Alliance Holdings GP, L.P. Increases Quarterly Distribution by 4.7% to $0.61 Per Unit and Reports Record Quarterly Financial Results

TULSA, Okla.--(BUSINESS WIRE)--Alliance Holdings GP, L.P. (NASDAQ: AHGP) today announced that the Board of Directors of its general partner declared a quarterly cash distribution for the quarter ended September 30, 2011 (the "2011 Quarter") of $0.61 per unit, or an annualized rate of $2.44 per unit. The declared distribution will be paid on November 18, 2011 to AHGP’s unitholders of record as of the close of trading on November 11, 2011.

The announced distribution represents a 22.0% increase over the $0.50 per unit distribution (an annualized rate of $2.00 per unit) for the quarter ended September 30, 2010 (the "2010 Quarter") and an increase of 4.7% over the second quarter 2011 distribution of $0.5825 per unit (an annualized rate of $2.33 per unit).

The declared distribution is based on the distribution AHGP will receive from its ownership interests in Alliance Resource Partners, L.P. (NASDAQ: ARLP). ARLP today announced a quarterly distribution for the 2011 Quarter of $0.955 per unit, or $3.82 per unit on an annualized basis, payable on November 14, 2011 to all unitholders of record as of the close of trading on November 7, 2011. (See ARLP Press Release dated October 28, 2011.)

AHGP also reported record net income for the 2011 Quarter of $57.1 million, or $0.95 per basic and diluted limited partner unit, an increase of 44.6% compared to net income for the 2010 Quarter of $39.5 million, or $0.66 per basic and diluted limited partner unit. (For a discussion of net income presentation, please see the end of this release.)

AHGP currently has no other operating activities apart from those conducted by the operating subsidiaries of ARLP and reports its financial results on a consolidated basis with the financial results of ARLP. AHGP’s principal sources of cash flow are its ownership of general partner interests, limited partner interests and incentive distribution rights in ARLP. Based on ARLP’s current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $37.4 million, or $149.5 million on an annualized basis. AHGP’s primary cash requirements are for working capital, distributions to its unitholders and general and administrative expenses, including for 2011 an estimated $4.1 million in general and administrative expenses.

AHGP and ARLP will discuss their 2011 Quarter financial results during a joint conference call scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial [phone] and provide pass code 92749055. International callers should dial [phone] and provide the same pass code. Investors may also listen to the call via the "investor information" section of ARLP’s website at http://www.arlp.com or AHGP’s website at http://www.ahgp.com.

An audio replay of the conference call will be available for approximately one week. To access the audio replay, dial [phone] and provide pass code 39869026. International callers should dial [phone] and provide the same pass code.

This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership’s distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, AHGP’s distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.

About Alliance Holdings GP, L.P.

AHGP is a limited partnership formed to own and control Alliance Resource Management GP, LLC, the managing general partner of ARLP, through which it holds a 1.98% general partner interest and the incentive distribution rights in ARLP. In addition, AHGP owns 15,544,169 common units of ARLP.

News, unit prices and additional information about AHGP including filings with the Securities and Exchange Commission, are available at http://www.ahgp.com. For more information, contact the investor relations department of AHGP at [phone] or via e-mail at [e-mail].

The statements and projections used throughout this release are based on current expectations. These statements and projections are forward-looking, and actual results may differ materially. These projections do not include the potential impact of any mergers, acquisitions or other business combinations that may occur after the date of this release. At the end of this release, we have included more information regarding business risks that could affect our results.

