ 36,306 |
Other information | ||||
Common units issued upon vesting | 222,011 | 176,319 | 128,150 |
COMPENSATION PLANS - LTIP Other
COMPENSATION PLANS - LTIP Other Information (Details) - ARLP LTIP - USD ($) $ in Millions | Feb. 08, 2018 | Jan. 24, 2018 | Feb. 08, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Other information | ||||||
Unit-based compensation expense | $ 11 | $ 12.7 | $ 11.2 | |||
Total unit-based obligation recorded | 21.8 | $ 25.1 | ||||
Unrecognized compensation expense (in dollars) | $ 11.4 | |||||
Weighted-average period for recognition of expense | 1 year 1 month 6 days | |||||
Units for which vesting requirements were deemed satisfied | 350,516 | 284,272 | 202,778 | |||
Forfeitures (in units) | 35,516 | 11,765 | 3,934 | |||
Common units issued upon vesting | 222,011 | 176,319 | 128,150 | |||
Units granted | 475,310 | 960,992 | 303,165 | |||
Units available for grant | 2,100,000 | |||||
2015 Grants | ||||||
Other information | ||||||
Units for which vesting requirements were deemed satisfied | 290,706 | |||||
Forfeitures (in units) | 12,459 | |||||
Common units issued upon vesting | 191,858 | 191,858 | ||||
2018 Grants | ||||||
Other information | ||||||
Additional grants authorized (in units) | 526,305 | |||||
Units granted | 511,305 |
COMPENSATION PLANS - SERP and D
COMPENSATION PLANS - SERP and Directors Deferred Compensation Activity (Details) - SERP and Deferred Compensation Plans - USD ($) $ / shares in Units, $ in Thousands | Feb. 08, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of non-vested grants (in units) | |||||
Issued (in units) | (7,181) | ||||
Other information | |||||
Unit-based compensation expense | $ 1,400 | $ 1,200 | $ 1,300 | ||
Total unit-based obligation recorded | $ 16,100 | $ 14,700 | |||
Phantom Share Units (PSUs) | |||||
Summary of non-vested grants (in units) | |||||
Balance at the beginning of the period (in units) | 494,018 | 429,141 | 368,981 | ||
Granted (in units) | 67,766 | 74,799 | 60,160 | ||
Issued (in units) | (9,922) | ||||
Balance at the end of the period (in units) | 561,784 | 494,018 | 429,141 | ||
Weighted average grant date fair value per unit | |||||
Balance at the beginning of the period (in dollars per unit) | $ 29.77 | $ 32.25 | $ 34.02 | ||
Granted (in dollars per unit) | 20.38 | 16.31 | 21.38 | ||
Issued (in dollars per unit) | 33.76 | ||||
Balance at the end of the period (in dollars per unit) | $ 28.64 | $ 29.77 | $ 32.25 | ||
Intrinsic value (in dollars) | |||||
Intrinsic value of outstanding grants (in dollars) | $ 11,067 | $ 11,091 | $ 5,789 | $ 15,885 |
SUPPLEMENTAL CASH FLOW INFOR104
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Paid For: | |||
Interest | $ 31,692 | $ 29,274 | $ 30,438 |
Income taxes | 210 | 10 | 21 |
Non-Cash Activity: | |||
Accounts payable for purchase of property, plant and equipment | 15,636 | 8,232 | 12,634 |
Assets acquired by capital lease | 37,089 | 99,543 | |
Market value of common units vested in Long-Term Incentive Plan and Deferred Compensation Plan before minimum statutory tax withholding requirements | $ 8,149 | 3,642 | 7,389 |
Acquisition of assets and businesses | |||
Fair value of assets assumed, net of cash acquired | 1,011 | 519,384 | |
Contingent consideration | (20,907) | ||
Settlement of pre-existing relationships | (124,379) | ||
Previously held equity-method investment | (122,764) | ||
Cash paid, net of cash acquired | $ (1,011) | (74,953) | |
Fair value of liabilities assumed | $ 176,381 |
ASSET RETIREMENT OBLIGATIONS -
ASSET RETIREMENT OBLIGATIONS - Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Asset retirement and mine closing liability | |||
Balance at the beginning of the period | $ 125,701 | $ 123,685 | |
Accretion expense | 3,793 | 3,769 | $ 3,192 |
Payments | (1,046) | (379) | |
