10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

OR

oTRANSITION 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  [X ] Yes   [   ] No

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

Large Accelerated Filer [X]	Accelerated Filer [   ]	Non-Accelerated Filer [   ]	Smaller Reporting Company [   ]
		(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[   ] Yes   [X] No

As of May 9, 2014, 37,030,317 common units are outstanding.

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, 2014 and December 31, 2013	1
	Condensed Consolidated Statements of Income for the three months ended March 31, 2014 and 2013	2
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2014 and 2013	3
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013	4
	Notes to Condensed Consolidated Financial Statements	5
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	26
ITEM 4.	Controls and Procedures	27
	Forward-Looking Statements	28
PART II
OTHER INFORMATION
ITEM 1.	Legal Proceedings	30
ITEM 1A.	Risk Factors	30
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
ITEM 3.	Defaults Upon Senior Securities	30
ITEM 4.	Mine Safety Disclosures	30
ITEM 5.	Other Information	30
ITEM 6.	Exhibits	31

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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)

ASSETS	March 31,		December 31,
	2014		2013
CURRENT ASSETS:
Cash and cash equivalents	$	14,396	$	93,654
Trade receivables	199,554		153,662
Other receivables	294		776
Due from affiliates	2,497		1,964
Inventories	68,751		44,214
Advance royalties	11,454		11,454
Prepaid expenses and other assets	9,954		16,186
Total current assets	306,900		321,910
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost	2,681,406		2,645,872
Less accumulated depreciation, depletion and amortization	(1,062,256)		(1,031,493)
Total property, plant and equipment, net	1,619,150		1,614,379
OTHER ASSETS:
Advance royalties	20,741		18,813
Due from affiliate	11,458		11,560
Equity investments in affiliates	154,029		130,410
Other long-term assets	23,680		24,826
Total other assets	209,908		185,609
TOTAL ASSETS	$	2,135,958	$	2,121,898
LIABILITIES AND PARTNERS’ CAPITAL
CURRENT LIABILITIES:
Accounts payable	$	83,860	$	79,371
Due to affiliates	202		290
Accrued taxes other than income taxes	25,060		19,061
Accrued payroll and related expenses	43,116		47,105
Accrued interest	6,302		996
Workers’ compensation and pneumoconiosis benefits	9,237		9,065
Current capital lease obligations	1,307		1,288
Other current liabilities	17,130		18,625
Current maturities, long-term debt	43,000		36,750
Total current liabilities	229,214		212,551
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities	790,000		831,250
Pneumoconiosis benefits	49,698		48,455
Accrued pension benefit	17,544		18,182
Workers’ compensation	54,857		54,949
Asset retirement obligations	81,324		80,807
Long-term capital lease obligations	16,758		17,135
Other liabilities	6,407		7,332
Total long-term liabilities	1,016,588		1,058,110
Total liabilities	1,245,802		1,270,661
COMMITMENTS AND CONTINGENCIES
PARTNERS’ CAPITAL:
Limited Partners - Common Unitholders 37,030,317 and 36,963,054 units outstanding, respectively	1,165,621		1,128,519
General Partners’ deficit	(265,708)		(267,563)
Accumulated other comprehensive loss	(9,757)		(9,719)
Total Partners’ Capital	890,156		851,237
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	2,135,958	$	2,121,898

See notes to condensed consolidated financial statements.

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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except unit and per unit data)

(Unaudited)

	Three Months EndedMarch 31,
	2014			2013
SALES AND OPERATING REVENUES:
Coal sales	$		525,545	$		534,509
Transportation revenues	6,005			6,934
Other sales and operating revenues	10,488			6,612
Total revenues	542,038			548,055
EXPENSES:
Operating expenses (excluding depreciation, depletion and amortization)	322,242			348,575
Transportation expenses	6,005			6,934
Outside coal purchases	2			602
General and administrative	17,435			15,246
Depreciation, depletion and amortization	66,841			64,382
Total operating expenses	412,525			435,739
INCOME FROM OPERATIONS	129,513			112,316
Interest expense (net of interest capitalized for the three months ended March 31, 2014 and 2013 of $772 and $2,531, respectively)	(8,063)			(6,618)
Interest income	389			134
Equity in loss of affiliates, net	(6,241)			(3,867)
Other income	306			274
INCOME BEFORE INCOME TAXES	115,904			102,239
INCOME TAX BENEFIT	-			(698)
NET INCOME	$	115,904		$	102,937
GENERAL PARTNERS’ INTEREST IN NET INCOME	$	33,368		$	29,770
LIMITED PARTNERS’ INTEREST IN NET INCOME	$	82,536		$	73,167
BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT (Note 7)	$	2.20		$	1.95
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT	$	1.1975		$	1.1075
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING – BASIC AND DILUTED	36,997,433			36,919,002

See notes to condensed consolidated financial statements.

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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2014		2013
NET INCOME	$	115,904	$	102,937
OTHER COMPREHENSIVE (LOSS)/INCOME:
Defined benefit pension plan:
Amortization of actuarial loss (1)	225		559
Total defined benefit pension plan adjustments	225		559
Pneumoconiosis benefits:
Amortization of actuarial (gain)/loss (1)	(263)		168
Total pneumoconiosis benefits adjustments	(263)		168
OTHER COMPREHENSIVE (LOSS)/INCOME	(38)		727
TOTAL COMPREHENSIVE INCOME	$	115,866	$	103,664

(1)Amortization of actuarial (gain)/loss is included in the computation of net periodic benefit cost (see Notes 8 and 10 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 EndedMarch 31,
	2014		2013
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES	$	140,099	$	199,478
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures	(69,463)		(70,306		)
Changes in accounts payable and accrued liabilities	(3,745)		(7,608		)
Proceeds from sale of property, plant and equipment	—		9
Purchases of equity investments in affiliate	(30,000)		(29,700		)
Payments to affiliate for acquisition and development of coal reserves	(1,401)		(12,064		)
Advances/loans to affiliate	—		(1,643		)
Net cash used in investing activities	(104,609)		(121,312		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities	82,800		45,000
Payments under revolving credit facilities	(117,800)		(50,000		)
Payments on capital lease obligations	(358)		(284		)
Net settlement of employee withholding taxes on vesting of Long-Term Incentive Plan	(2,991)		(3,015		)
Cash contributions by General Partners	111		114
Distributions paid to Partners	(76,510)		(69,587		)
Net cash used in financing activities	(114,748)		(77,772		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	(79,258)		394
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	93,654		28,283
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	14,396	$	28,677
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	3,255	$	3,906
NON-CASH INVESTING AND FINANCING ACTIVITY:
Accounts payable for purchase of property, plant and equipment	$	14,179	$	13,364
Market value of common units issued under Long-Term Incentive and Directors Deferred Compensation Plans before minimum statutory tax withholding requirements	$	8,417	$	8,583

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, the managing general partner of Alliance Resource Partners, L.P, also referred to as our managing general partner.

·References to “SGP” mean Alliance Resource GP, LLC, the special general partner of Alliance Resource Partners, L.P., also referred to as our special general partner.

·References to “Intermediate Partnership” mean Alliance Resource Operating Partners, L.P., the intermediate partnership of Alliance Resource Partners, L.P., also referred to as our intermediate partnership.

·References to “Alliance Coal” mean Alliance Coal, LLC, the holding company for the operations of Alliance Resource Operating Partners, L.P., also referred to as our 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 our managing general partner, and Kathleen S. Craft.  SGP, a Delaware limited liability company, is owned by ARH and holds a 0.01% general partner interest in each of ARLP and the Intermediate Partnership.

We are managed by our managing general partner, MGP, a Delaware limited liability company, which holds a 0.99% and a 1.0001% managing general partner interest in ARLP and the Intermediate Partnership, respectively, 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 on May 15, 2006.  AHGP owns directly and indirectly 100% of the members’ interest of MGP, the incentive distribution rights (“IDR”) in ARLP and 15,544,169 common units of 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, 2014 and December 31, 2013, and the results of our operations, comprehensive income and cash flows for the three months ended March 31, 2014 and 2013.  All of our intercompany transactions and accounts have been eliminated.

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These condensed consolidated financial statements and notes are unaudited. However, in the opinion of management, these financial statements reflect all adjustments (which include only 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 for a full year.

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 should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2013.

Use of Estimates

The preparation of the ARLP Partnership’s condensed consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) of the United States (“U.S.”) 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.NEW ACCOUNTING STANDARDS

New Accounting Standards Issued and Not Yet Adopted

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”).  ASU 2014-08 changes the requirements for reporting discontinued operations in Accounting Standards Codification 205, Presentation of Financial Statements, by updating the criteria for determining which disposals can be presented as discontinued operations and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of discontinued operations.  ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014.  We do not anticipate the adoption of ASU 2014-08 on January 1, 2015 will have a material impact on our consolidated financial statements.

3.CONTINGENCIES

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.

4.FAIR VALUE MEASUREMENTS

We apply the provisions of FASB ASC 820, Fair Value Measurement, which, among other things, defines fair value, requires disclosures about assets and liabilities carried at fair value and establishes a hierarchal disclosure framework based upon the quality of inputs used to measure fair value.

Valuation techniques are based upon observable and unobservable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our own market assumptions.  These two types of inputs create the following fair value hierarchy:

·Level 1 – Quoted prices for identical instruments in active markets.

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·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 – Instruments whose significant value drivers are unobservable.

The carrying amounts for cash equivalents, accounts receivable, accounts payable, due from affiliates and due to affiliates approximate fair value because of the short maturity of those instruments.  At March 31, 2014 and December 31, 2013, the estimated fair value of our long-term debt, including current maturities, was approximately $845.5 million and $884.8 million, respectively, based on interest rates that we believe are currently available to us for issuance of debt with similar terms and remaining maturities (Note 5). The fair value of debt, which is based upon interest rates for similar instruments in active markets, is classified as a Level 2 measurement under the fair value hierarchy.

5.LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

	March 31, 2014		December 31, 2013
Revolving Credit facility	$	215,000	$	250,000
Senior notes	18,000		18,000
Series A senior notes	205,000		205,000
Series B senior notes	145,000		145,000
Term loan	250,000		250,000
	833,000		868,000
Less current maturities	(43,000)		(36,750)
Total long-term debt	$	790,000	$	831,250

Our Intermediate Partnership has $18.0 million in senior notes (“Senior Notes”), $205.0 million in Series A and $145.0 million in Series B senior notes (collectively, the “2008 Senior Notes”), a $700.0 million revolving credit facility (“Revolving Credit Facility”) and a $250.0 million term loan (collectively, with the Senior Notes, the 2008 Senior Notes and the Revolving Credit Facility, the “ARLP Debt Arrangements”), which are guaranteed by all of the material direct and indirect subsidiaries of our Intermediate Partnership. The ARLP Debt Arrangements contain various covenants affecting our Intermediate Partnership and its subsidiaries restricting, among other things, the amount of distributions by our Intermediate Partnership, the incurrence of additional indebtedness and liens, the sale of assets, the making of investments, the entry into mergers and consolidations and the entry into transactions with affiliates, in each case subject to various exceptions.  The ARLP Debt Arrangements also require the Intermediate Partnership to remain in control of a certain amount of mineable coal reserves relative to its annual production.  In addition, the ARLP Debt Arrangements require our Intermediate Partnership to maintain (a) debt to cash flow ratio of not more than 3.0 to 1.0 and (b) 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 1.17 to 1.0 and 20.4 to 1.0, respectively, for the trailing twelve months ended March 31, 2014.  We were in compliance with the covenants of the ARLP Debt Arrangements as of March 31, 2014.

At March 31, 2014, we had borrowings of $215.0 million and $24.2 million of letters of credit outstanding with $460.8 million available for borrowing under the Revolving Credit Facility.  We utilize the Revolving Credit Facility, as appropriate, for working capital requirements, anticipated capital expenditures and investments in affiliates, scheduled debt payments and distribution payments.  We incur an annual commitment fee of 0.25% on the undrawn portion of the Revolving Credit Facility.

