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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________to________________

Commission File No.: 0-26823

ALLIANCE RESOURCE PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

Delaware

   

73-1564280

(State or other jurisdiction of

incorporation or organization)

(IRS Employer Identification No.)

1717 South Boulder Avenue, Suite 400, Tulsa, Oklahoma 74119

(Address of principal executive offices and zip code)

(918) 295-7600

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes   [   ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  [X ] Yes   [   ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer  

Smaller Reporting Company  

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common units representing limited partner interests

ARLP

NASDAQ Global Select Market

As of May 7, 2021, 127,195,219 common units are outstanding.

Table of Contents

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Page

ITEM 1.

Financial Statements (Unaudited)

ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020

1

Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020

2

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020

3

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020

4

Notes to Condensed Consolidated Financial Statements

5

1.     Organization and Presentation

5

2.     Long-Lived Asset Impairments

6

3. Goodwill Impairment

6

4.     Contingencies

6

5.     Inventories

7

6.     Fair Value Measurements

7

7.     Long-Term Debt

8

8.    Variable Interest Entities

10

9.    Investment

11

10.   Partners' Capital

11

11.   Revenue from Contracts with Customers

13

12.   Earnings per Limited Partner Unit

13

13.   Workers' Compensation and Pneumoconiosis

14

14.   Common Unit-Based Compensation Plans

15

15.   Components of Pension Plan Net Periodic Benefit Cost

16

16.   Segment Information

17

17. Subsequent Events

19

ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

20

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

30

ITEM 4.

Controls and Procedures

31

Forward-Looking Statements

32

PART II

OTHER INFORMATION

ITEM 1.

Legal Proceedings

34

ITEM 1A.

Risk Factors

34

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

34

ITEM 3.

Defaults Upon Senior Securities

34

ITEM 4.

Mine Safety Disclosures

34

ITEM 5.

Other Information

34

ITEM 6.

Exhibits

35

i

Table of Contents

PART I

FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)

(Unaudited)

March 31, 

December 31, 

2021

    

2020

ASSETS

    

 

CURRENT ASSETS:

Cash and cash equivalents

$

34,443

$

55,574

Trade receivables

 

116,333

 

104,579

Other receivables

 

2,496

 

3,481

Inventories, net

 

84,981

 

56,407

Advance royalties

 

3,293

 

4,168

Prepaid expenses and other assets

    

 

15,268

    

 

21,565

Total current assets

 

256,814

 

245,774

PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment, at cost

 

3,575,120

 

3,554,090

Less accumulated depreciation, depletion and amortization

 

(1,807,897)

 

(1,753,845)

Total property, plant and equipment, net

 

1,767,223

 

1,800,245

OTHER ASSETS:

Advance royalties

 

65,101

 

56,791

Equity method investments

 

26,907

 

27,268

Goodwill

4,373

4,373

Operating lease right-of-use assets

15,100

15,004

Other long-term assets

 

15,662

 

16,561

Total other assets

 

127,143

 

119,997

TOTAL ASSETS

$

2,151,180

$

2,166,016

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:

Accounts payable

$

60,140

$

47,511

Accrued taxes other than income taxes

 

22,563

 

25,054

Accrued payroll and related expenses

 

31,984

 

28,524

Accrued interest

 

12,572

 

5,132

Workers' compensation and pneumoconiosis benefits

 

10,646

 

10,646

Current finance lease obligations

 

784

 

766

Current operating lease obligations

 

1,837

 

1,854

Other current liabilities

 

15,153

 

21,919

Current maturities, long-term debt, net

 

55,630

 

73,199

Total current liabilities

 

211,309

 

214,605

LONG-TERM LIABILITIES:

Long-term debt, excluding current maturities, net

 

485,071

 

519,421

Pneumoconiosis benefits

 

105,650

 

105,068

Accrued pension benefit

 

42,842

 

46,965

Workers' compensation

 

47,015

 

47,521

Asset retirement obligations

 

122,060

 

121,487

Long-term finance lease obligations

 

1,255

 

1,458

Long-term operating lease obligations

 

13,260

 

13,078

Other liabilities

 

22,812

 

24,146

Total long-term liabilities

 

839,965

 

879,144

Total liabilities

 

1,051,274

 

1,093,749

PARTNERS' CAPITAL:

ARLP Partners' Capital:

Limited Partners - Common Unitholders 127,195,219 units outstanding

 

1,174,036

 

1,148,565

Accumulated other comprehensive loss

 

(85,443)

 

(87,674)

Total ARLP Partners' Capital

 

1,088,593

 

1,060,891

Noncontrolling interest

11,313

11,376

Total Partners' Capital

1,099,906

1,072,267

TOTAL LIABILITIES AND PARTNERS' CAPITAL

$

2,151,180

$

2,166,016

See notes to condensed consolidated financial statements.