Allocation of liability associated with acquisitions, mine development and change in assumptions | 2,152 | (1,374) | |
Balance at the end of the period | $ 130,600 | $ 125,701 | $ 123,685 |
ASSET RETIREMENT OBLIGATIONS106
ASSET RETIREMENT OBLIGATIONS - Estimated Payments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Estimated payments of asset retirement obligations: | |||
2,018 | $ 3,850 | ||
2,019 | 454 | ||
2,020 | 433 | ||
2,022 | 1,256 | ||
Thereafter | 238,604 | ||
Aggregate undiscounted asset retirement obligations | 244,597 | ||
Effect of discounting | (113,997) | $ (110,700) | |
Total asset retirement obligations | 130,600 | 125,701 | $ 123,685 |
Less: current portion | (3,850) | ||
Asset retirement obligations | 126,750 | 125,266 | |
Surety bonds outstanding to performance of reclamation obligations | $ 172,900 | $ 171,800 |
ACCRUED WORKERS' COMPENSATIO107
ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS - Workers' Compensation Liability (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of changes in the workers' compensation liability | |||
Beginning balance | $ 48,131 | $ 54,558 | |
Accruals increase | 17,066 | 10,450 | |
Payments | (10,769) | (10,415) | |
Interest accretion | 1,681 | 1,967 | |
Valuation gain (1) | (1,670) | (8,429) | |
Ending balance | $ 54,439 | $ 48,131 | $ 54,558 |
Estimated present value of future obligations and other information | |||
Workers' compensation discount rate | 3.22% | 3.52% | 3.63% |
Letters of credit to secure workers compensation obligation | $ 89,200 | $ 89,100 | |
Other long-term assets | |||
Estimated present value of future obligations and other information | |||
Receivables for traumatic injury claims | $ 9,000 |
ACCRUED WORKERS' COMPENSATIO108
ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS - Benefit Obligations (Details) - Pneumoconiosis benefits - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of the changes in black lung benefit obligations | |||
Benefit obligations at beginning of year | $ 64,988 | $ 61,693 | |
Service cost | 2,255 | 2,578 | $ 3,081 |
Interest cost | 2,555 | 2,506 | 2,094 |
Actuarial loss | 7,938 | 205 | |
Benefits and expenses paid | (2,877) | (1,994) | |
Benefit obligations at end of year | $ 74,859 | $ 64,988 | $ 61,693 |
ACCRUED WORKERS' COMPENSATIO109
ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS - Recognized in AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive loss: | ||||
Total adjustments | $ (13,400) | $ (3,983) | $ 1,290 | |
Pneumoconiosis benefits | ||||
Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive loss: | ||||
Net actuarial loss | (7,938) | (205) | (750) | |
Reversal of amortization item: net actuarial gain | [1] | (2,092) | (2,643) | (451) |
Total adjustments | (10,030) | (2,848) | (1,201) | |
Amount recognized in accumulated other comprehensive loss consists of: | ||||
Net actuarial gain (loss) | $ 8,648 | $ (1,382) | $ (4,230) | |
[1] | Amortization of prior service cost and actuarial gain or loss is included in the computation of net periodic benefit cost (see Notes 13 and 17 for additional details). |
ACCRUED WORKERS' COMPENSATIO110
ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS - Recognized in Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
WORKERS' COMPENSATION AND PNEUMOCONIOSIS | |||
Workers' compensation claims | $ 54,439 | $ 48,131 | $ 54,558 |
Black lung claims | 74,859 | 64,988 | |
Total obligations | 129,298 | 113,119 | |
Less current portion | (10,729) | (9,897) | |
Non-current obligations | $ 118,569 | $ 103,222 |
ACCRUED WORKERS' COMPENSATIO111
ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS - Recognized in AOCL (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Accrued Workers Compensation And Pneumoconiosis Benefits | ||||
Total adjustments | $ (13,400) | $ (3,983) | $ 1,290 | |