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6.WHITE OAK TRANSACTIONS

On September 22, 2011 (the “Transaction Date”), we entered into a series of transactions with White Oak Resources LLC (“White Oak”) and related entities to support development of a longwall mining operation currently under construction.  The transactions feature several components, including an equity investment in White Oak (represented by “Series A Units” containing certain distribution and liquidation preferences), the acquisition and lease-back of certain coal reserves and surface rights and a construction loan.  Our initial investment funding to White Oak at the Transaction Date, consummated utilizing existing cash on hand, was $69.5 million and we have funded White Oak $248.1 million between the Transaction Date and March 31, 2014.  We expect to fund a total of approximately $395.5 million to $425.5 million from the Transaction Date through December 31, 2015, which includes the funding made to White Oak through March 31, 2014 discussed above.  On the Transaction Date, we also entered into a coal handling and services agreement, pursuant to which we constructed and are operating a preparation plant and other surface facilities.  We expect to fund these additional commitments utilizing existing cash balances, future cash flows from operations, borrowings under credit facilities and cash provided from the issuance of debt or equity.  The following information discusses each component of these transactions in further detail.

Hamilton County, Illinois Reserve Acquisition

On the Transaction Date, Alliance WOR Properties, LLC (“WOR Properties”) acquired from White Oak the rights to approximately 204.9 million tons of proven and probable high-sulfur coal reserves, of which 105.2 million tons are currently being developed for future mining by White Oak, and certain surface properties and rights in Hamilton County, Illinois (the “Reserve Acquisition”), which is adjacent to White County, Illinois, where our White County Coal, LLC Pattiki mine is located.  The asset purchase price of $33.8 million cash paid at closing was allocated to owned and leased coal rights.  Between the Transaction Date and December 31, 2012, WOR Properties provided $51.6 million to White Oak for development of the acquired coal reserves, fulfilling its initial commitment for further development funding.  During the twelve months ended December 31, 2013, WOR Properties acquired from White Oak, for $25.3 million cash paid at various closings, an additional 90.1 million tons of reserves.  During the three months ended March 31, 2014, WOR Properties acquired from White Oak, for $1.4 million cash paid at closing, an additional 5.1 million tons of reserves.  Of the additional tons acquired in 2013 and the three months ended March 31, 2014, 48.5 million tons are currently being developed for future mining by White Oak.  At March 31, 2014, WOR Properties has provided $112.1 million to acquire a total of 300.1 million tons of coal reserves and fund the development of the acquired reserves.  WOR Properties has a remaining commitment of $27.9 million for additional coal reserve acquisitions and development funding.

Equity Investment – Series A Units

Concurrent with the Reserve Acquisition, our subsidiary, Alliance WOR Processing, LLC (“WOR Processing”), made an initial equity investment of $35.7 million in White Oak to purchase Series A Units representing ownership in White Oak.  WOR Processing purchased $129.3 million of additional Series A Units between the Transaction Date and December 31, 2013, and fulfilled WOR Processing’s minimum equity investment commitment of $150.0 million.  During the three months ended March 31, 2014, WOR Processing purchased $30.0 million of additional Series A Units, bringing the total investment in Series A Units to $195.0 million at March 31, 2014.

WOR Processing’s ownership and member’s voting interest in White Oak at March 31, 2014 were 29.0% based upon currently outstanding voting units.  The remainder of the equity ownership in White Oak, represented by Series B Units, is held by other investors and members of White Oak management.

We continually review all rights provided to WOR Processing and us by various agreements with White Oak and continue to conclude all such rights are protective or participating in nature and do not

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provide WOR Processing or us the ability to unilaterally direct any of the primary activities of White Oak that most significantly impact its economic performance.  As such, we recognize WOR Processing’s interest in White Oak as an equity investment in affiliate in our consolidated balance sheets.  As of March 31, 2014, WOR Processing had invested $195.0 million in Series A Units of White Oak equity, which represents our current maximum exposure to loss as a result of our equity investment in White Oak exclusive of capitalized interest.  White Oak has made no distributions to us.

We record WOR Processing’s equity in earnings or losses of affiliates under the hypothetical liquidation at book value method of accounting due to the preferences to which WOR Processing is entitled on distributions.  For the three months ended March 31, 2014 and 2013, we were allocated losses of $6.3 million and $4.2 million, respectively.

Services Agreement

Simultaneous with the closing of the Reserve Acquisition, WOR Processing entered into a Coal Handling and Preparation Agreement with White Oak pursuant to which WOR Processing committed to construct and operate a coal preparation plant and related facilities and a rail loop and loadout facility to service the White Oak longwall Mine No. 1.  For the quarter ended March 31, 2014, WOR Processing earned throughput fees of $3.6 million from White Oak for processing and loading coal through the facilities.

In addition, the Intermediate Partnership agreed to loan $10.5 million to White Oak for the construction of various assets on the surface property, including but not limited to, a bathhouse, office and warehouse (“Construction Loan”).  The Construction Loan has a term of 20 years, with repayment scheduled to begin in 2015.  White Oak had borrowed the entire amount available under the Construction Loan as of March 31, 2014.

7.NET INCOME PER LIMITED PARTNER UNIT

We apply the provisions of FASB ASC 260, Earnings Per Share, which requires the two-class method in calculating basic and diluted earnings per unit (“EPU”).  Net income 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 managing general partner, the holder of the IDR pursuant to our partnership agreement, which are declared and paid following the end of each quarter. Under the quarterly IDR provisions of our partnership agreement, our managing general partner is entitled to receive 15% of the amount we distribute in excess of $0.275 per unit, 25% of the amount we distribute in excess of $0.3125 per unit, and 50% of the amount we distribute in excess of $0.375 per unit.  Our partnership agreement contractually limits our distributions to available cash; therefore, undistributed earnings of the ARLP Partnership are not allocated to the IDR holder.  In addition, our outstanding awards under our Long-Term Incentive Plan (“LTIP”) and phantom units in notional accounts under our Supplemental Executive Retirement Plan (“SERP”) and the MGP Amended and Restated Deferred Compensation Plan for Directors (“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.

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The following is a reconciliation of net income used for calculating basic earnings per unit and the weighted average units used in computing EPU for the three months ended March 31, 2014 and 2013 (in thousands, except per unit data):

	Three Months EndedMarch 31,
	2014		2013
Net income	$	115,904	$	102,937
Adjustments:
Managing general partner’s priority distributions	(31,684)		(28,277)
General partners’ 2% equity ownership	(1,684)		(1,493)
Limited partners’ interest in net income	82,536		73,167
Less:
Distributions to participating securities	(708)		(569)
Undistributed earnings attributable to participating securities	(559)		(432)
Net income available to limited partners	$	81,269	$	72,166
Weighted average limited partner units outstanding — basic and diluted	36,997		36,919
Basic and diluted net income per limited partner unit (1)	$	2.20	$	1.95

(1)Diluted EPU gives effect to all dilutive potential common units outstanding during the period using the treasury stock method. Diluted EPU excludes all dilutive potential units calculated under the treasury stock method if their effect is anti-dilutive.  For the three months ended March 31, 2014 and 2013, LTIP, SERP and Deferred Compensation Plan units of 373,896 and 324,315 respectively, were considered anti-dilutive under the treasury stock method.

On April 28, 2014, we also announced a two-for-one split of our common units. The unit split will take place in the form of a one unit distribution on each unit outstanding, with units to be distributed on June 16, 2014 to unitholders of record as of May 30, 2014. This unit split will result in the issuance of approximately 37.0 million common units. Following the unit split, the quarterly distribution per unit will be reduced by half; for example, the distribution for the quarter ended March 31, 2014 of $1.2225 per unit would become $0.61125 per unit, or an annualized rate of $2.445 per unit. Also following the unit split, the target threshold for the IDR per unit will be reduced by half and accordingly, the quarterly IDR paid will remain unchanged. The following pro forma net income per limited partner unit assumes a two-for-one split on June 16, 2014:

	Three Months EndedMarch 31,
	2014		2013
PRO FORMA BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT	$	1.10	$	0.98

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8.WORKERS’ COMPENSATION AND PNEUMOCONIOSIS

The changes in the workers’ compensation liability (including current and long-term liability balances) for each of the periods presented were as follows (in thousands):

	Three Months EndedMarch 31,
	2014		2013
Beginning balance	$	62,909	$	77,046
Accruals increase	2,183		3,965
Payments	(2,749)		(2,876)
Interest accretion	646		620
Ending balance	$	62,989	$	78,755

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, or black lung, benefits to eligible employees and former employees and their dependents.  Components of the net periodic benefit cost for each of the periods presented are as follows (in thousands):

	Three Months EndedMarch 31,
	2014		2013
Service cost	$	857	$	954
Interest cost	566		563
Amortization of net (gain)/loss (1)	(263)		168
Net periodic benefit cost	$	1,160	$	1,685

(1)Amortization of net (gain)/loss is included in the operating expenses line item within our condensed consolidated statements of income.

9.COMPENSATION PLANS

Long-Term Incentive Plan

We have the LTIP for certain employees and officers of our managing general partner and its affiliates who perform services for us.  The LTIP awards are grants of non-vested “phantom” or notional units, which upon satisfaction of vesting requirements, entitle the LTIP participant to receive ARLP common units.  Annual grant levels and vesting provisions for designated participants are recommended by our President and Chief Executive Officer, subject to review and approval of the compensation committee of the MGP board of directors (the “Compensation Committee”).  On January 22, 2014, the Compensation Committee determined that the vesting requirements for the 2011 grants of 101,371 restricted units (which is net of 7,045 forfeitures) had been satisfied as of January 1, 2014.  As a result of this vesting, on February 14, 2014, we issued 64,305 unrestricted common units to the LTIP participants. The remaining units were settled in cash to satisfy the individual statutory minimum tax obligations of the LTIP participants.  On January 22, 2014, the Compensation Committee authorized additional grants of up to 185,205 restricted units, of which 175,205 were granted during the three months ended March 31, 2014 and will vest on January 1, 2017, subject to satisfaction of certain financial tests.  The fair value of these 2014 grants is equal to the intrinsic value at the date of grant, which was $81.16 per unit.  LTIP expense was $2.1 million and $1.7 million for the three months ended March 31, 2014 and 2013, respectively.  After consideration of the January 1, 2014 vesting and subsequent issuance of 64,305 common units, approximately 2.0 million units remain available under the LTIP for issuance in the future, assuming all

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grants issued in 2012, 2013 and 2014 currently outstanding are settled with common units, without reduction for tax withholding, and no future forfeitures occur.

As of March 31, 2014, there was $19.9 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 1.9 years.  As of March 31, 2014, the intrinsic value of the non-vested LTIP grants was $35.5 million.  As of March 31, 2014, the total obligation associated with the LTIP was $10.1 million and is included in the partners’ capital-limited partners line item in our condensed consolidated balance sheets.

As provided under the distribution equivalent rights provisions of the LTIP, all non-vested grants include contingent rights to receive quarterly cash distributions in an amount equal to the cash distributions we make to unitholders during the vesting period.

SERP 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.  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.

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.

For the three months ended March 31, 2014 and 2013, SERP and Deferred Compensation Plan participant notional account balances were credited with a total of 2,844 and 3,937 phantom units, respectively, and the fair value of these phantom units was $81.34 per unit and $61.67 per unit, respectively, on a weighted-average basis.  Total SERP and Deferred Compensation Plan expense was approximately $0.3 million for the three months ended March 31, 2014 and 2013, respectively.

As of March 31, 2014, there were 173,546 total phantom units outstanding under the SERP and Deferred Compensation Plan and the total intrinsic value of the SERP and Deferred Compensation Plan phantom units was $14.6 million.  As of March 31, 2014, the total obligation associated with the SERP and Deferred Compensation Plan was $11.6 million and is included in the partners’ capital-limited partners line item in our condensed consolidated balance sheets.  On February 14, 2014, we issued 2,958 ARLP common units to directors under the Deferred Compensation Plan.

10.COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS

Eligible employees at certain of our mining operations participate in a defined benefit plan (the “Pension Plan”) that we sponsor.  The benefit formula for the Pension Plan is a fixed dollar unit based on years of service.

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Components of the net periodic benefit cost for each of the periods presented are as follows (in thousands):

	Three Months Ended March 31,
	2014			2013
Service cost	$	543		$	760
Interest cost	1,019			852
Expected return on plan assets	(1,401		)	(1,233		)
Amortization of net loss (1)	225			559
Net periodic benefit cost	$	386		$	938

(1)Amortization of net loss is included in the operating expenses line item within our condensed consolidated statements of income.