1

Table of Contents

ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except unit and per unit data)

(Unaudited)

Three Months Ended

March 31, 

    

2021

    

2020

    

SALES AND OPERATING REVENUES:

Coal sales

$

287,487

$

314,637

Oil & gas royalties

13,999

14,239

Transportation revenues

 

11,068

 

4,739

Other revenues

 

6,068

 

17,148

Total revenues

 

318,622

 

350,763

EXPENSES:

Operating expenses (excluding depreciation, depletion and amortization)

 

196,520

 

234,342

Transportation expenses

 

11,068

 

4,739

General and administrative

 

15,504

 

13,438

Depreciation, depletion and amortization

 

59,202

 

73,921

Asset impairments

 

 

24,977

Goodwill impairment

 

132,026

Total operating expenses

 

282,294

 

483,443

INCOME (LOSS) FROM OPERATIONS

 

36,328

 

(132,680)

Interest expense (net of interest capitalized for the three months ended March 31, 2021 and 2020 of $86 and $557, respectively)

 

(10,396)

 

(12,279)

Interest income

 

17

 

52

Equity method investment income

 

62

 

451

Other expense

 

(1,197)

 

(356)

INCOME (LOSS) BEFORE INCOME TAXES

 

24,814

 

(144,812)

INCOME TAX BENEFIT

 

(12)

 

(105)

NET INCOME (LOSS)

24,826

(144,707)

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

(78)

 

(76)

NET INCOME (LOSS) ATTRIBUTABLE TO ARLP

$

24,748

$

(144,783)

EARNINGS PER LIMITED PARTNER UNIT - BASIC AND DILUTED

$

0.19

$

(1.14)

WEIGHTED-AVERAGE NUMBER OF UNITS OUTSTANDING – BASIC AND DILUTED

 

127,195,219

 

127,072,308

See notes to condensed consolidated financial statements.

2

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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

Three Months Ended

March 31, 

    

2021

    

2020

    

NET INCOME (LOSS)

$

24,826

$

(144,707)

OTHER COMPREHENSIVE INCOME (LOSS):

Defined benefit pension plan

Amortization of prior service cost (1)

47

46

Amortization of net actuarial loss (1)

 

1,141

 

1,064

Total defined benefit pension plan adjustments

 

1,188

 

1,110

Pneumoconiosis benefits

Amortization of net actuarial loss (gain) (1)

 

1,043

 

(172)

Total pneumoconiosis benefits adjustments

 

1,043

 

(172)

OTHER COMPREHENSIVE INCOME

 

2,231

 

938

COMPREHENSIVE INCOME (LOSS)

27,057

(143,769)

Less: Comprehensive income attributable to noncontrolling interest

(78)

(76)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ARLP

$

26,979

$

(143,845)

(1)Amortization of prior service cost and net actuarial gain or loss is included in the computation of net periodic benefit cost (see Notes 13 and 15 for additional details).

See notes to condensed consolidated financial statements.

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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended

March 31, 

    

2021

    

2020

    

CASH FLOWS FROM OPERATING ACTIVITIES

$

54,647

$

78,719

CASH FLOWS FROM INVESTING ACTIVITIES:

Property, plant and equipment:

Capital expenditures

 

(31,437)

 

(50,364)

Change in accounts payable and accrued liabilities

 

7,200

 

(3,612)

Proceeds from sale of property, plant and equipment

 

1,139

 

2,500

Distributions received from investments in excess of cumulative earnings

361

 

142

Net cash used in investing activities

 

(22,737)

 

(51,334)

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings under securitization facility

 

12,800

Payments under securitization facility

(17,800)

 

(28,200)

Payments on equipment financings

(4,239)

 

(3,225)