Estimated present value of future obligations and other information | ||||
Letters of credit to secure workers compensation obligation | 89,200 | 89,100 | ||
Pneumoconiosis benefits | ||||
Accrued Workers Compensation And Pneumoconiosis Benefits | ||||
Net actuarial loss | (7,938) | (205) | (750) | |
Reversal of amortization item: net actuarial loss | [1] | (2,092) | (2,643) | (451) |
Total adjustments | $ (10,030) | $ (2,848) | $ (1,201) | |
Estimated present value of future obligations and other information | ||||
Pneumoconiosis discount rate | 3.49% | 3.97% | 4.16% | |
Amount recognized in accumulated other comprehensive loss consists of: | ||||
Net actuarial (loss) gain | $ (8,648) | $ 1,382 | $ 4,230 | |
[1] | Amortization of prior service cost and actuarial gain or loss is included in the computation of net periodic benefit cost (see Notes 13 and 17 for additional details). |
ACCRUED WORKERS' COMPENSATIO112
ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS - Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accrued Workers Compensation And Pneumoconiosis Benefits | |||
Workers' compensation expense | $ 12,215 | $ 9,063 | $ 9,759 |
Total expense | 14,933 | 11,504 | 14,483 |
Pneumoconiosis benefits | |||
Accrued Workers Compensation And Pneumoconiosis Benefits | |||
Service cost | 2,255 | 2,578 | 3,081 |
Interest cost | 2,555 | 2,506 | 2,094 |
Net amortization | (2,092) | (2,643) | (451) |
Net periodic benefit cost | $ 2,718 | $ 2,441 | $ 4,724 |
RELATED-PARTY TRANSACTIONS - Wh
RELATED-PARTY TRANSACTIONS - White Oak, and SGP (Details) - Equity Method Investee - White Oak $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Acquisition and lease-back of reserves and surface rights | |
Related Party Transaction | |
Royalties generated | $ 11.4 |
Coal handling and services agreement | |
Related Party Transaction | |
Revenue from services and products | 28.2 |
Subsidiary agreements for purchase of services and products | |
Related Party Transaction | |
Revenue from services and products | $ 4.6 |
RELATED-PARTY TRANSACTIONS - Af
RELATED-PARTY TRANSACTIONS - Affliliate Royalty Agreements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction | |||
As of the beginning of period | $ 30,579 | ||
As of the end of period | 44,170 | $ 30,579 | |
Mineral and Coal Leases | |||
Related Party Transaction | |||
As of the beginning of period | 19,820 | 16,190 | $ 10,706 |
Payments | 16,819 | 13,819 | 13,819 |
Recoupment | (3,646) | (10,189) | (8,335) |
As of the end of period | 32,993 | 19,820 | 16,190 |
SGP | Tunnel Ridge | Coal lease | |||
Related Party Transaction | |||
As of the beginning of period | 0 | 5,413 | 10,706 |
Payments | 6,000 | 3,000 | 3,000 |
Recoupment | (3,000) | (8,413) | (8,293) |
As of the end of period | 3,000 | 0 | 5,413 |
WKY CoalPlay | December 2014 coal lease - Henderson and Union Counties, Kentucky | |||
Related Party Transaction | |||
As of the beginning of period | 7,195 | 3,598 | 0 |
Payments | 3,598 | 3,598 | 3,598 |
Recoupment | (109) | (1) | |
As of the end of period | 10,684 | 7,195 | 3,598 |
WKY CoalPlay | December 2014 coal lease - Webster County, Kentucky | |||
Related Party Transaction | |||
As of the beginning of period | 3,319 | 2,526 | 0 |
Payments | 2,568 | 2,568 | 2,568 |
Recoupment | (531) | (1,775) | (42) |
As of the end of period | 5,356 | 3,319 | 2,526 |
WKY CoalPlay | December 2014 coal lease - Henderson County, Kentucky | |||
Related Party Transaction | |||
As of the beginning of period | 5,044 | 2,522 | 0 |
Payments | 2,522 | 2,522 | 2,522 |
As of the end of period | 7,566 | 5,044 | 2,522 |
WKY CoalPlay | February 2015 coal lease - Henderson and Union Counties, Kentucky | |||
Related Party Transaction | |||
As of the beginning of period | 4,262 | 2,131 | 0 |
Payments | 2,131 | 2,131 | 2,131 |