We previously disclosed in our financial statements for the year ended December 31, 2013 that we expected to contribute $3.6 million to the Pension Plan in 2014.  As of March 31, 2014, we made a contribution payment of $0.8 million to the Pension Plan for the 2013 plan year.  On April 15, 2014, we made a contribution payment of $0.8 million for the 2014 plan year.  We expect to make additional contributions of $0.3 million for the 2013 plan year and $1.7 million for the 2014 plan year for the remainder of 2014 and, therefore, will contribute approximately $3.6 million to the Pension Plan in 2014.

11.       SEGMENT INFORMATION

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 four reportable segments: the Illinois Basin, Appalachia, White Oak and Other and Corporate.  The first two 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 White Oak reportable segment includes our activities associated with the White Oak longwall Mine No. 1 development project more fully described below.

The Illinois Basin reportable segment is comprised of multiple operating segments, including Webster County Coal, LLC’s Dotiki mining complex, Gibson County Coal, LLC’s mining complex, which includes the Gibson North mine and Gibson South mine, Hopkins County Coal, LLC’s Elk Creek mining complex, White County Coal, LLC’s Pattiki mining complex, Warrior Coal, LLC’s mining complex, Sebree Mining, LLC’s mining complex, which includes the Onton mine, and River View Coal, LLC’s mining complex.  The development of the Gibson South mine is currently underway with incidental production beginning in April 2014.

The Appalachian reportable segment is comprised of multiple operating segments, including the Mettiki mining complex, the Tunnel Ridge, LLC mining complex, the MC Mining, LLC mining complex and the Penn Ridge Coal, LLC (“Penn Ridge”) property.  The Mettiki mining complex includes Mettiki Coal (WV), LLC’s Mountain View mine, Mettiki Coal, LLC’s preparation plant and a small third-party mining operation which has been idled since July 2013.  We are in the process of permitting the Penn Ridge property for future mine development.

The White Oak reportable segment is comprised of two operating segments, WOR Processing and WOR Properties.  WOR Processing includes both the surface operations at White Oak and the equity investment in White Oak.  WOR Properties owns coal reserves acquired from White Oak under lease-back arrangements (Note 6).

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Other and Corporate includes marketing and administrative expenses, Alliance Service, Inc. (“ASI”) and its subsidiary, Matrix Design Group, LLC (“Matrix Design”), Alliance Design Group, LLC (“Alliance Design”) (collectively, Matrix Design and Alliance Design are referred to as the “Matrix Group”), ASI’s ownership of aircraft, the Mt. Vernon Transfer Terminal, LLC (“Mt. Vernon”) dock activities, coal brokerage activity, our equity investment in Mid-America Carbonates, LLC, certain activities of Alliance Resource Properties and the Pontiki Coal, LLC mining complex(“Pontiki”), which ceased operations in late November 2013.

As a result of the cessation of operations at Pontiki in November 2013, we evaluated the ongoing management of our mining operations and coal sales efforts to ensure that resources were appropriately allocated to maximize our overall results.  Based on this evaluation, we have realigned the management of our operating and marketing teams and changed our reportable segment presentation to reflect this realignment.  Due to the change in our reportable segment presentation in 2014, certain reclassifications of 2013 segment information have been made to conform to the 2014 presentation.  These reclassifications include changes to the Appalachian and Other and Corporate segments.

Reportable segment results as of and for the three months ended March 31, 2014 and 2013 are presented below.

	Illinois Basin		Appalachia		White Oak		Other and Corporate		Elimination (1)		Consolidated
	(in thousands)
Reportable segment results as of and for the three months ended March 31, 2014 were as follows:
Total revenues (2)	$	396,502	$	137,184	$	3,698	$	7,742	$	(3,088)	$	542,038
Segment Adjusted EBITDA Expense (3)	229,591		85,573		1,391		8,471		(3,088)		321,938
Segment Adjusted EBITDA (4)(5)	163,649		48,870		(3,997)		(668)		-		207,854
Total assets (6)	1,119,868		620,775		343,040		53,404		(1,129)		2,135,958
Capital expenditures (7)	55,709		10,128		1,959		3,068		-		70,864
Reportable segment results as of and for the three months ended March 31, 2013 were as follows:
Total revenues (2)	$	404,823	$	122,359	$	-	$	26,507	$	(5,634)	$	548,055
Segment Adjusted EBITDA Expense (3)	234,145		95,925		101		24,366		(5,634)		348,903
Segment Adjusted EBITDA (4)(5)	167,221		22,957		(4,292)		2,465		-		188,351
Total assets (6)	1,046,513		599,502		272,316		82,646		(1,439)		1,999,538
Capital expenditures (7)	52,031		12,555		16,953		831		-		82,370

(1)The elimination column represents the elimination of intercompany transactions and is primarily comprised of sales from the Matrix Group to our mining operations and coal sales and purchases between mining operations (2013 only).

(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, brokerage sales and Pontiki’s coal sales revenue (2013 only).

(3)Segment Adjusted EBITDA Expense includes operating expenses, outside 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.

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The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to operating expenses (excluding depreciation, depletion and amortization) (in thousands):

	Three Months Ended
	March 31,
	2014			2013
Segment Adjusted EBITDA Expense	$	321,938		$	348,903
Outside coal purchases	(2		)	(602		)
Other income	306			274
Operating expenses (excluding depreciation, depletion and amortization)	$	322,242		$	348,575

(4) Segment Adjusted EBITDA is defined as net income before net interest expense, income taxes, depreciation, depletion and amortization 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.  Consolidated Segment Adjusted EBITDA is reconciled to net income as follows (in thousands):

	Three Months Ended
	March 31,
	2014			2013
Consolidated Segment Adjusted EBITDA	$	207,854		$	188,351
General and administrative	(17,435		)	(15,246		)
Depreciation, depletion and amortization	(66,841		)	(64,382		)
Interest expense, net	(7,674		)	(6,484		)
Income tax benefit	-			698
Net income	$	115,904		$	102,937

(5)Includes equity in income (loss) of affiliates for the three months ended March 31, 2014 and 2013 of $(6.3) million and $(4.2) million, respectively, included in the White Oak segment and $0.1 million and $0.3 million, respectively, included in the Other and Corporate segment.

(6)Total assets at March 31, 2014 and 2013 include investments in affiliate of $152.4 million and $113.7 million, respectively, for the White Oak segment and $1.7 million and $1.9 million, respectively, for the Other and Corporate segment.

(7)Capital expenditures shown above for the three months ended March 31, 2014 and 2013, included funding of $1.4 million and $12.1 million, respectively, for the acquisition and development of coal reserves from White Oak (Note 6), which is described as “Payments to affiliate for acquisition and development of coal reserves” in our condensed consolidated statements of cash flow.

12.       SUBSEQUENT EVENTS

On April 28, 2014, we declared a quarterly distribution for the quarter ended March 31, 2014, of $1.2225 per unit, on all common units outstanding, totaling approximately $77.9 million (which includes our managing general partner’s incentive distributions), payable on May 15, 2014 to all unitholders of record as of May 8, 2014.

Other than the event described above and in Note 7, there were no other subsequent events.

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ITEM 2.          MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Significant relationships referenced in this management’s discussion and analysis of financial condition and results of operations include the following:

· 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, the managing general partner of Alliance Resource Partners, L.P., also referred to as our managing general partner.

· References to “SGP” mean Alliance Resource GP, LLC, the special general partner of Alliance Resource Partners, L.P., also referred to as our special general partner.

· References to “Intermediate Partnership” mean Alliance Resource Operating Partners, L.P., the intermediate partnership of Alliance Resource Partners, L.P., also referred to as our intermediate partnership.

· References to “Alliance Coal” mean Alliance Coal, LLC, the holding company for the operations of Alliance Resource Operating Partners, L.P., also referred to as our 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.

Summary

We are a diversified producer and marketer of coal primarily to major United States (“U.S.”) utilities and industrial users. We began mining operations in 1971 and, since then, have grown through acquisitions and internal development to become the third largest coal producer in the eastern U.S. We operate ten underground mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia.  We are constructing an additional mine (the “Gibson South mine”) at our southern Indiana Gibson County Coal, LLC (“Gibson County Coal”) mining complex and operate a coal loading terminal on the Ohio River at Mt. Vernon, Indiana.  Incidental production began at the Gibson South mine in April 2014.  Also, we own a preferred equity interest and are making additional equity investments in White Oak Resources LLC (“White Oak”) and are purchasing and funding development of reserves and have constructed and are operating surface facilities at White Oak’s new longwall mining complex in southern Illinois.  As is customary in the coal industry, we have entered into long-term coal supply agreements with many of our customers.

We have four reportable segments: Illinois Basin, Appalachia, White Oak and Other and Corporate.  The first two reportable segments correspond to major coal producing regions in the eastern U.S.  Factors similarly affecting financial performance of 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 White Oak segment includes our activities associated with the White Oak longwall Mine No. 1 development project in southern Illinois more fully described below.

·Illinois Basin reportable segment is comprised of multiple operating segments, including Webster County Coal, LLC’s Dotiki mining complex (“Dotiki”), Gibson County Coal, which includes the Gibson North mine and Gibson South mine, Hopkins County Coal, LLC mining complex, which includes the Elk Creek mine and the Fies property, White County Coal, LLC’s Pattiki mining complex (“Pattiki”), Warrior Coal, LLC’s mining complex (“Warrior”), Sebree Mining, LLC’s mining complex (“Sebree”), which includes the Onton mine, Steamport, LLC and certain undeveloped coal reserves, River View Coal, LLC’s mining complex, CR Services, LLC, and certain properties of Alliance Resource Properties, LLC (“Alliance Resource Properties”), ARP

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Sebree, LLC and ARP Sebree South, LLC.  The development of the Gibson South mine is currently underway with incidental production beginning in April 2014.  We are in the process of permitting the Sebree and Fies properties for future mine development.

·Appalachian reportable segment is comprised of multiple operating segments, including the Mettiki mining complex, the Tunnel Ridge, LLC mining complex (“Tunnel Ridge”), the MC Mining, LLC mining complex (“MC Mining”) and the Penn Ridge Coal, LLC (“Penn Ridge”) property.  The Mettiki mining complex includes Mettiki Coal (WV), LLC’s Mountain View mine, Mettiki Coal, LLC’s preparation plant and a small third-party mining operation which has been idled since July 2013.  We are in the process of permitting the Penn Ridge property for future mine development.

·White Oak reportable segment is comprised of two operating segments, Alliance WOR Properties, LLC (“WOR Properties”) and Alliance WOR Processing, LLC (“WOR Processing”).  WOR Properties owns reserves acquired from White Oak and is committed to acquiring additional reserves from White Oak under lease-back arrangements.  WOR Properties has also provided, and is continuing to provide, certain funding to White Oak for development of these reserves.  WOR Processing includes both the surface operations at White Oak and the equity investments we are making in White Oak.  The White Oak reportable segment also includes a loan to White Oak from our Intermediate Partnership to construct certain surface facilities. For more information on White Oak, please read “Item 1. Financial Statements (Unaudited) – Note 6. White Oak Transactions” of this Quarterly Report on Form 10-Q.

·Other and Corporate segment includes marketing and administrative expenses, Alliance Service, Inc. (“ASI”) and its subsidiary, Matrix Design Group, LLC (“Matrix Design”), Alliance Design Group, LLC, ASI’s ownership of aircraft, the Mt. Vernon Transfer Terminal, LLC (“Mt. Vernon”) dock activities, coal brokerage activity, our equity investment in Mid-America Carbonates, LLC (“MAC”), certain activities of Alliance Resource Properties and the Pontiki Coal, LLC mining complex (“Pontiki”) which ceased operations in late November 2013.

As a result of a change in our reportable segments in 2014, certain reclassifications of 2013 segment information have been made to conform to the 2014 presentation.  These reclassifications include changes to the Appalachian reportable segment and Other and Corporate segment.

Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013

We reported record net income of $115.9 million for the three months ended March 31, 2014 (“2014 Quarter”) compared to $102.9 million for the three months ended March 31, 2013 (“2013 Quarter”).  This increase of $13.0 million was principally due to lower operating expenses during the 2014 Quarter, primarily as a result of increased longwall production and improved recoveries at our Tunnel Ridge mine and the absence of higher cost production at our Pontiki mine.  We also produced a record 10.3 million tons in the 2014 Quarter compared to 9.8 million tons in the 2013 Quarter.  The increase in tons produced resulted from increased production at our Tunnel Ridge mine, increased production in the new Excel No. 4 mining area at our MC Mining mine and improved geological conditions at our Dotiki mine.  Although we had record tons produced, coal sales volumes decreased to 9.5 million tons sold in the 2014 Quarter compared to 9.7 million tons sold in the 2013 Quarter primarily due to weather-related transportation disruptions at our Warrior, Gibson North and Pattiki mines.

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	Three Months Ended March 31,
	2014	2013	2014	2013
	(in thousands)		(per ton sold)
Tons sold	9,495	9,698	N/A	N/A
Tons produced	10,253	9,819	N/A	N/A
Coal sales	$525,545	$534,509	$55.35	$55.12
Operating expenses and outside coal purchases	$322,244	$349,177	$33.94	$36.01

Coal sales.  Coal sales for the 2014 Quarter decreased 1.7% to $525.5 million from $534.5 million for the 2013 Quarter.  The decrease of $9.0 million in coal sales reflected the impact of lower tons sold (reducing coal sales by $11.2 million), offset partially by higher average coal sales prices (contributing $2.2 million in additional coal sales).  Average coal sales price increased slightly to $55.35 per ton in the 2014 Quarter as compared to $55.12 per ton sold in the 2013 Quarter, primarily as a result of higher priced coal sales at our Mettiki mine.

Operating expenses and outside coal purchases.  Operating expenses and outside coal purchases combined decreased 7.7% to $322.2 million for the 2014 Quarter from $349.2 million for the 2013 Quarter, primarily due to the favorable impact of increased lower-cost production at our Tunnel Ridge mine, reduced cost per ton at our Dotiki and MC Mining mines, lower coal sales volumes and the absence of higher cost production at our Pontiki mine discussed above.  On a per ton basis, operating expenses and outside coal purchases decreased 5.7% to $33.94 per ton sold.  Operating expenses were impacted by various factors in addition to the impact of record production volumes.  The most significantly impacted expenses are discussed below:

·Labor and benefit expenses per ton produced, excluding workers’ compensation, decreased 5.1% to $11.08 per ton in the 2014 Quarter from $11.67 per ton in the 2013 Quarter.  This decrease of $0.59 per ton was primarily attributable to lower labor cost per ton resulting from increased coal production and improved recoveries discussed above;

·Workers’ compensation expenses per ton produced decreased 37.5% to $0.45 per ton in the 2014 Quarter from $0.72 per ton in the 2013 Quarter.  The decrease of $0.27 per ton produced resulted primarily from favorable claims trends;

·Materials and supplies expenses per ton produced decreased 4.0% to $10.95 per ton in the 2014 Quarter from $11.41 per ton in the 2013 Quarter.  The decrease of $0.46 per ton produced resulted primarily from increased coal production discussed above and a decrease in cost for certain products and services, primarily contract labor used in the mining process (decrease of $0.42 per ton) and roof support expenses per ton (decrease of $0.10 per ton), partially offset by an increase in power and fuel used in the mining process (increase of $0.15 per ton);

·Maintenance expenses per ton produced decreased 4.8% to $3.74 per ton in the 2014 Quarter from $3.93 per ton in the 2013 Quarter.  The decrease of $0.19 per ton produced was primarily from the benefits of newer equipment and increased production at our Tunnel Ridge mine and increased coal production and improved recoveries at certain locations as discussed above; and

·Contract mining expenses decreased $2.0 million in the 2014 Quarter compared to the 2013 Quarter.  The decrease reflects lower production from a third-party mining operation in our Appalachian region due to reduced metallurgical coal export market opportunities.

Other sales and operating revenues.  Other sales and operating revenues are principally comprised of Mt. Vernon transloading revenues, Matrix Design sales, throughput fees received from White Oak and other outside services and administrative services revenue from affiliates.  Other sales and

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operating revenues increased to $10.5 million in the 2014 Quarter from $6.6 million in the 2013 Quarter.  The increase of $3.9 million was primarily due to increased Matrix Design sales and White Oak throughput fees.

General and administrative.  General and administrative expenses for the 2014 Quarter increased to $17.4 million compared to $15.2 million in the 2013 Quarter.  The increase of $2.2 million was primarily due to higher incentive compensation expenses.

Depreciation, depletion and amortization.  Depreciation, depletion and amortization expense increased to $66.8 million for the 2014 Quarter from $64.4 million for the 2013 Quarter.  The increase of $2.4 million was attributable to increased production levels mentioned above, as well as capital expenditures related to production expansion and infrastructure investments at various operations.

Interest expense.  Interest expense, net of capitalized interest, increased to $8.1 million for the 2014 Quarter from $6.6 million for the 2013 Quarter.  The increase of $1.5 million in the 2014 Quarter was principally attributable to lower capitalized interest on our equity investment in White Oak.  Interest payable under our term loan and revolving credit facility is discussed below under “–Debt Obligations.”

Transportation revenues and expenses.  Transportation revenues and expenses were $6.0 million and $6.9 million for the 2014 and 2013 Quarters, respectively.  The decrease of $0.9 million was primarily attributable to decreased tonnage for which we arrange transportation at certain mines, partially offset by an increase in average transportation rates in the 2014 Quarter.  The cost of transportation services are passed through to our customers.  Consequently, we do not realize any gain or loss on transportation revenues.

Equity in loss of affiliates, net.  Equity in loss of affiliates, net includes our equity investments in MAC and White Oak.  For the 2014 Quarter, equity in loss of affiliates was $6.2 million compared to $3.9 million for the 2013 Quarter, which was primarily attributable to losses allocated to us due to our equity investment in White Oak.

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Segment Adjusted EBITDA.  Our 2014 Quarter Segment Adjusted EBITDA increased $19.5 million, or 10.4%, to a record $207.9 million from the 2013 Quarter Segment Adjusted EBITDA of $188.4 million.  Segment Adjusted EBITDA, tons sold, coal sales, other sales and operating revenues and Segment Adjusted EBITDA Expense by segment are (in thousands):

	Three Months Ended
	March 31,
	2014		2013				Increase/(Decrease)
Segment Adjusted EBITDA
Illinois Basin	$	163,649	$	167,221			$	(3,572)	(2.1)%
Appalachia	48,870		22,957				25,913		(1)
White Oak	(3,997)		(4,292)				295		6.9%
Other and Corporate	(668)		2,465				(3,133)		(1)
Elimination	-		-				-		-
Total Segment Adjusted EBITDA (2)	$	207,854	$	188,351			$	19,503	10.4%
Tons sold
Illinois Basin	7,482		7,706				(224)		(2.9)%
Appalachia	2,013		1,783				230		12.9%
White Oak	-		-				-		-
Other and Corporate	-		242				(242)		(1)
Elimination	-		(33)				33		(1)
Total tons sold	9,495		9,698				(203)		(2.1)%
Coal sales
Illinois Basin	$	392,254	$		400,320		$	(8,066)	(2.0)%
Appalachia	133,291		117,744				15,547		13.2%
White Oak	-		-				-		-
Other and Corporate	-		18,522				(18,522)		(1)
Elimination	-		(2,077)				2,077		(1)
Total coal sales	$	525,545	$	534,509			$	(8,964)	(1.7)%
Other sales and operating revenues
Illinois Basin	$	986	$	1,045			$	(59)	(5.6)%
Appalachia	1,151		1,139				12		1.1%
White Oak	3,698		-				3,698		-
Other and Corporate	7,741		7,985				(244)		(3.1)%
Elimination	(3,088)		(3,557)				469		13.2%
Total other sales and operating revenues	$	10,488	$	6,612			$	3,876	58.6%
Segment Adjusted EBITDA Expense
Illinois Basin	$	229,591	$			234,145	$	(4,554)	(1.9)%
Appalachia	85,573		95,925				(10,352)		(10.8)%
White Oak	1,391		101				1,290		(1)
Other and Corporate	8,471		24,366				(15,895)		(65.2)%
Elimination	(3,088)		(5,634)				2,546		45.2%
Total Segment Adjusted EBITDA Expense (3)	$	321,938	$	348,903			$	(26,965)	(7.7)%

(1)  Percentage change was greater than or equal to 100%.

(2)  Segment Adjusted EBITDA (a non-GAAP financial measure) is defined as net income before net interest expense, income taxes, depreciation, depletion and amortization, and general and administrative expenses.  Segment Adjusted EBITDA is a key component of consolidated EBITDA,

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which is used as a supplemental financial measure by management and by external users of our financial statements such as investors, commercial banks, research analysts and others, to assess:

·    the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;

·    the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness;

·    our operating performance and return on investment compared to those of other companies in the coal energy sector, without regard to financing or capital structures; and

·    the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

Segment Adjusted EBITDA is also used as a supplemental financial measure by our management for reasons similar to those stated in the previous explanation of consolidated EBITDA.  In addition, the exclusion of corporate general and administrative expenses from Segment Adjusted EBITDA allows management 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.

The following is a reconciliation of consolidated Segment Adjusted EBITDA to net income, the most comparable GAAP financial measure (in thousands):

	Three Months Ended
	March 31,
	2014		2013
Segment Adjusted EBITDA	$	207,854	$	188,351
General and administrative	(17,435)		(15,246)
Depreciation, depletion and amortization	(66,841)		(64,382)
Interest expense, net	(7,674)		(6,484)
Income tax benefit	-		698
Net income	$	115,904	$	102,937

(3)Segment Adjusted EBITDA Expense (a non-GAAP financial measure) includes operating expenses, outside 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.  Segment Adjusted EBITDA Expense is used as a supplemental financial measure by our management to assess the operating performance of our segments.  Segment Adjusted EBITDA Expense is a key component of Segment Adjusted EBITDA in addition to coal sales and other sales and operating revenues.  The exclusion of corporate general and administrative expenses from Segment Adjusted EBITDA Expense allows management to focus solely on the evaluation of segment operating performance as it primarily relates to our operating expenses.  Outside coal purchases are included in Segment Adjusted EBITDA Expense because tons sold and coal sales include sales from outside coal purchases.

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The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to operating expense, the most comparable GAAP financial measure (in thousands):

	Three Months Ended
	March 31,
	2014		2013
Segment Adjusted EBITDA Expense	$	321,938	$	348,903
Outside coal purchases	(2)		(602)
Other income	306		274
Operating expense (excluding depreciation, depletion and amortization)	$	322,242	$	348,575

Illinois Basin – Segment Adjusted EBITDA decreased 2.1% to $163.6 million in the 2014 Quarter from $167.2 million in the 2013 Quarter.  The decrease of $3.6 million was primarily attributable to decreased tons sold, which decreased 2.9% to 7.5 million tons in the 2014 Quarter.  Coal sales decreased 2.0% to $392.3 million in the 2014 Quarter compared to $400.3 million in the 2013 Quarter. The decrease of $8.1 million reflects decreased tons sold from our Warrior, Gibson North and Pattiki mines due to weather-related transportation disruptions, partially offset by increased coal production at our Dotiki mine related to improved geological conditions.  Total Segment Adjusted EBITDA Expense for the 2014 Quarter decreased 1.9% to $229.6 million from $234.1 million in the 2013 Quarter, primarily due to lower tons sold for the segment, reduced cost per ton at our Dotiki mine due to improved coal production and lower operating expenses described above under “–Operating expenses and outside coal purchases.”  Although Segment Adjusted EBITDA Expense decreased in the 2014 Quarter, Segment Adjusted EBITDA Expense per ton sold increased $0.30 to $30.68 from $30.38 per ton sold in the 2013 Quarter, primarily as a result of reduced recoveries from our Warrior operation.