Borrowings under revolving credit facilities

 

10,000

 

70,000

Payments under revolving credit facilities

 

(42,500)

 

(25,000)

Borrowings from line of credit

 

1,830

 

Payments on finance lease obligations

 

(185)

 

(1,510)

Payment of debt issuance costs

 

(6)

 

(5,758)

Payments for taxes related to net settlement of issuance of units in deferred compensation plans

 

 

(1,310)

Distributions paid to Partners

 

(51,753)

Other

 

(141)

 

(288)

Net cash used in financing activities

 

(53,041)

 

(34,244)

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

(21,131)

 

(6,859)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

55,574

 

36,482

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

34,443

$

29,623

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest

$

2,094

$

4,533

SUPPLEMENTAL NON-CASH ACTIVITY:

Accounts payable for purchase of property, plant and equipment

$

12,931

$

10,892

Right-of-use assets acquired by operating lease

$

$

195

Market value of common units issued under deferred compensation plans before tax withholding requirements

$

$

3,837

See notes to condensed consolidated financial statements.

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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.ORGANIZATION AND PRESENTATION

Significant Relationships Referenced in Notes to Condensed 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 general partner.  
References to "Mr. Craft" mean Joseph W. Craft III, the Chairman, President and Chief Executive Officer of MGP.
References to "Intermediate Partnership" mean Alliance Resource Operating Partners, L.P., the intermediate partnership of Alliance Resource Partners, L.P.
References to "Alliance Coal" mean Alliance Coal, LLC, the holding company for the coal mining operations of Alliance Resource Operating Partners, L.P.
References to "Alliance Minerals" mean Alliance Minerals, LLC, the holding company for the oil and gas minerals interests of Alliance Resource Operating Partners, L.P.
References to "Alliance Resource Properties" mean Alliance Resource Properties, LLC (the land holding company for certain coal mineral interests of Alliance Resource Operating Partners, L.P.) including the subsidiaries of Alliance Resource Properties, LLC.

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 and completed its initial public offering on August 19, 1999 when it acquired substantially all of the coal production and marketing assets of Alliance Resource Holdings, Inc., a Delaware corporation, and its subsidiaries.  We are managed by our general partner, MGP, a Delaware limited liability company which holds a non-economic general partner interest in ARLP.  

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of March 31, 2021 and December 31, 2020 and the results of our operations, comprehensive income (loss) and cash flows for the three months ended March 31, 2021 and 2020.  All intercompany transactions and accounts have been eliminated.

These condensed consolidated financial statements and notes are prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and do not include all the information normally included with financial statements prepared in accordance with generally accepted accounting principles ("GAAP") of the United States.  These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

 

These condensed consolidated financial statements and notes are unaudited. However, in the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments necessary for a fair presentation of the results for the periods presented.  Results for interim periods are not necessarily indicative of results to be expected for the full year ending December 31, 2021.

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Use of Estimates

The preparation of the ARLP Partnership's condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in our condensed consolidated financial statements.  Actual results could differ from those estimates.

2.LONG-LIVED ASSET IMPAIRMENTS

During the three months ended March 31, 2020, we recorded $23.5 million of non-cash asset impairment charges in our Illinois Basin Coal Operations segment due to sealing our idled Gibson North mine, resulting in its permanent closure, and a decrease in the fair value of certain mining equipment at our idled operations and greenfield coal reserves as a result of weakened coal market conditions. During the same period, we also recorded an asset impairment charge of $1.5 million in our Coal Royalties segment due to a decrease in the fair value of greenfield coal reserves held by Alliance Resource Properties near our coal mining operations in the Illinois Basin. See Note 16 – Segment Information for more information about our segments.

The fair values of the impaired assets were determined using a market approach, which represents Level 3 fair value measurements under the fair value hierarchy.  The fair value analysis used assumptions regarding the marketability of certain mining and reserve assets near our Illinois Basin coal mining operations.