FORWARD-LOOKING STATEMENTS: With the exception of historical matters, any matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. These risks, uncertainties and contingencies include, but are not limited to, the following: changes in competition in coal markets and the ARLP Partnership's ability to respond to such changes; changes in coal prices, which could affect the ARLP Partnership's operating results and cash flows; risks associated with the ARLP Partnership's expansion of its operations and properties; the impact of recent health care legislation; deregulation of the electric utility industry or the effects of any adverse change in the coal industry, electric utility industry, or general economic conditions; dependence on significant customer contracts, including renewing customer contracts upon expiration of existing contracts; changing global economic conditions or in industries in which the ARLP Partnership’s customers operate; liquidity constraints, including those resulting from any future unavailability of financing; customer bankruptcies, cancellations or breaches to existing contracts, or other failures to perform; customer delays, failure to take coal under contracts or defaults in making payments; adjustments made in price, volume or terms to existing coal supply agreements; fluctuations in coal demand, prices and availability due to labor and transportation costs and disruptions, equipment availability, governmental regulations, including those related to carbon dioxide emissions, and other factors; legislation, regulatory and court decisions and interpretations thereof, including issues related to climate change and miner health and safety; the ARLP Partnership's productivity levels and margins it earns on coal sales; unexpected changes in raw material costs; unexpected changes in availability of skilled labor; the ARLP Partnership's ability to maintain satisfactory relations with its employees; any unanticipated increases in labor costs, adverse changes in work rules, or unexpected cash payments or projections associated with post-mine reclamation and workers' compensation claims; any unanticipated increases in transportation costs and risk of transportation delays or interruptions; greater than expected environmental regulation, costs and liabilities; a variety of operational, geologic, permitting, labor and weather-related factors; risks associated with major mine-related accidents, such as mine fires, or interruptions; results of litigation, including claims not yet asserted; difficulty maintaining the ARLP Partnership's surety bonds for mine reclamation as well as workers' compensation and black lung benefits; difficulty in making accurate assumptions and projections regarding pension, black lung benefits and other post-retirement benefit liabilities; coal market's share of electricity generation, including as a result of environmental concerns related to coal mining and combustion and the cost and perceived benefits of alternative sources of energy, such as natural gas, nuclear energy and renewable fuels; uncertainties in estimating and replacing the ARLP Partnership’s coal reserves; a loss or reduction of benefits from certain tax credits; AND difficulty obtaining commercial property insurance, and risks associated with the ARLP Partnership's participation (excluding any applicable deductible) in the commercial insurance property program.

Additional information concerning these and other factors can be found in AHGP’s public periodic filings with the Securities and Exchange Commission ("SEC"), including AHGP's Annual Report on Form 10-K for the year ended December 31, 2010, filed on March 8, 2011 with the SEC. Except as required by applicable securities laws, AHGP does not intend to update its forward-looking statements.

ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA
(In thousands, except unit and per unit data)
(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
SALES AND OPERATING REVENUES:
Coal sales	$	473,683		$	396,655		$	1,323,851		$	1,146,719
Transportation revenues		7,446			7,111			25,452			25,637
Other sales and operating revenues		6,528			6,590			19,381			18,866
Total revenues		487,657			410,356			1,368,684			1,191,222
EXPENSES:
Operating expenses (excluding depreciation, depletion and amortization)		294,771			264,388			835,006			750,357
Transportation expenses		7,446			7,111			25,452			25,637
Outside coal purchases		19,864			5,736			29,495			12,122
General and administrative		13,613			16,327			40,692			39,353
Depreciation, depletion and amortization		40,275			37,587			117,237			109,560
Total operating expenses		375,969			331,149			1,047,882			937,029
INCOME FROM OPERATIONS		111,688			79,207			320,802			254,193
Interest expense		(8,782	)		(7,633	)		(27,248	)		(22,667	)
Interest income		84			47			279			148
Other income		360			460			1,340			614
INCOME BEFORE INCOME TAXES		103,350			72,081			295,173			232,288
INCOME TAX EXPENSE (BENEFIT)		(317	)		995			(221	)		1,586
NET INCOME		103,667			71,086			295,394			230,702
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		(46,559	)		(31,602	)		(133,367	)		(103,956	)
NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. ("NET INCOME OF AHGP")	$	57,108		$	39,484		$	162,027		$	126,746
BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT	$	0.95		$	0.66		$	2.71		$	2.12
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT	$	0.5825		$	0.4825		$	1.665		$	1.40
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING-BASIC AND DILUTED		59,863,000			59,863,000			59,863,000			59,863,000

ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
(Unaudited)
ASSETS	September 30,			December 31,
	2011			2010
CURRENT ASSETS:
Cash and cash equivalents	$	309,771		$	342,237
Trade receivables		144,201			112,942
Other receivables		2,336			2,537
Due from affiliates		-			1,635
Inventories		45,835			31,548
Advance royalties		4,812			4,812
Prepaid expenses and other assets		1,716			10,363
Total current assets		508,671			506,074
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost		1,838,660			1,598,130
Less accumulated depreciation, depletion and amortization		(750,586	)		(648,883	)
Total property, plant and equipment, net		1,088,074			949,247
OTHER ASSETS:
Advance royalties		30,740			27,439
Equity investments in affiliates		37,119			-
Other long-term assets		17,231			21,312
Total other assets		85,090			48,751
TOTAL ASSETS	$	1,681,835		$	1,504,072
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable	$	86,796		$	63,934
Due to affiliates		514			573
Accrued taxes other than income taxes		18,094			13,916
Accrued payroll and related expenses		37,405			30,773
Accrued interest		6,644			2,491
Workers’ compensation and pneumoconiosis benefits		8,521			8,518
Current capital lease obligations		724			295
Other current liabilities		18,529			16,780
Current maturities, long-term debt		18,000			18,000
Total current liabilities		195,227			155,280
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities		686,000			704,000
Pneumoconiosis benefits		49,106			45,039
Accrued pension benefit		10,489			13,296
Workers’ compensation		70,619			59,796
Asset retirement obligations		56,655			56,045
Due to affiliates		-			682
Long-term capital lease obligations		2,666			165
Other liabilities		3,568			12,549
Total long-term liabilities		879,103			891,572
Total liabilities		1,074,330			1,046,852
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Alliance Holdings GP, L.P. ("AHGP") Partners' Capital:
Limited Partners – Common Unitholders 59,863,000 units outstanding		393,519			330,346
Accumulated other comprehensive loss		(8,039	)		(8,138	)
Total AHGP Partners' Capital		385,480			322,208
Noncontrolling interests		222,025			135,012
Total Partners' Capital		607,505			457,220
TOTAL LIABILITIES AND PARTNERS' CAPITAL	$	1,681,835		$	1,504,072

ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
	Nine Months Ended
	September 30,
	2011			2010
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES	$	429,975		$	391,213
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures		(216,308	)		(233,773	)
Changes in accounts payable and accrued liabilities		511			(6,298	)
Proceeds from sale of property, plant and equipment		465			353
Purchase of equity investment in affiliate		(35,700	)		-
Payment for acquisition of reserves		(33,841	)		-
Receipts of prior advances on Gibson rail project		810			1,597
Net cash used in investing activities		(284,063	)		(238,121	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities		-			95,000
Payments under revolving credit facilities		-			(95,000	)
Payments on capital lease obligations		(595	)		(242	)
Payment on long-term debt		(18,000	)		(18,000	)
Net settlement of employee withholding taxes on vesting of ARLP Long-Term Incentive Plan		(2,324	)		(1,265	)
Distributions paid by consolidated partnership to noncontrolling interests		(57,787	)		(51,242	)
Distributions paid to Partners		(99,672	)		(83,808	)
Net cash used in financing activities		(178,378	)		(154,557	)
EFFECT OF CURRENCY TRANSLATION ON CASH		-			(274	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(32,466	)		(1,739	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		342,237			24,361
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	309,771		$	22,622

Presentation of Net Income

Consolidated net income includes earnings attributable to both AHGP and noncontrolling interests. Unless otherwise noted, any reference to net income in this release represents net income attributable to AHGP.