Recoupment | (6) | ||
As of the end of period | $ 6,387 | $ 4,262 | $ 2,131 |
RELATED-PARTY TRANSACTIONS -115
RELATED-PARTY TRANSACTIONS - Affliliate Royalty Agreements - SGP (Details) - Tunnel Ridge - USD ($) $ in Millions | 1 Months Ended | ||
Dec. 31, 2017 | Jan. 31, 2017 | Jan. 31, 2018 | |
Related Party Transaction | |||
Accrued earned royalties payable | $ 7.2 | ||
SGP | |||
Related Party Transaction | |||
Accrued earned royalties payable | $ 0.8 | ||
SGP | Coal lease | |||
Related Party Transaction | |||
Annual minimum royalties | 3 | ||
Payments for earned royalties | $ 3 | $ 3 |
RELATED-PARTY TRANSACTIONS - WK
RELATED-PARTY TRANSACTIONS - WKY CoalPlay (Details) - Variable Interest Entity, Not Primary Beneficiary - WKY CoalPlay - USD ($) $ in Millions | 1 Months Ended | |
Feb. 28, 2015 | Dec. 31, 2014 | |
February 2015 coal lease - Henderson and Union Counties, Kentucky | ||
Related Party Transaction | ||
Percentage of internal rate of return on purchase price, if leased reserves acquired | 7.00% | |
Alliance Resource Properties | February 2015 coal lease - Henderson and Union Counties, Kentucky | ||
Related Party Transaction | ||
Initial term of lease | 20 years | |
Percentage of earned royalty on coal sale price | 4.00% | |
Annual minimum royalties | $ 2.1 | |
Period for option to acquire the leased reserves | 3 years | |
Percentage of internal rate of return on purchase price, if leased reserves acquired | 7.00% | |
Alliance Resource Properties | Towhead Coal | December 2014 coal lease - Henderson and Union Counties, Kentucky | ||
Related Party Transaction | ||
Initial term of lease | 20 years | |
Percentage of earned royalty on coal sale price | 4.00% | |
Annual minimum royalties | $ 3.6 | |
Period for option to acquire the leased reserves | 3 years | |
Percentage of internal rate of return on purchase price, if leased reserves acquired | 7.00% | |
Alliance Resource Properties | Henderson Coal | December 2014 coal lease - Henderson County, Kentucky | ||
Related Party Transaction | ||
Initial term of lease | 20 years | |
Percentage of earned royalty on coal sale price | 4.00% | |
Annual minimum royalties | $ 2.5 | |
Period for option to acquire the leased reserves | 3 years | |
Percentage of internal rate of return on purchase price, if leased reserves acquired | 7.00% | |
Alliance Resource Properties | Webster Coal | December 2014 coal lease - Webster County, Kentucky | ||
Related Party Transaction | ||
Initial term of lease | 7 years | |
Percentage of earned royalty on coal sale price | 4.00% | |
Annual minimum royalties | $ 2.6 | |
Period for option to acquire the leased reserves | 3 years | |
Percentage of internal rate of return on purchase price, if leased reserves acquired | 7.00% |
RELATED-PARTY TRANSACTIONS -117
RELATED-PARTY TRANSACTIONS - Affliliate Royalty Agreements - SGP Land (Details) - SGP Land, LLC - MC Mining LLC - Mineral lease - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction | |||
Annual minimum royalties | $ 0.3 | ||
Cumulative annual minimum and/or earned royalty payments | 6 | ||
Payments for earned royalties | $ 0.6 | $ 0.6 | $ 1.9 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Capital Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Future minimum lease payments, Capital Lease | ||
2,018 | $ 32,378 | |
2,019 | 48,953 | |
2,020 | 8,866 | |
2,021 | 966 | |
2,022 | 917 | |
Total future minimum lease payments | 92,080 | |
Less: amount representing interest | (6,376) | |
Present value of future minimum lease payments | 85,704 | |
Less: current portion | (28,613) | $ (27,196) |
Long-term capital lease obligation | $ 57,091 | $ 85,540 |
COMMITMENTS AND CONTINGENCIE119
COMMITMENTS AND CONTINGENCIES - Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Future minimum lease payments, Other Operating Leases | |||