3.GOODWILL IMPAIRMENT

During the three months ended March 31, 2020, we considered whether an interim test of our consolidated goodwill of $136.4 million was necessary.  Our consolidated goodwill included $132.0 million recorded in our Illinois Basin Coal Operations segment in conjunction with our acquisition of the Hamilton County Coal, LLC ("Hamilton") mine on July 31, 2015.  We assessed certain events and changes in circumstances, including a) adverse industry and market developments, including the impact of the COVID-19 pandemic, b) our response to these developments, including temporarily ceasing production at several mines, including our Hamilton mine and c) our actual performance during the quarter.  After consideration of these events and changes in circumstances, we performed an interim test of the goodwill associated with Hamilton comparing Hamilton's carrying amount to its fair value.

We estimated the fair value of Hamilton using an income approach utilizing a discounted cash flow model.  The assumptions used in the discounted cash flow model included estimated production, forward coal prices, operating expenses, capital expenditures and a weighted average cost of capital.  Our forecasts of future cash flows considered market conditions at the time of the assessment and our estimate of the mine's performance in future years based on the information available to us. Key assumptions used in our valuation were not observable in active markets; therefore, the fair value measurements represent Level 3 fair value measurements.  The fair value of Hamilton was determined to be below its carrying amount (including goodwill) by more than the recorded balance of goodwill associated with the mine.  Accordingly, we recognized an impairment charge of $132.0 million consisting of the total carrying amount of goodwill associated with Hamilton.  This impairment charge reduced our consolidated goodwill balance to $4.4 million. During the three months ended March 31, 2020, we also performed an interim test on ARLP's remaining goodwill balances not associated with Hamilton and concluded no impairment was necessary for our other reporting units.

4.CONTINGENCIES

We are party to litigation that has been initiated against certain of our subsidiaries in which the plaintiffs allege violations of the Fair Labor Standards Act and Kentucky Wage and Hour Act due to an alleged failure to compensate for time "donning" and "doffing" equipment and to account for certain bonuses in the calculation of overtime rates and pay.  The plaintiffs seek class or collective action certification.  Because the litigation of these matters is in the early stages, we cannot reasonably estimate a range of potential exposure at this time.  We believe the plaintiffs’ claims are without merit and our ultimate exposure, if any, will not be material to our results of operations or financial position and we intend to defend the litigation vigorously.  However, if our current belief that the claims are without merit is not upheld, it is reasonably possible that the ultimate resolution of these matters could result in a potential loss that may be material to our results of operations.

We also have various other lawsuits, claims and regulatory proceedings incidental to our business that are pending against the ARLP Partnership.  We record an accrual for a potential loss related to these matters when, in management's

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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 are different from management's current expectations and in amounts greater than our accruals, such matters could have a material adverse effect on our business and operations.

5.INVENTORIES

Inventories consist of the following:

March 31, 

December 31, 

2021

    

2020

 

(in thousands)

Coal

$

49,804

$

19,756

Supplies (net of reserve for obsolescence of $5,545 and $5,547, respectively)

 

35,177

 

36,651

Total inventories, net

$

84,981

$

56,407

6.FAIR VALUE MEASUREMENTS

The following table summarizes our fair value measurements within the hierarchy not included elsewhere in these notes:

March 31, 2021

December 31, 2020

    

Level 1

    

Level 2

    

Level 3

    

Level 1

    

Level 2

    

Level 3

 

(in thousands)

Long-term debt

$

$

514,321

$

$

$

518,317

$

Total

$

$

514,321

$

$

$

518,317

$

The carrying amounts for cash equivalents, accounts receivable, accounts payable, accrued and other liabilities 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.

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7.LONG-TERM DEBT

Long-term debt consists of the following:

Unamortized Discount and

Principal

Debt Issuance Costs

March 31, 

December 31, 

March 31, 

December 31, 

    

2021

    

2020

    

2021

    

2020

 

(in thousands)

Revolving credit facility

$

55,000

$

87,500

$

(6,634)

$

(7,196)

Senior notes

 

400,000

 

400,000

 

(3,735)

 

(3,964)

Securitization facility

38,100

55,900

May 2019 equipment financing

4,113

4,956

November 2019 equipment financing

39,814

42,367

June 2020 equipment financing

12,213

13,057

Line of credit

1,830

 

551,070

 

603,780

 

(10,369)

 

(11,160)

Less current maturities

 

(55,630)

 

(73,199)

 

 

Total long-term debt

$

495,440

$

530,581

$

(10,369)

$

(11,160)

Credit Facility.  On March 9, 2020, our Intermediate Partnership entered into a Fifth Amended and Restated Credit Agreement (the "Credit Agreement") with various financial institutions.  The Credit Agreement provides for a $537.75 million revolving credit facility, reducing to $459.5 million on May 23, 2021, 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"), with a termination date of March 9, 2024.