Appalachia – Segment Adjusted EBITDA increased to $48.9 million for the 2014 Quarter as compared to $23.0 million in the 2013 Quarter.  This increase of $25.9 million was primarily attributable to increased tons sold, which increased 12.9% to 2.0 million tons in the 2014 Quarter.  Coal sales increased 13.2% to $133.3 million in the 2014 Quarter compared to $117.7 million in the 2013 Quarter.  The increase of $15.5 million was primarily due to increased production at our Tunnel Ridge longwall operation.  Segment Adjusted EBITDA Expense decreased 10.8% to $85.6 million in the 2014 Quarter from $95.9 million in the 2013 Quarter and decreased $11.28 per ton sold to $42.52 from $53.80 per ton sold in the 2013 Quarter, primarily due to improved productivity and geological conditions at our Tunnel Ridge mine and new Excel No. 4 mining area at the MC Mining operation and reduced contract mining expenses at our Mettiki mining complex, partially offset by higher costs per ton at Mettiki due to reduced longwall shifts related to reduced contract shipments.

White Oak – Segment Adjusted EBITDA was $(4.0) million and $(4.3) million, respectively, in the 2014 and 2013 Quarters primarily attributable to losses allocated to us from our equity interest in White Oak, partially offset by increased throughput fee revenues earned from White Oak.

Other and Corporate – Segment Adjusted EBITDA decreased $3.1 million in the 2014 Quarter from the 2013 Quarter.  This decrease was primarily attributable to the cessation of operations at our Pontiki mine in November 2013.  Segment Adjusted EBITDA Expense decreased 65.2% to $8.5 million from $24.4 million in the 2013 Quarter, primarily due to the absence of the cost of production at the Pontiki mine mentioned above.

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Liquidity and Capital Resources

Liquidity

We have historically satisfied our working capital requirements and funded our capital expenditures and debt service obligations with cash generated from operations, cash provided by the issuance of debt or equity and borrowings under credit facilities.  We believe that existing cash balances, future cash flows from operations, borrowings under credit facilities and cash provided from the issuance of debt or equity will be sufficient to meet our working capital requirements, capital expenditures and additional equity investments, debt payments, commitments and distribution payments.  Our ability to satisfy our obligations and planned expenditures will depend upon our future operating performance and access to and cost of financing sources, which will be affected by prevailing economic conditions generally and in the coal industry specifically, which are beyond our control.  Based on our recent operating results, current cash position, anticipated future cash flows and sources of financing that we expect to have available, we do not anticipate any significant liquidity constraints in the foreseeable future.  However, to the extent operating cash flow or access to and cost of financing sources are materially different than expected, future liquidity may be adversely affected.  Please read “Item 1A. Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2013.

Cash Flows

Cash provided by operating activities was $140.1 million for the 2014 Quarter compared to $199.5 million for the 2013 Quarter.  The decrease in cash provided by operating activities was primarily due to an increase in trade receivables during the 2014 Quarter as compared to a decrease during the 2013 Quarter and increased growth in coal inventory levels, offset partially by higher net income during the 2014 Quarter.

Net cash used in investing activities was $104.6 million for the 2014 Quarter compared to $121.3 million for the 2013 Quarter.  The decrease in cash used in investing activities was primarily attributable to a decrease in the acquisition and funding for development of coal reserves in the 2014 Quarter.

Net cash used in financing activities was $114.7 million for the 2014 Quarter compared to $77.8 million for the 2013 Quarter.  The increase in cash used in financing activities was primarily attributable to increased distributions paid to partners in the 2014 Quarter and net payments under our revolving credit facilities during the 2014 Quarter, which is discussed in more detail below under “–Debt Obligations.”

Capital Expenditures

Capital expenditures decreased slightly to $69.5 million in the 2014 Quarter from $70.3 million in the 2013 Quarter.

Our anticipated total capital expenditures for the year ending December 31, 2014 are estimated in a range of $320.0 to $350.0 million, which includes expenditures for mine expansion to complete development of our new Gibson South mine, reserve acquisitions related to the White Oak mine development project and infrastructure projects and maintenance capital at various mines.  In addition to these capital expenditures, ARLP continues to anticipate funding approximately $80.0 to $95.0 million of its preferred equity investment commitment to White Oak in 2014.  Management anticipates funding remaining 2014 capital requirements with cash and cash equivalents ($14.4 million as of March 31, 2014), cash flows from operations, borrowings under the revolving credit facility and, if necessary, accessing the debt or equity capital markets.  We will continue to have significant capital requirements over the long-term, which may require us to obtain additional debt or equity capital.  The availability and cost of additional capital will depend upon prevailing market conditions, the market price of our common units and several other factors over which we have limited control, as well as our financial condition and results of operations.

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Debt Obligations

Credit Facility.  On May 23, 2012, our Intermediate Partnership entered into a credit agreement (the “Credit Agreement”) with various financial institutions for a revolving credit facility (the “Revolving Credit Facility”) of $700.0 million and a term loan (the “Term Loan”) in the aggregate principal amount of $250.0 million (collectively, the Revolving Credit Facility and Term Loan are referred to as the “Credit Facility”).  Borrowings under the Credit Agreement bear interest at a Base Rate or Eurodollar Rate, at our election, plus an applicable margin that fluctuates depending upon the ratio of Consolidated Debt to Consolidated Cash Flow (each as defined in the Credit Agreement).  We have elected a Eurodollar Rate which, with applicable margin, was 1.81% on borrowings outstanding as of March 31, 2014.  The Credit Facility matures May 23, 2017, at which time all amounts outstanding are required to be repaid.  Interest is payable quarterly, with principal of the Term Loan due as follows:  commencing with the quarter ending June 30, 2014 and for each quarter thereafter ending on March 31, 2016, an amount per quarter equal to 2.50% of the aggregate amount of the Term Loan advances outstanding; for each quarter beginning June 30, 2016 through December 31, 2016, 20% of the aggregate amount of the Term Loan advances outstanding; and the remaining balance of the Term Loan advances at maturity.  We have the option to prepay the Term Loan at any time in whole or in part subject to terms and conditions described in the Credit Agreement.  Upon a “change in control” (as defined by the Credit Agreement), the unpaid principal amount of the Credit Facility, all interest thereon and all other amounts payable under the Credit Agreement would become due and payable.

At March 31, 2014, we had borrowings of $215.0 million and $24.2 million of letters of credit outstanding with $460.8 million available for borrowing under the Revolving Credit Facility.  We utilize the Revolving Credit Facility, as appropriate, for working capital requirements, capital expenditures, debt payments and distribution payments.  We incur an annual commitment fee of 0.25% on the undrawn portion of the Revolving Credit Facility.

Senior Notes.  Our Intermediate Partnership has $18.0 million principal amount of 8.31% senior notes due August 20, 2014, with interest payable semi-annually (“Senior Notes”).

Series A Senior Notes.  On June 26, 2008, our Intermediate Partnership entered into a Note Purchase Agreement (the “2008 Note Purchase Agreement”) with a group of institutional investors in a private placement offering.  We issued $205.0 million of Series A senior notes, which bear interest at 6.28% and mature on June 26, 2015 with interest payable semi-annually.

Series B Senior Notes.  On June 26, 2008, we issued under the 2008 Note Purchase Agreement $145.0 million of Series B senior notes (together with the Series A senior notes, the “2008 Senior Notes”), which bear interest at 6.72% and mature on June 26, 2018 with interest payable semi-annually.

The Senior Notes, 2008 Senior Notes and the Credit Facility described above (collectively, “ARLP Debt Arrangements”) are guaranteed by all of the material direct and indirect subsidiaries of our Intermediate Partnership. The ARLP Debt Arrangements contain various covenants affecting our Intermediate Partnership and its subsidiaries restricting, among other things, the amount of distributions by our Intermediate Partnership, the incurrence of additional indebtedness and liens, the sale of assets, the making of investments, the entry into mergers and consolidations and the entry into transactions with affiliates, in each case subject to various exceptions.  The ARLP Debt Arrangements also require the Intermediate Partnership to remain in control of a certain amount of mineable coal reserves relative to its annual production.  In addition, the ARLP Debt Arrangements require our Intermediate Partnership to maintain (a) debt to cash flow ratio of not more than 3.0 to 1.0 and (b) 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 1.17 to 1.0 and 20.4 to 1.0, respectively, for the trailing twelve months ended March 31, 2014.  We were in compliance with the covenants of the ARLP Debt Arrangements as of March 31, 2014.

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Other.  In addition to the letters of credit available under the Credit Facility discussed above, we also have agreements with two banks to provide additional letters of credit in an aggregate amount of $31.1 million to maintain surety bonds to secure certain asset retirement obligations and our obligations for workers’ compensation benefits.  At March 31, 2014, we had $30.7 million in letters of credit outstanding under agreements with these two banks.

Related-Party Transactions

We have continuing related-party transactions with our managing general partner, AHGP and SGP and its affiliates. These related-party transactions relate principally to the provision of administrative services to AHGP and Alliance Resource Holdings II, Inc. and their respective affiliates, mineral and equipment leases with SGP and its affiliates, and a timesharing agreement for the use of aircraft.  We also have ongoing transactions with White Oak and related entities to support development of a longwall mining operation currently under construction.

Please read our Annual Report on Form 10-K for the year ended December 31, 2013, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Related-Party Transactions” for additional information concerning related-party transactions.

New Accounting Standards

New Accounting Standards Issued and Not Yet Adopted

In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”).  ASU 2014-08 changes the requirements for reporting discontinued operations in Accounting Standards Codification 205, Presentation of Financial Statements, by updating the criteria for determining which disposals can be presented as discontinued operations and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of discontinued operations.  ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014.  We do not anticipate the adoption of ASU 2014-08 on January 1, 2015 will have a material impact on our consolidated financial statements.

Other Information

            IRS Notice

On April 12, 2013, we received a “Notice of Beginning of Administrative Proceeding” (“NBAP”) from the Internal Revenue Service notifying us of an audit of the income tax return of Alliance Coal, the holding company for the operations of our Intermediate Partnership, for the tax year ending December 31, 2011.  We believe this is a routine audit of our lower-tier subsidiary’s income, gain, deductions, losses and credits.  The audit is ongoing.

Unit Split

On April 28, 2014, we announced a two-for-one split of our common units.  The unit split will take place in the form of a one unit distribution on each unit outstanding, with units to be distributed on June 16, 2014 to unitholders of record as of May 30, 2014.  This unit split will result in the issuance of approximately 37.0 million common units.  Following the unit split, the current quarterly distribution per unit will be reduced by half; for example, the distribution for the quarter ended March 31, 2014 of $1.2225 per unit would become $0.61125 per unit, or an annualized rate of $2.445 per unit.  Also following the unit split, the target threshold for the incentive distribution rights (“IDR”) per unit will be reduced by half and accordingly, the quarterly IDR paid will remain unchanged.

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Regulation and Laws

Reference is made to “Item 1. Business – Regulation and Laws – Air Emissions” in the Annual Report on Form 10-K for the year ended December 31, 2013.

On April 29, 2014, the Supreme Court reversed the D.C. Circuit’s ruling vacating the Cross-State Air Pollution Rule (“CSAPR”), upheld the rule, and remanded the case for the D.C. Circuit to resolve the remaining implementation issues consistent with the Supreme Court’s opinion.  The Supreme Court held that the U.S. Environmental Protection Agency’s (“EPA”) allocation of emissions reductions in upwind states permissibly considered the cost-effectiveness of achieving downwind attainment and that EPA has authority under the Federal Clean Air Act (“CAA”) to impose federal implementation plans (“FIPs”) immediately after disapproving individual state implementation plans (“SIPs”).  Because the D.C. Circuit overturned CSAPR on two over-arching issues, the D.C. Circuit must now consider on remand the other issues that it left unaddressed in its first opinion.  Because it is not yet known how the litigation over the remaining issues will be resolved, we cannot reasonably predict what requirements, if any, may be imposed under CSAPR in the future, or their timing.  As a result, the full impact of the Supreme Court’s decision on CSAPR cannot be determined until further action by the D.C. Circuit and implementation of CSAPR or an alternative rule promulgated by EPA. Although EPA cannot implement CSAPR immediately, the rule will likely require retirement of a number of coal-fired electric generating units, rather than retrofitting the units with the necessary emission control technologies, which closures may reduce the demand for coal.

Reference is made to “Item 1. Business – Regulation and Laws – Mine Health and Safety Laws” in the Annual Report on Form 10-K for the year ended December 31, 2013.