2,018 | $ 10,067 | ||
2,019 | 5,826 | ||
2,020 | 1,366 | ||
Total future minimum lease payments | 17,259 | ||
Rental expense | 16,100 | $ 17,000 | $ 11,700 |
Other Operating Leases, Affiliate | |||
Future minimum lease payments, Other Operating Leases | |||
2,018 | 240 | ||
Total future minimum lease payments | 240 | ||
Other Operating Leases, Others | |||
Future minimum lease payments, Other Operating Leases | |||
2,018 | 9,827 | ||
2,019 | 5,826 | ||
2,020 | 1,366 | ||
Total future minimum lease payments | $ 17,019 |
COMMITMENTS AND CONTINGENCIE120
COMMITMENTS AND CONTINGENCIES - Purchase Commitments (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Commitments for external coal purchases | |
Contractual Commitments | |
Commitments to purchase coal | $ 1.3 |
Commitments related to planned capital projects | |
Contractual Commitments | |
Contractual amount | $ 64.3 |
COMMITMENTS AND CONTINGENCIE121
COMMITMENTS AND CONTINGENCIES - Funding and Sale-Leaseback (Details) - USD ($) $ in Thousands | Jun. 29, 2016 | Oct. 29, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Feb. 28, 2017 |
Contractual Commitments | ||||||
Proceeds from sale-leaseback transactions | $ 33,881 | $ 100,000 | ||||
Sale-leaseback of mining equipment, October 2015 | ||||||
Contractual Commitments | ||||||
Proceeds from sale-leaseback transactions | $ 100,000 | |||||
Term of lease | 4 years | |||||
Monthly rent under lease agreement | $ 1,900 | |||||
Balloon payment due at end of lease term (as a percent) | 20.00% | |||||
Deferred gain (loss) | $ 5,000 | |||||
Sale-leaseback transactions | ||||||
Contractual Commitments | ||||||
Proceeds from sale-leaseback transactions | $ 33,900 | |||||
Monthly rent under lease agreement | $ 700 | |||||
Balloon payment due at end of lease term (as a percent) | 20.00% | |||||
Deferred gain (loss) | $ (7,900) | |||||
Sale-leaseback transactions | Minimum | ||||||
Contractual Commitments | ||||||
Term of lease | 3 years | |||||
Sale-leaseback transactions | Maximum | ||||||
Contractual Commitments | ||||||
Term of lease | 4 years | |||||
All Dale Minerals III | Alliance Minerals | Funding Commitments | ||||||
Contractual Commitments | ||||||
Investment commitment | $ 30,000 | |||||
Remaining funding commitment | $ 15,600 |
COMMITMENTS AND CONTINGENCIE122
COMMITMENTS AND CONTINGENCIES - Insurance (Details) - Property and casualty insurance | Oct. 01, 2017USD ($) |
Commitments And Contingencies | |
Aggregate maximum insurance limit | $ 100,000,000 |
Insurance deductible | $ 1,500,000 |
Waiting period one | 75 days |
Waiting period two | 90 days |
Waiting period three | 120 days |
Overall aggregate deductible | $ 10,000,000 |
CONCENTRATION OF CREDIT RISK123
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)customer | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Major Customers | |||||||||||
Total revenues | $ 483,231 | $ 453,189 | $ 398,720 | $ 461,080 | $ 527,400 | $ 552,074 | $ 439,150 | $ 412,829 | $ 1,796,220 | $ 1,931,453 | $ 2,273,733 |
Trade receivables | $ 181,671 | 152,032 | $ 181,671 | 152,032 | |||||||
Revenues | Customer Concentration Risk | Major customers | |||||||||||
Major Customers | |||||||||||
Number of customers | customer | 0 | ||||||||||
Revenues | Customer Concentration Risk | Customer A | |||||||||||
Major Customers | |||||||||||
Total revenues | 253,465 | 343,483 | |||||||||
Revenues | Customer Concentration Risk | Customer B | |||||||||||
Major Customers | |||||||||||
Total revenues | 241,255 | 305,048 | |||||||||
Revenues | Customer Concentration Risk | Customer C | |||||||||||
Major Customers | |||||||||||
Total revenues | 265,642 | 312,150 | |||||||||
Trade accounts receivable | Customer Concentration Risk | Major customers | |||||||||||
Major Customers | |||||||||||
Trade receivables | $ 42,500 | $ 42,500 | $ 48,400 |