The Credit Agreement is guaranteed by certain of our Intermediate Partnership's material direct and indirect subsidiaries (the "Restricted Subsidiaries") and is secured by substantially all the assets of the Restricted Subsidiaries.  The Credit Agreement is also guaranteed by Alliance Minerals but the oil and gas minerals assets of Alliance Minerals and its direct and indirect subsidiaries (collectively with Alliance Minerals, the "Unrestricted Subsidiaries") are not collateral under the Credit Agreement.  Borrowings under the Revolving Credit Facility bear interest, at our option, 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 Eurodollar Rate, with applicable margin, under the Revolving Credit Facility was 2.97% as of March 31, 2021.  On March 31, 2021, we had $21.8 million of letters of credit outstanding with $461.0 million available for borrowing under the Revolving Credit Facility. We 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 the Intermediate Partnership and its Restricted Subsidiaries including, among other things, restrictions on incurrence of additional indebtedness and liens, sale of assets, investments, mergers and consolidations and transactions with affiliates, including transactions with Unrestricted Subsidiaries.  In each case, these restrictions are subject to various exceptions.  In addition, the payment of cash distributions is restricted if such payment would result in a fixed charge coverage ratio of less than 1.0 to 1.0 (as defined in the Credit Agreement) for the four most recently ended fiscal quarters.  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, (b) a cash flow to interest expense ratio of not less than 3.0 to 1.0 and (c) a first lien debt to cash flow ratio of not more than 1.5 to 1.0, in each case, during the four most recently ended fiscal quarters. The debt to cash flow ratio, cash flow to interest expense ratio and first lien debt to cash flow ratio were 1.43 to 1.0, 8.67 to 1.0 and 0.39 to 1.0, respectively, for the trailing twelve months ended March 31, 2021.  We remained in compliance with the covenants of the Credit Agreement as of March 31, 2021 and anticipate remaining in compliance with the covenants.  

Senior Notes.  On April 24, 2017, the Intermediate Partnership and Alliance Resource Finance Corporation (as co-issuer), a wholly owned subsidiary of the Intermediate Partnership ("Alliance Finance"), 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.  The

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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.  The issuers of the Senior Notes may redeem all or a part of the notes at any time at redemption prices set forth in the indenture governing the Senior Notes.    

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 certain trade receivables on an ongoing basis to our Intermediate Partnership, which then sells the trade receivables to AROP Funding, LLC ("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.  The agreement governing the Securitization Facility contains customary terms and conditions, including limitations with regards to certain customer credit ratings.  In January 2021, we extended the term of the Securitization Facility to January 2022 and reduced the borrowing availability under the facility to $60.0 million.  The Securitization Facility was previously scheduled to mature in January 2021.  On March 31, 2021, we had a $38.1 million outstanding balance under the Securitization Facility.  

May 2019 Equipment Financing.  On May 17, 2019, the Intermediate Partnership entered into an equipment financing arrangement accounted for as debt, wherein the Intermediate Partnership received $10.0 million in exchange for conveying its interest in certain equipment owned indirectly by the Intermediate Partnership and entering into a master lease agreement for that equipment (the "May 2019 Equipment Financing"). The May 2019 Equipment Financing contains customary terms and events of default and provides for thirty-six monthly payments with an implicit interest rate of 6.25%, maturing on May 1, 2022. Upon maturity, the equipment will revert to the Intermediate Partnership.

November 2019 Equipment Financing.  On November 6, 2019, the Intermediate Partnership entered into an equipment financing arrangement accounted for as debt, wherein the Intermediate Partnership received $53.1 million in exchange for conveying its interest in certain equipment owned indirectly by the Intermediate Partnership and entering into a master lease agreement for that equipment (the "November 2019 Equipment Financing").  The November 2019 Equipment Financing contains customary terms and events of default and an implicit interest rate of 4.75%, providing for a four-year term with forty-seven monthly payments of $1.0 million and a balloon payment of $11.6 million upon maturity on November 6, 2023.  Upon maturity, the equipment will revert to the Intermediate Partnership.  