On April 23, 2014, the Mine Safety and Health Administration (“MSHA”) published its final rule titled “Lowering Miner’s Exposure to Respirable Coal Mine Dust, Including Continuous Personal Dust Monitors.”  The rule lowers the permissible level of miners’ exposure to respirable coal mine dust, increases sampling requirements, and requires use of certain technology to provide real-time information about dust levels.  The rule also requires immediate corrective action when a sample finds an excessive concentration of dust.  The rule is being challenged in litigation initiated by the National Mining Association and others.  We are continuing to evaluate the potential impact this rule, if upheld, may have on our results of operations and financial position.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk

We have significant long-term coal supply agreements.  Virtually all of the long-term coal supply agreements are subject to price adjustment provisions, which permit an increase or decrease periodically in the contract price to principally reflect changes in specified price indices or items such as taxes, royalties or actual production costs resulting from regulatory changes.

We have exposure to price risk for items that are used directly or indirectly in the normal course of coal production such as steel, electricity and other supplies. We manage our risk for these items through strategic sourcing contracts for normal quantities required by our operations.  We do not utilize any commodity price-hedges or other derivatives related to these risks.

Credit Risk

Most of our sales tonnage is consumed by electric utilities.  Therefore, our credit risk is primarily with domestic electric power generators.  Our policy is to independently evaluate the creditworthiness of each customer prior to entering into transactions and to constantly monitor outstanding accounts

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receivable against established credit limits. When deemed appropriate by our credit management department, we will take steps to reduce our credit exposure to customers that do not meet our credit standards or whose credit has deteriorated. These steps may include obtaining letters of credit or cash collateral, requiring prepayment for shipments or establishing customer trust accounts held for our benefit in the event of a failure to pay.

Exchange Rate Risk

Almost all of our transactions are denominated in U.S. dollars, and as a result, we do not have material exposure to currency exchange-rate risks.

Interest Rate Risk

Borrowings under the Credit Facility are at variable rates and, as a result, we have interest rate exposure. Historically, our earnings have not been materially affected by changes in interest rates.  We do not utilize any interest rate derivative instruments related to our outstanding debt.  We had $215.0 million in borrowings under the revolving credit facility and $250.0 million outstanding under the Term Loan at March 31, 2014.  A one percentage point increase in the interest rates related to the revolving credit facility and Term Loan would result in an annualized increase in 2014 interest expense of $4.7 million, based on borrowing levels at March 31, 2014.  With respect to our fixed-rate borrowings, a one percentage point increase in interest rates would result in a decrease of approximately $8.5 million in the estimated fair value of these borrowings.

As of March 31, 2014, the estimated fair value of the ARLP Debt Arrangements was approximately $845.5 million.  The fair values of long-term debt are estimated using discounted cash flow analyses, based upon our current incremental borrowing rates for similar types of borrowing arrangements as of March 31, 2014.  There were no other changes in our quantitative and qualitative disclosures about market risk as set forth in our Annual Report on Form 10-K for the year ended December 31, 2013.

ITEM 4.          CONTROLS AND PROCEDURES

We maintain controls and procedures designed to provide reasonable assurance that information required to be disclosed in the reports we file with the Securities and Exchange Commission (“SEC”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.  As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Exchange Act) as of March 31, 2014.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these controls and procedures are effective as of March 31, 2014.

During the quarterly period ended March 31, 2014, there have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with this evaluation that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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FORWARD-LOOKING STATEMENTS

Certain statements and information in this Quarterly Report on Form 10-Q may constitute “forward-looking statements.”  These statements are based on our beliefs as well as assumptions made by, and information currently available to, us.  When used in this document, the words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “may,” “project,” “will,” and similar expressions identify forward-looking statements.  Without limiting the foregoing, all statements relating to our future outlook, anticipated capital expenditures, future cash flows and borrowings and sources of funding are forward-looking statements. These statements reflect our current views with respect to future events and are subject to numerous assumptions that we believe are reasonable, but are open to a wide range of uncertainties and business risks, and actual results may differ materially from those discussed in these statements.  Among the factors that could cause actual results to differ from those in the forward-looking statements are:

· changes in competition in coal markets and our ability to respond to such changes;

· changes in coal prices, which could affect our operating results and cash flows;

· risks associated with the expansion of our operations and properties;

· legislation, regulations, and court decisions and interpretations thereof, including those relating to the environment, mining, miner health and safety, and health care;

· 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 our 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;

· our productivity levels and margins earned on our coal sales;

· changes in raw material costs;

· changes in the availability of skilled labor;

· our ability to maintain satisfactory relations with our employees;

· increases in labor costs, adverse changes in work rules, or cash payments or projections associated with post-mine reclamation and workers' compensation claims;

· increases in transportation costs and risk of transportation delays or interruptions;

· operational interruptions due to geologic, permitting, labor, weather-related or other factors;

· risks associated with major mine-related accidents, such as mine fires, or interruptions;

· results of litigation, including claims not yet asserted;

· difficulty maintaining our 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;

· the coal industry’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 other sources of electricity, such as natural gas, nuclear energy and renewable fuels;

· uncertainties in estimating and replacing our coal reserves;

· a loss or reduction of benefits from certain tax deductions and credits;

· difficulty obtaining commercial property insurance, and risks associated with our participation (excluding any applicable deductible) in the commercial insurance property program;

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· difficulty in making accurate assumptions and projections regarding future revenues and costs associated with equity investments in companies we do not control; and

· other factors, including those discussed in “Part II. Item 1A. Risk Factors” and “Part II. Item 1. Legal Proceedings” of this Quarterly Report on Form 10-Q.

If one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may differ materially from those described in any forward-looking statement.  When considering forward-looking statements, you should also keep in mind the risks described in “Risk Factors” below.  These risks could also cause our actual results to differ materially from those contained in any forward-looking statement.  We disclaim any obligation to update the above list or to announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

You should consider the information above when reading or considering any forward-looking statements contained in:

·this Quarterly Report on Form 10-Q;

·other reports filed by us with the SEC;

·our press releases;

·our website http://www.arlp.com; and

·written or oral statements made by us or any of our officers or other authorized persons acting on our behalf.

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PART II

OTHER INFORMATION

ITEM 1.          LEGAL PROCEEDINGS

The information in Note 3. Contingencies to the Unaudited Condensed Consolidated Financial Statements included in “Part I. Item 1. Financial Statements (Unaudited)” of this Quarterly Report on Form 10-Q herein is hereby incorporated by reference. See also “Item 3. Legal Proceedings” of the Annual Report on Form 10-K for the year ended December 31, 2013.

ITEM 1A.       RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A  “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013 which could materially affect our business, financial condition or future results.  The risks described in our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q are not our only risks.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial based on current knowledge and factual circumstances, if such knowledge or facts change, also may materially adversely affect our business, financial condition and/or operating results in the future.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.          DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.          MINE SAFETY DISCLOSURES

Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Quarterly Report on Form 10-Q.

ITEM 5.          OTHER INFORMATION

None.

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ITEM 6.          EXHIBITS

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	SEC File No. and Film No.	Exhibit	Filing Date	Filed Herewith*
31.1	Certification of Joseph W. Craft III, President and Chief Executive Officer of Alliance Resource Management GP, LLC, the managing general partner of Alliance Resource Partners, L.P., dated May 9, 2014, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Brian L. Cantrell, Senior Vice President and Chief Financial Officer of Alliance Resource Management GP, LLC, the managing general partner of Alliance Resource Partners, L.P., dated May 9, 2014, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Joseph W. Craft III, President and Chief Executive Officer of Alliance Resource Management GP, LLC, the managing general partner of Alliance Resource Partners, L.P., dated May 9, 2014, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Brian L. Cantrell, Senior Vice President and Chief Financial Officer of Alliance Resource Management GP, LLC, the managing general partner of Alliance Resource Partners, L.P., dated May 9, 2014, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
95.1	Federal Mine Safety and Health Act Information
101	Interactive Data File (Form 10-Q for the quarter ended March 31, 2014 filed in XBRL).

* Or furnished, in the case of Exhibits 32.1 and 32.2.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, in Tulsa, Oklahoma, on May 9, 2014.

ALLIANCE RESOURCE PARTNERS, L.P.
By:	Alliance Resource Management GP, LLC
	its managing general partner
	/s/ Joseph W. Craft, III
	Joseph W. Craft, III
	President, Chief Executive Officer
	and Director, duly authorized to sign on behalf of the registrant.
	/s/ Brian L. Cantrell
	Brian L. Cantrell
	Senior Vice President and
	Chief Financial Officer

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Joseph W. Craft III certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Alliance Resource Partners, L.P.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the quarterly period ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2014

/s/ Joseph W. Craft III

Joseph W. Craft III

President, Chief Executive

Officer and Director

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Brian L. Cantrell, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Alliance Resource Partners, L.P.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this  report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the quarterly period ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2014

/s/ Brian L. Cantrell

Brian L. Cantrell

Senior Vice President and

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alliance Resource Partners, L.P. (the “Partnership”) on Form 10-Q for the three months ended March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph W. Craft III, President and Chief Executive Officer of Alliance Resource Management GP, LLC, the managing general partner of the Partnership, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership.

By:	/s/ Joseph W. Craft III
Joseph W. Craft III
President and Chief Executive Officer
of Alliance Resource Management GP, LLC
(the managing general partner of Alliance Resource Partners, L.P.)

Date:  May 9, 2014

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate document.  A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alliance Resource Partners, L.P. (the “Partnership”) on Form 10-Q for the three months ended March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian L. Cantrell, Senior Vice President and Chief Financial Officer of Alliance Resource Management GP, LLC, the managing general partner of the Partnership, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership.

By:	/s/ Brian L. Cantrell
Brian L. Cantrell
Senior Vice President and
Chief Financial Officer
of Alliance Resource Management GP, LLC
(the managing general partner of Alliance Resource Partners, L.P.)

Date: May 9, 2014

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate document.  A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request.

EX-95.1

EXHIBIT 95.1

Federal Mine Safety and Health Act Information

Workplace safety is fundamental to our culture.  Our operating subsidiaries empower their employees to be actively involved in continuous efforts to prevent accidents.  By providing a work environment that rewards safety and encourages employee participation in the safety process, our mining operations strive to be the leaders in safety performance in our industry.

We are also a recognized leader in developing and implementing new technologies to improve safety throughout the industry.  Our subsidiary, Matrix Design, is an innovator in the design and development of technologies intended to improve safety in underground mining operations.  In fact, in 2013, Matrix Design was awarded a Mine Safety and Health Technology Innovation Award by the U.S. National Institute for Occupational Safety and Health.  Matrix Design products include portable, wireless communication and electronic tracking systems for providing surface personnel the ability to communicate with and locate underground mining personnel, and proximity detection systems designed to improve the safety of continuous mining machines and other mobile equipment used in underground operations.  Matrix Design has completed installation of its communication and tracking system at our operating subsidiaries and has either installed or received orders to install this vital safety system at over half of the operating underground coal mines in the U.S.  In addition, Matrix Design’s first-generation proximity detection system, M3-1000, has been installed on continuous miners in use at underground coal mines operated by our subsidiaries and others.  The Mine Safety and Health Administration (“MSHA”) also recently approved Matrix Design’s second-generation proximity detection system, IntelliZone, expanding the availability of this safety technology to various forms of mobile equipment used in underground mines to carry coal between continuous miners and conveyor belts.  In addition, in September 2013, Matrix Design received MSHA approval for the use of Matrix Design’s new advanced-technology atmospheric monitoring sensors (“AMS”) for underground mining operations.  The AMS technology, which was developed at the request of Alpha Natural Resources, Inc. (“Alpha”) and is presently being implemented at various Alpha affiliates, is designed to provide services that integrate voice communications, personnel tracking, atmospheric monitoring, and calibration tools for underground mining.  The AMS technology is designed to operate by either wired or wireless connections.

Our industry is focused on improving employee safety and its safety performance is continuously monitored, including through the mining industry standard of “non-fatal days lost,” or “NFDL,” which reflects both the frequency and severity of injuries incurred and, we believe, is a better measure of safety performance than compliance statistics.  As indicated in the chart below, these efforts have resulted in significant safety improvements as the industry average NFDL as of the third quarter of 2013, as reported(a) by MSHA, has decreased approximately 61% since 2000.