SEGMENT INFORMATION - General I
SEGMENT INFORMATION - General Information (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2017segment | Jul. 19, 2017USD ($) | |
Reportable segment results | ||
Number of reportable segments | segment | 2 | |
Alliance Minerals | Kodiak | Series A-1 Preferred Interests | ||
Reportable segment results | ||
Investment in affiliate | $ | $ 100 |
SEGMENT INFORMATION - Segment R
SEGMENT INFORMATION - Segment Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reportable segment results | |||||||||||
Total revenues | $ 483,231 | $ 453,189 | $ 398,720 | $ 461,080 | $ 527,400 | $ 552,074 | $ 439,150 | $ 412,829 | $ 1,796,220 | $ 1,931,453 | $ 2,273,733 |
Segment Adjusted EBITDA Expense | 1,092,187 | 1,125,637 | 1,386,155 | ||||||||
Segment Adjusted EBITDA | 682,591 | 779,248 | 804,935 | ||||||||
Total assets | 2,219,371 | 2,193,042 | 2,219,371 | 2,193,042 | 2,361,286 | ||||||
Capital expenditures | 145,088 | 91,056 | 212,797 | ||||||||
Additional information | |||||||||||
Equity investment income (loss) | 13,860 | 3,543 | (49,046) | ||||||||
Investments in affiliate | 147,964 | 138,817 | 147,964 | 138,817 | |||||||
Illinois Basin | |||||||||||
Reportable segment results | |||||||||||
Total revenues | 1,059,381 | 1,275,543 | 1,527,596 | ||||||||
Appalachia | |||||||||||
Reportable segment results | |||||||||||
Total revenues | 623,720 | 541,108 | 584,962 | ||||||||
Other and Corporate | |||||||||||
Reportable segment results | |||||||||||
Total revenues | 113,119 | 114,802 | 161,175 | ||||||||
Operating segments | Illinois Basin | |||||||||||
Reportable segment results | |||||||||||
Total revenues | 1,115,478 | 1,337,160 | 1,636,217 | ||||||||
Segment Adjusted EBITDA Expense | 688,468 | 761,644 | 961,611 | ||||||||
Segment Adjusted EBITDA | 391,426 | 552,284 | 604,808 | ||||||||
Total assets | 1,429,078 | 1,460,924 | 1,429,078 | 1,460,924 | 1,694,044 | ||||||
Capital expenditures | 94,252 | 52,505 | 145,352 | ||||||||
Operating segments | Appalachia | |||||||||||
Reportable segment results | |||||||||||
Total revenues | 626,041 | 544,914 | 596,299 | ||||||||
Segment Adjusted EBITDA Expense | 385,802 | 346,712 | 398,071 | ||||||||
Segment Adjusted EBITDA | 234,124 | 191,487 | 186,518 | ||||||||
Total assets | 470,892 | 480,745 | 470,892 | 480,745 | 517,972 | ||||||
Capital expenditures | 48,358 | 36,213 | 61,279 | ||||||||
Operating segments | Other and Corporate | |||||||||||
Reportable segment results | |||||||||||
Total revenues | 129,043 | 132,554 | 181,044 | ||||||||
Segment Adjusted EBITDA Expense | 83,490 | 89,594 | 153,720 | ||||||||
Segment Adjusted EBITDA | 65,810 | 46,339 | 26,189 | ||||||||
Total assets | 506,437 | 404,153 | 506,437 | 404,153 | 263,817 | ||||||
Capital expenditures | 2,478 | 2,338 | 6,166 | ||||||||
Elimination | |||||||||||
Reportable segment results | |||||||||||
Total revenues | (74,342) | (83,175) | (139,827) | ||||||||
Segment Adjusted EBITDA Expense | (65,573) | (72,313) | (127,247) | ||||||||
Segment Adjusted EBITDA | (8,769) | (10,862) | (12,580) | ||||||||
Total assets | $ (187,036) | $ (152,780) | (187,036) | (152,780) | (114,547) | ||||||
Elimination | Illinois Basin | |||||||||||
Reportable segment results | |||||||||||
Total revenues | 56,097 | 61,617 | 108,621 | ||||||||
Elimination | Appalachia | |||||||||||
Reportable segment results | |||||||||||
Total revenues | 2,321 | 3,806 | 11,337 | ||||||||
Elimination | Other and Corporate | |||||||||||
Reportable segment results | |||||||||||
Total revenues | $ 15,924 | $ 17,752 | $ 19,869 |
SEGMENT INFORMATION - EBITDA Ex
SEGMENT INFORMATION - EBITDA Expense Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of consolidated Segment Adjusted EBITDA Expense to operating expenses (excluding depreciation, depletion and amortization) | |||