June 2020 Equipment Financing.  On June 5, 2020, the Intermediate Partnership entered into an equipment financing arrangement accounted for as debt, wherein the Intermediate Partnership received $14.7 million in exchange for conveying its interest in certain equipment owned indirectly by the Intermediate Partnership and entering into a master lease agreement for that equipment (the "June 2020 Equipment Financing"). The June 2020 Equipment Financing contains customary terms and events of default and provides for forty-eight monthly payments with an implicit interest rate of 6.1%, maturing on June 5, 2024. Upon maturity, the equipment will revert to the Intermediate Partnership.

Line of Credit.  On February 19, 2021, we entered into a line of credit arrangement with a related party for $5.0 million.  The line of credit has a maturity date of February 28, 2023, with an option to extend it for an additional six months and accrue interest at an annual rate of 3.50%.  Interest is payable quarterly commencing March 31, 2021, and continuing each March 31, June 30, September 30 and December 31 thereafter through and including February 28, 2023.  The agreement contains customary terms and events of default and is guaranteed by ARLP.  We utilize the line of credit, as appropriate, for capital expenditures and investments.  As of March 31, 2021, we had drawn $1.8 million under this agreement.

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8.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 JV, LLC ("Cavalier Minerals"), which was formed to indirectly acquire oil & gas mineral interests through its ownership in AllDale Minerals LP ("AllDale I") and AllDale Minerals II, LP ("AllDale II", and collectively with AllDale I, "AllDale I & II").  Alliance Minerals owns a 96% member interest in Cavalier Minerals, and Bluegrass Minerals owns a 4% member interest in Cavalier Minerals and a profits interest which entitles it to receive distributions equal to 25% of all distributions (including in liquidation) after all members have recovered their investment.  Distributions with respect to Bluegrass Minerals' profits interest will be offset by all distributions received by Bluegrass Minerals from the former general partners of AllDale I & II.  To date, there has been no profits interest distribution.  We hold the managing member interest in Cavalier Minerals.  Total contributions to and cumulative distributions from Cavalier Minerals are as follows:  

Alliance

Bluegrass

Minerals

Minerals

(in thousands)

Contributions

$

143,112

$

5,963

Distributions

92,780

3,865

We have concluded that Cavalier Minerals is a variable interest entity ("VIE") which we consolidate as the primary beneficiary because we are the managing member and a substantial equity owner in Cavalier Minerals.  Bluegrass Minerals' equity ownership of Cavalier Minerals is accounted for as noncontrolling ownership interest in our condensed consolidated balance sheets.  In addition, earnings attributable to Bluegrass Minerals are recognized as noncontrolling interest in our condensed consolidated statements of income.

AllDale III

In February 2017, Alliance Minerals committed to directly invest $30.0 million in AllDale Minerals III, LP ("AllDale III") which was created for similar investment purposes as AllDale I & II.  Alliance Minerals completed funding of this commitment in 2018. Alliance Minerals' limited partner interest in AllDale III is 13.9%.

The AllDale III Partnership Agreement includes a 25% profits interest for the general partner, subject to a return hurdle equal to the greater of 125% of cumulative capital contributions and a 10% internal rate of return, and following an 80/20 "catch-up" provision for the general partner.  

Since AllDale III is structured as a limited partnership with the limited partners 1) not having the ability to remove the general partner and 2) not participating significantly in the operational decisions, we concluded that AllDale III is a VIE.  We are not the primary beneficiary of AllDale III as we do not have the power to direct the activities that most significantly impact AllDale III's economic performance.  We account for our ownership interest in the income or loss of AllDale III as an equity method investment.  We record equity income or loss based on AllDale III's distribution structure. See Note 9 – Investment for more information.