(a)Data compiled for all U.S. underground bituminous coal mines and related surface facilities from the MSHA report “Mine Injury and Worktime, Quarterly Closeout Edition.”  Data for 2000 through 2012 reflects the “January – December, Final” report for each year.  Data for 2013 reflects the “January – September, Preliminary” report for the first nine months of 2013.

During this same time period, the combined NFDL rating of our operating subsidiaries has averaged approximately one-third lower than the industry average.

Our mining operations are subject to extensive and stringent compliance standards established pursuant to the Federal Mine Safety and Health Act of 1977, as amended by the MINER Act (as amended, the “Mine Act”).  MSHA monitors and rigorously enforces compliance with these standards, and our mining operations are inspected frequently.  Citations and orders are issued by MSHA under Section 104 of the Mine Act for violations of the Mine Act or any mandatory health or safety standard, rule, order or regulation promulgated under the Mine Act.  A Section 104(a) “Significant and Substantial” or “S&S” citation is generally issued in a situation where the conditions created by the violation do not cause imminent danger, but in the opinion of the MSHA inspector could significantly and substantially contribute to the cause and effect of a mine safety or health hazard.  During the three months ended March 31, 2014, our mines were subject to 1,762 MSHA inspection days with an average of only 0.15 S&S citations written per inspection day.

We endeavor to comply at all times with all Mine Act regulations.  However, the Mine Act has been construed as authorizing MSHA to issue citations and orders pursuant to the legal doctrine of strict liability, or liability without regard to fault.  If, in the opinion of an MSHA inspector, a condition exists that violates the Mine Act or regulations promulgated thereunder, then a citation or order will be issued regardless of whether we had any knowledge of, or fault in, the existence of that condition.  Many of the Mine Act standards include one or more subjective elements, so that issuance of a citation often depends on the opinions or experience of the MSHA inspector involved and the frequency of citations will vary from inspector to inspector.

The number of citations issued also is affected by the size of the mine, in that the number of citations issued generally increases with the size of the mine.  Our mines typically are larger in scale than most underground coal mines in the U.S. in terms of area, production and employee hours.

We take all allegations of violations of Mine Act standards seriously, and if we disagree with the assertions of an MSHA inspector, we exercise our right to challenge those findings by “contesting” the citation or order pursuant to the procedures established by the Mine Act and its regulations.  During the three months ended March 31, 2014, our operating subsidiaries have contested approximately 13% of all citations and 28% of S&S citations issued by MSHA inspectors.  These contest proceedings frequently result in the dismissal or modification of previously issued citations, substantial reductions in the penalty amounts originally assessed by MSHA, or both.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) requires issuers to include in periodic reports filed with the SEC certain information relating to citations or orders for violations of standards under the Mine Act.  The following tables include information required by the Dodd-Frank Act for the three months ended March 31, 2014.  The mine data retrieval system maintained by MSHA may show information that is different than what is provided herein.  Any such difference may be attributed to the need to update that information on MSHA’s system and/or other factors.

Subsidiary Name / MSHA Identification Number (1)	Section 104(a) S&S Citations(2)	Section 104(b) Orders (3)	Section 104(d) Citations and Orders (4)	Section 110(b)(2) Violations (5)	Section 107(a) Orders (6)	Total Dollar Value of MSHA Assessments Proposed (in thousands) (7)
Illinois Basin Operations
Webster County Coal, LLC (KY)
1502132	13	-	-	-	-	$	13.6
1511935	-	-	-	-	-	$	0.1
Warrior Coal, LLC (KY)
1505230	-	-	-	-	-	$	-
1512083	-	-	-	-	-	$	-
1513514	-	-	-	-	-	$	-
1516460	-	-	-	-	-	$	-
1517216	34	-	-	-	-	$	43.9
1517232	11	-	-	-	-	$	20.5
1517678	-	-	-	-	-	$	-
1517740	-	-	-	-	-	$	-
1517758	-	-	-	-	-	$	-
1514335	-	-	-	-	-	$	0.1
Hopkins County Coal, LLC (KY)
1502013	-	-	-	-	-	$	0.2
1517377	-	-	-	-	-	$	-
1517515	-	-	-	-	-	$	-
1518826	41	-	1	-	-	$	22.0
1517378	-	-	-	-	-	$	-
River View Coal, LLC (KY)
1503178	2	-	-	-	-	$	-
1519374	40	-	-	-	-	$	86.9
White County Coal, LLC (IL)
1102662	-	-	-	-	-	$	-
1103058	23	-	-	-	-	$	85.9
Alliance WOR Processing, LLC (IL)
1103242	-	-	-	-	-	$	0.2
Gibson County Coal, LLC (IN)
1202388	-	-	-	-	-	$	-
1202215	18	-	-	-	-	$	31.3
Sebree Mining, LLC (KY)
1519264	-	-	-	-	-	$	-
1518547	17	-	-	-	-	$	10.6
1518864	-	-	-	-	-	$	-
1517044	-	-	-	-	-	$	-
Appalachia Operations
MC Mining, LLC (KY)
1508079	-	-	-	-	-	$	-
1517733	7	-	-	-	-	$	6.6
1519515	6	-	-	-	-	$	3.6
Mettiki Coal, LLC (MD)
1800621	-	-	-	-	-	$	-
1800671	1	-	-	-	-	$	0.1
Mettiki Coal (WV), LLC
4609028	11	-	-	-	-	$	23.2
Tunnel Ridge, LLC (PA/WV)
4608864	36	-	-	-	-	$	85.5
Other
4403236	-	-	-	-	-	$	-
4403255	-	-	-	-	-	$	-
4406630	-	-	-	-	-	$	-
4406867	-	-	-	-	-	$	-
Pontiki Coal, LLC (KY)
1508413	-	-	-	-	-	$	-
1509571	-	-	-	-	-	$	-
1514324	-	-	-	-	-	$	-
1518839	-	-	-	-	-	$	2.1
1518056	-	-	-	-	-	$	-

Subsidiary Name / MSHA  Identification Number (1)	Total Number of  Mining Related  Fatalities	Received Notice  of Pattern of  Violations Under  Section 104(e) (yes/no) (8)	Legal Actions  Pending as of  Last Day of  Period	Legal Actions  Initiated During  Period	Legal Actions Resolved  During Period
Illinois Basin Operations
Webster County Coal, LLC (KY)
1502132	-	No	35	4	6
1511935	-	No	-	-	-
Warrior Coal, LLC (KY)
1505230	-	No	-	-	-
1512083	-	No	-	-	-
1513514	-	No	-	-	-
1516460	-	No	-	-	-
1517216	-	No	24	7	6
1517232	-	No	2	-	1
1517678	-	No	-	-	-
1517740	-	No	-	-	-
1517758	-	No	-	-	-
1514335	-	No	1	-	-
Hopkins County Coal, LLC (KY)
1502013	-	No	-	-	3
1517377	-	No	-	-	-
1517515	-	No	-	-	-
1518826	-	No	15	5	24
1517378	-	No	-	-	-
River View Coal, LLC (KY)
1503178	-	No	-	-	-
1519374	-	No	8	3	1
White County Coal, LLC (IL)
1102662	-	No	-	-	-
1103058	-	No	12	2	15
Alliance WOR Processing, LLC (IL)
1103242	-	No	-	-	-
Gibson County Coal, LLC (IN)
1202388	-	No	1	-	-
1202215	1	No	7	1	6
Sebree Mining, LLC (KY)
1519264	-	No	-	-	-
1518547	-	No	13	3	-
1518864	-	No	-	-	-
1517044	-	No	-	-	-
Appalachia Operations
MC Mining, LLC (KY)
1508079	-	No	21	-	6
1517733	-	No	-	-	-
1519515	-	No	2	-	-
Mettiki Coal, LLC (MD)
1800621	-	No	-	-	-
1800671	-	No	-	-	-
Mettiki Coal (WV), LLC
4609028	1	No	9	3	1
Tunnel Ridge, LLC (PA/WV)
4608864	-	No	14	3	3
Other
4403236	-	No	-	-	-
4403255	-	No	-	-	-
4406630	-	No	-	-	-
4406867	-	No	-	-	-
Pontiki Coal, LLC (KY)
1508413	-	No	-	-	-
1509571	-	No	-	-	-
1514324	-	No	2	-	-
1518839	-	No	5	-	5
1518056	-	No	-	-	-

The number of legal actions pending before the Federal Mine Safety and Health Review Commission as of March 31, 2014 that fall into each of the following categories is as follows:

Subsidiary Name / MSHA  Identification Number (1)	Contests of  Citations  and Orders	Contests of  Proposed  Penalties	Complaints  for  Compensation	Complaints of Discharge/  Discrimination/  Interference	Applications  for  Temporary  Relief	Appeals of Judges  Rulings
Illinois Basin Operations
Webster County Coal, LLC (KY)
1502132	3	32	-	-	-	-
1511935	-	-	-	-	-	-
Warrior Coal, LLC (KY)
1505230	-	-	-	-	-	-
1512083	-	-	-	-	-	-
1513514	-	-	-	-	-	-
1516460	-	-	-	-	-	-
1517216	6	18	-	-	-	3
1517232	-	2	-	-	-	-
1517678	-	-	-	-	-	-
1517740	-	-	-	-	-	-
1517758	-	-	-	-	-	-
1514335	-	1	-	-	-	-
Hopkins County Coal, LLC (KY)
1502013	-	-	-	-	-	-
1517377	-	-	-	-	-	-
1517515	-	-	-	-	-	-
1518826	3	12	-	-	-	5
1517378	-	-	-	-	-	-
River View Coal, LLC (KY)
1503178	-	-	-	-	-	-
1519374	-	8	-	-	-	-
White County Coal, LLC (IL)
1102662	-	-	-	-	-	-
1103058	-	12	-	-	-	-
Alliance WOR Processing, LLC (IL)
1103242	-	-	-	-	-	-
Gibson County Coal, LLC (IN)
1202388	-	1	-	-	-	-
1202215	-	7	-	-	-	-
Sebree Mining, LLC (KY)
1519264	-	-	-	-	-	-
1518547	-	13	-	-	-	-
1518864	-	-	-	-	-	-
1517044	-	-	-	-	-	-
Appalachia Operations
MC Mining, LLC (KY)
1508079	-	21	-	-	-	-
1517733	-	-	-	-	-	-
1519515	-	2	-	-	-	-
Mettiki Coal, LLC (MD)
1800621	-	-	-	-	-	-
1800671	-	-	-	-	-	-
Mettiki Coal (WV), LLC
4609028	-	9	-	-	-	-
Tunnel Ridge, LLC (PA/WV)
4608864	-	14	-	-	-	-
Other
4403236	-	-	-	-	-	-
4403255	-	-	-	-	-	-
4406630	-	-	-	-	-	-
4406867	-	-	-	-	-	-
Pontiki Coal, LLC (KY)
1508413	-	-	-	-	-	-
1509571	-	-	-	-	-	-
1514324	-	2	-	-	-	-
1518839	-	5	-	-	-	1
1518056	-	-	-	-	-	-

(1)The statistics reported for each of our subsidiaries listed above are segregated into specific MSHA identification numbers.

(2)Mine Act section 104(a) S&S citations shown above are for alleged violations of mandatory health or safety standards that could significantly and substantially contribute to a coal mine health and safety hazard.  It should be noted that, for purposes of this table, S&S citations that are included in another column, such as Section 104(d) citations, are not also included as Section 104(a) S&S citations in this column.

(3)Mine Act section 104(b) orders are for alleged failures to totally abate a citation within the time period specified in the citation.

(4)Mine Act section 104(d) citations and orders are for an alleged unwarrantable failure (i.e. aggravated conduct constituting more than ordinary negligence) to comply with mandatory health or safety standards.

(5)Mine Act section 110(b)(2) violations are for an alleged “flagrant” failure (i.e. reckless or repeated) to make reasonable efforts to eliminate a known violation of a mandatory safety or health standard that substantially and proximately caused, or reasonably could have been expected to cause, death or serious bodily injury.

(6)Mine Act section 107(a) orders are for alleged conditions or practices which could reasonably be expected to cause death or serious physical harm before such condition or practice can be abated and result in orders of immediate withdrawal from the area of the mine affected by the condition.