Segment Adjusted EBITDA Expense | $ 1,092,187 | $ 1,125,637 | $ 1,386,155 |
Outside coal purchases | (1,514) | (327) | |
Other income | 2,980 | 725 | 955 |
Operating expenses (excluding depreciation, depletion and amortization) | $ 1,095,167 | $ 1,124,848 | $ 1,386,783 |
SEGMENT INFORMATION - EBITDA Re
SEGMENT INFORMATION - EBITDA Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of consolidated Segment Adjusted EBITDA to net income | |||
Consolidated Segment Adjusted EBITDA | $ 682,591 | $ 779,248 | $ 804,935 |
General and administrative | (61,760) | (72,529) | (67,484) |
Depreciation, depletion and amortization | (268,981) | (336,509) | (323,983) |
Asset impairment charge | (100,130) | ||
Interest expense, net | (39,291) | (30,659) | (29,694) |
Acquisition gain, net | 22,548 | ||
Debt extinguishment loss | (8,148) | ||
Income tax expense | (210) | (13) | (21) |
NET INCOME | $ 304,201 | $ 339,538 | $ 306,171 |
SELECTED QUARTERLY FINANCIAL128
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |||||||||||
Revenues | $ 483,231 | $ 453,189 | $ 398,720 | $ 461,080 | $ 527,400 | $ 552,074 | $ 439,150 | $ 412,829 | $ 1,796,220 | $ 1,931,453 | $ 2,273,733 |
Income from operations | 77,492 | 64,828 | 78,760 | 107,532 | 124,303 | 96,431 | 90,361 | 54,847 | 328,612 | 365,942 | 361,429 |
Income before income taxes | 74,586 | 61,431 | 63,356 | 105,038 | 119,704 | 89,831 | 82,717 | 47,299 | 304,411 | 339,551 | 306,192 |
Net income of ARLP | $ 74,235 | $ 61,271 | $ 63,230 | $ 104,902 | $ 119,595 | $ 89,780 | $ 82,713 | $ 47,310 | $ 303,638 | $ 339,398 | $ 306,198 |
Basic net income of ARLP per limited partner unit (in dollars per unit) | $ 0.55 | $ 0.52 | $ 0.82 | $ 1.10 | $ 1.30 | $ 0.91 | $ 0.82 | $ 0.36 | $ 2.80 | $ 3.39 | $ 2.11 |
Diluted net income of ARLP per limited partner unit (in dollars per unit) | $ 0.55 | $ 0.52 | $ 0.82 | $ 1.10 | $ 1.30 | $ 0.91 | $ 0.82 | $ 0.36 | $ 2.80 | $ 3.39 | $ 2.11 |
Weighted average limited partner units outstanding - basic (in units) | 130,704,217 | 114,237,979 | 74,597,036 | 74,503,298 | 74,375,025 | 74,375,025 | 74,375,025 | 74,291,114 | 98,707,696 | 74,354,162 | 74,174,389 |
Weighted average limited partner units outstanding - diluted (in units) | 130,704,217 | 114,237,979 | 74,597,036 | 74,503,298 | 74,375,025 | 74,375,025 | 74,375,025 | 74,291,114 | 98,707,696 | 74,354,162 | 74,174,389 |
ARLP Debt Arrangements | ARLP Series B Senior Notes | |||||||||||
Other information | |||||||||||
Debt extinguishment loss | $ 8,100 |
SUBSEQUENT EVENTS - Simplificat
SUBSEQUENT EVENTS - Simplification Transactions (Details) | Feb. 22, 2018 |
Subsequent event | Merger and Simplification Agreement | |
Simplification Transactions | |
Number of business days allowed to execute a written consent under terms of agreement | 2 days |
SUBSEQUENT EVENTS - Settlement
SUBSEQUENT EVENTS - Settlement of Litigation (Details) - USD ($) $ in Millions | Feb. 18, 2018 | Dec. 31, 2017 |
Subsequent event | Breach of contract litigation | ||
Settlement of Litigation | ||
Settlement per agreement in principal | $ 93 | |
Net amount expected from settlement | 80 | |
Commitments for external coal purchases | ||
Settlement of Litigation | ||
Purchase of coal reserves, agreed amount | $ 1.3 | |
Commitments for external coal purchases | Subsequent event | Breach of contract litigation | ||
Settlement of Litigation | ||
Purchase of coal reserves, agreed amount | $ 2 |
SCHEDULE II VALUATION AND QU131
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) - Allowance for doubtful accounts - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Valuation And Qualifying Accounts | |||
Balance At Beginning of Year | $ 0 | $ 0 | $ 0 |
Additions Charged to Income | 0 | 0 | 0 |
Deductions | 0 | 0 | 0 |
Balance At End of Year | $ 0 | $ 0 | $ 0 |