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9.INVESTMENT

AllDale III

As discussed in Note 8 – Variable Interest Entities, we account for our ownership interest in the income or loss of AllDale III as an equity method investment.  We record equity income or loss based on AllDale III's distribution structure.  The changes in our equity method investment in AllDale III for each of the periods presented were as follows:

Three Months Ended

March 31, 

    

2021

    

2020

(in thousands)

Beginning balance

$

27,268

$

28,529

Equity method investment income

62

451

Distributions received

(423)

(593)

Other

(273)

Ending balance

$

26,907

$

28,114

10.PARTNERS' CAPITAL

Distributions

Distributions paid or declared during 2020 and 2021 were as follows:

Payment Date

    

Per Unit Cash Distribution

 

Total Cash Distribution

 

(in thousands)

February 14, 2020

$

0.4000

$

51,753

Total

$

0.4000

$

51,753

May 14, 2021 (1)

$

0.1000

$

Total

$

0.1000

$

(1)On April 26, 2021, we declared this quarterly distribution payable on May 14, 2021 to all unitholders of record as of May 7, 2021.  

Unit Repurchase Program

In May 2018, the MGP board of directors approved the establishment of a unit repurchase program authorizing us to repurchase and retire up to $100 million of ARLP common units.  The program has no time limit and we may repurchase units from time to time in the open market or in other privately negotiated transactions. The unit repurchase program authorization does not obligate us to repurchase any dollar amount or number of units.  No unit repurchases were made during the three months ended March 31, 2021.  Since inception of the unit repurchase program, we have repurchased and retired 5,460,639 units at an average unit price of $17.12 for an aggregate purchase price of $93.5 million. The remaining authorized amount for unit repurchases under this program is $6.5 million.

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Change in Partners' Capital

The following tables present the quarterly change in Partners' Capital for the three months ended March 31, 2021 and 2020:

Accumulated

Number of

Limited 

Other

Limited Partner

Partners'

Comprehensive

Noncontrolling

Total Partners'

    

Units

    

Capital

    

Income (Loss)

    

Interest

    

 Capital

 

(in thousands, except unit data)

Balance at January 1, 2021

 

127,195,219

$

1,148,565

$

(87,674)

$

11,376

$

1,072,267

Comprehensive income:

Net income

 

 

24,748

 

78

 

 

24,826

Actuarially determined long-term liability adjustments

 

 

 

2,231

 

 

 

2,231

Total comprehensive income

 

 

27,057

Common unit-based compensation

 

 

723

723

Distributions from consolidated company to noncontrolling interest

(141)

(141)

Balance at March 31, 2021

 

127,195,219

$

1,174,036

$

(85,443)

$

11,313

$

1,099,906

Accumulated

Number of

Limited 

Other

Limited Partner

Partners'

Comprehensive

Noncontrolling

Total Partners'

    

Units

    

Capital

    

Loss

    

Interest

    

 Capital

 

(in thousands, except unit data)

Balance at January 1, 2020

 

126,915,597

$

1,331,482

$

(77,993)

$

11,935

$

1,265,424

Comprehensive income (loss):

Net income (loss)

 

 

(144,783)

 

76

 

 

(144,707)

Actuarially determined long-term liability adjustments

 

 

 

938

 

 

 

938

Total comprehensive loss

 

 

(143,769)

Settlement of deferred compensation plans

279,622

(1,310)

(1,310)

Common unit-based compensation

 

 

(527)

(527)

Distributions on deferred common unit-based compensation

 

 

(986)

(986)

Distributions from consolidated company to noncontrolling interest

(288)

(288)

Distributions to Partners

 

(50,767)

(50,767)

Other

(273)

(273)

Balance at March 31, 2020

 

127,195,219

$

1,132,836

$

(77,055)

$

11,723

$

1,067,504

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11.REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table illustrates the disaggregation of our revenues by type, including a reconciliation to our segment presentation as presented in Note 16 – Segment Information.

    

Coal Operations

Royalties

Illinois

    

    

    

Other and

    

    

    

Basin

    

Appalachia

    

Oil & Gas

    

Coal

    

Corporate

    

Elimination

    

Consolidated

(in thousands)

Three Months Ended March 31, 2021

Coal sales

$

182,641

$

104,846

$

$

$

$

$

287,487

Oil & gas royalties

13,999

13,999

Coal royalties

11,301

(11,301)

Transportation revenues

7,680

3,388

11,068

Other revenues

613

385

21

7,768

(2,719)

6,068

Total revenues

$

190,934

$

108,619

$

14,020

$

11,301

$

7,768

$

(14,020)

$

318,622

Three Months Ended March 31, 2020

 

Coal sales

$

199,098

$

115,539

$

$

$

$

$

314,637

Oil & gas royalties