(7)  Amounts shown include assessments proposed by MSHA during the three months ended March 31, 2014 on all citations and orders, including those citations and orders that are not required to be included within the above chart.

(8)  Mine Act section 104(e) written notices are for an alleged pattern of violations of mandatory health or safety standards that could significantly and substantially contribute to a coal mine safety or health hazard.

XML

SEGMENT INFORMATION (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Reconciliation of consolidated Segment Adjusted EBITDA Expense to operating expenses (excluding depreciation, depletion and amortization)
Segment Adjusted EBITDA Expense	$ 321,938	[1]	$ 348,903	[1]
Outside coal purchases	(2)		(602)
Other income	306		274
Operating expenses (excluding depreciation, depletion and amortization)	$ 322,242		$ 348,575

[1] Segment Adjusted EBITDA Expense includes operating expenses, outside 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.

XML

NET INCOME PER LIMITED PARTNER UNIT (Details 3) (Subsequent event, USD $) In Millions, except Per Share data, unless otherwise specified	0 Months Ended	3 Months Ended
	Apr. 28, 2014	Mar. 31, 2014	Mar. 31, 2013
Distributions per unit and unit split
Distributions declared per unit	$ 1.2225
Forecast
Distributions per unit and unit split
Unit split ratio	2
Units to be issued due to split	37.0
Reduction in quarterly distribution per unit due to unit split (as a percent)	50.00%
Distributions declared per unit, adjusted for split	$ 0.61125
Annualized distributions declared per unit, adjusted for split	$ 2.445
Reduction in target threshold for IDR per unit due to unit split (as a percent)	50.00%
Pro forma net income per limited partner unit
PRO FORMA BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT (in dollars per unit)		$ 1.10	$ 0.98

XML

SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2014

SEGMENT INFORMATION

Schedule of results of reportable segment

	Illinois Basin		Appalachia		White Oak		Other and Corporate		Elimination (1)		Consolidated
	(in thousands)
Reportable segment results as of and for the three months ended March 31, 2014 were as follows:
Total revenues (2)	$	396,502	$	137,184	$	3,698	$	7,742	$	(3,088)	$	542,038
Segment Adjusted EBITDA Expense (3)	229,591		85,573		1,391		8,471		(3,088)		321,938
Segment Adjusted EBITDA (4)(5)	163,649		48,870		(3,997)		(668)		-		207,854
Total assets (6)	1,119,868		620,775		343,040		53,404		(1,129)		2,135,958
Capital expenditures (7)	55,709		10,128		1,959		3,068		-		70,864
Reportable segment results as of and for the three months ended March 31, 2013 were as follows:
Total revenues (2)	$	404,823	$	122,359	$	-	$	26,507	$	(5,634)	$	548,055
Segment Adjusted EBITDA Expense (3)	234,145		95,925		101		24,366		(5,634)		348,903
Segment Adjusted EBITDA (4)(5)	167,221		22,957		(4,292)		2,465		-		188,351
Total assets (6)	1,046,513		599,502		272,316		82,646		(1,439)		1,999,538
Capital expenditures (7)	52,031		12,555		16,953		831		-		82,370

(1) The elimination column represents the elimination of intercompany transactions and is primarily comprised of sales from the Matrix Group to our mining operations and coal sales and purchases between mining operations (2013 only).

(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, brokerage sales and Pontiki’s coal sales revenue (2013 only).

(3) Segment Adjusted EBITDA Expense includes operating expenses, outside 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.

The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to operating expenses (excluding depreciation, depletion and amortization) (in thousands):

	Three Months Ended
	March 31,
	2014			2013
Segment Adjusted EBITDA Expense	$	321,938		$	348,903
Outside coal purchases	(2		)	(602		)
Other income	306			274
Operating expenses (excluding depreciation, depletion and amortization)	$	322,242		$	348,575

(4) Segment Adjusted EBITDA is defined as net income before net interest expense, income taxes, depreciation, depletion and amortization 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.  Consolidated Segment Adjusted EBITDA is reconciled to net income as follows (in thousands):

	Three Months Ended
	March 31,
	2014			2013
Consolidated Segment Adjusted EBITDA	$	207,854		$	188,351
General and administrative	(17,435		)	(15,246		)
Depreciation, depletion and amortization	(66,841		)	(64,382		)
Interest expense, net	(7,674		)	(6,484		)
Income tax benefit	-			698
Net income	$	115,904		$	102,937

(5) Includes equity in income (loss) of affiliates for the three months ended March 31, 2014 and 2013 of $(6.3) million and $(4.2) million, respectively, included in the White Oak segment and $0.1 million and $0.3 million, respectively, included in the Other and Corporate segment.

(6) Total assets at March 31, 2014 and 2013 include investments in affiliate of $152.4 million and $113.7 million, respectively, for the White Oak segment and $1.7 million and $1.9 million, respectively, for the Other and Corporate segment.

(7) Capital expenditures shown above for the three months ended March 31, 2014 and 2013, included funding of $1.4 million and $12.1 million, respectively, for the acquisition and development of coal reserves from White Oak (Note 6), which is described as “Payments to affiliate for acquisition and development of coal reserves” in our condensed consolidated statements of cash flow.

Schedule of reconciliation of consolidated Segment Adjusted EBITDA Expense to 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) (in thousands):

	Three Months Ended
	March 31,
	2014			2013
Segment Adjusted EBITDA Expense	$	321,938		$	348,903
Outside coal purchases	(2		)	(602		)
Other income	306			274
Operating expenses (excluding depreciation, depletion and amortization)	$	322,242		$	348,575

Schedule of reconciliation of consolidated Segment Adjusted EBITDA to net income

Consolidated Segment Adjusted EBITDA is reconciled to net income as follows (in thousands):

	Three Months Ended
	March 31,
	2014			2013
Consolidated Segment Adjusted EBITDA	$	207,854		$	188,351
General and administrative	(17,435		)	(15,246		)
Depreciation, depletion and amortization	(66,841		)	(64,382		)
Interest expense, net	(7,674		)	(6,484		)
Income tax benefit	-			698
Net income	$	115,904		$	102,937

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COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS (Details) (USD $)	3 Months Ended				12 Months Ended	3 Months Ended	0 Months Ended	3 Months Ended
	Mar. 31, 2014 Pension Plan		Mar. 31, 2013 Pension Plan		Dec. 31, 2013 Pension Plan	Mar. 31, 2014 2013 plan year	Apr. 15, 2014 2014 plan year	Mar. 31, 2014 2014 plan year
Defined Benefit Plan Disclosure
Service cost	$ 543,000		$ 760,000
Interest cost	1,019,000		852,000
Expected return on plan assets	(1,401,000)		(1,233,000)
Amortization of net loss	225,000	[1]	559,000	[1]
Net periodic benefit cost	386,000		938,000
Employer contribution						800,000	800,000
Expected contribution for pension plan in 2014					3,600,000
Expected additional contribution for the remainder of 2014						$ 300,000		$ 1,700,000

[1] Amortization of net loss is included in the operating expenses line item within our condensed consolidated statements of income.

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NEW ACCOUNTING STANDARDS

3 Months Ended

Mar. 31, 2014

NEW ACCOUNTING STANDARDS

NEW ACCOUNTING STANDARDS

2. NEW ACCOUNTING STANDARDS

New Accounting Standards Issued and Not Yet Adopted

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”).  ASU 2014-08 changes the requirements for reporting discontinued operations in Accounting Standards Codification 205, Presentation of Financial Statements, by updating the criteria for determining which disposals can be presented as discontinued operations and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of discontinued operations.  ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014.  We do not anticipate the adoption of ASU 2014-08 on January 1, 2015 will have a material impact on our consolidated financial statements.

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LONG-TERM DEBT (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2014
ARLP Debt Arrangements
Long-Term Debt
ARLP debt arrangements requirements, period over which the ratios are required to be maintained	1 year
Actual debt to cash flow ratio for trailing twelve months		1.17
Actual cash flow to interest expense ratio for trailing twelve months		20.4
ARLP Debt Arrangements | Maximum
Long-Term Debt
ARLP debt arrangements requirements, debt to cash flow ratio		3.0
ARLP Debt Arrangements | Minimum
Long-Term Debt
ARLP debt arrangements requirements, cash flow to interest expense ratio		3.0
Revolving Credit facility
Long-Term Debt
Revolving credit facility	$ 700.0	$ 700.0
Letters of credit outstanding	24.2	24.2
Line of credit facility, available for borrowing capacity	$ 460.8	$ 460.8
Annual commitment fee percentage, undrawn portion	0.25%
Frequency of commitment fee on undrawn portion	annual

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LONG-TERM DEBT (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Long-Term Debt
Long-term debt including current and non-current	$ 833,000	$ 868,000
Less current maturities	(43,000)	(36,750)
Total long-term debt	790,000	831,250
Revolving Credit facility
Long-Term Debt
Revolving credit facility	215,000	250,000
Senior notes
Long-Term Debt
Long-term debt including current and non-current	18,000	18,000
Series A Senior Notes
Long-Term Debt
Long-term debt including current and non-current	205,000	205,000
Series B Senior Notes
Long-Term Debt
Long-term debt including current and non-current	145,000	145,000
Term loan
Long-Term Debt
Long-term debt including current and non-current	$ 250,000	$ 250,000

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WHITE OAK TRANSACTIONS (Details) (USD $)	3 Months Ended		27 Months Ended	0 Months Ended	3 Months Ended		30 Months Ended	0 Months Ended	3 Months Ended		0 Months Ended	3 Months Ended	12 Months Ended	15 Months Ended	30 Months Ended	3 Months Ended		0 Months Ended	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013	Sep. 22, 2011 White Oak	Mar. 31, 2014 White Oak	Mar. 31, 2013 White Oak	Mar. 31, 2014 White Oak	Sep. 22, 2011 White Oak Minimum	Mar. 31, 2014 White Oak Minimum	Mar. 31, 2014 White Oak Maximum	Sep. 22, 2011 White Oak Reserve Acquisition T	Mar. 31, 2014 White Oak Reserve Acquisition T	Dec. 31, 2013 White Oak Reserve Acquisition T	Dec. 31, 2012 White Oak Reserve Acquisition	Mar. 31, 2014 White Oak Reserve Acquisition T	Mar. 31, 2014 White Oak Reserve Acquisition, rights purchased on Transaction Date T	Mar. 31, 2014 White Oak Reserve Acquisition, rights purchased during fiscal year 2013 and first quarter 2014 T	Sep. 22, 2011 White Oak Services Agreement	Mar. 31, 2014 White Oak Services Agreement
White oak transactions
Amount funded by partnership				$ 69,500,000			$ 248,100,000
Total expected funding by partnership									395,500,000	425,500,000
Coal reserves, rights purchased (in tons)											204,900,000	5,100,000	90,100,000		300,100,000
Coal reserves developed for future mining (in tons)																105,200,000	48,500,000
Payment for acquisition and development of coal reserves	1,401,000	12,064,000													112,100,000
Payment for acquisition of coal reserves and other assets											33,800,000	1,400,000	25,300,000
Payment for development of acquired coal reserves														51,600,000
Commitment for additional coal reserve acquisitions												27,900,000			27,900,000
Purchase of equity investment			129,300,000	35,700,000	30,000,000		195,000,000
Equity investment commitment								150,000,000
Voting Interest (as a percent)					29.00%		29.00%
Equity method investment, net					195,000,000		195,000,000
Distributions from White Oak							0
Allocated losses					6,300,000	4,200,000
Throughput fees																			3,600,000
Additional commitment for construction loan																		10,500,000
Term of construction loan																			20 years
Construction Loan utilized																			$ 10,500,000

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NET INCOME PER LIMITED PARTNER UNIT (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Excess Of $0.275 Per Unit
Incentive distributions
General partner incentive distribution percentage	15.00%
Threshold distribution of net income per unit (in dollars per unit)	$ 0.275
Excess Of $0.3125 Per Unit
Incentive distributions
General partner incentive distribution percentage	25.00%
Threshold distribution of net income per unit (in dollars per unit)	$ 0.3125
Excess Of $0.375 Per Unit
Incentive distributions
General partner incentive distribution percentage	50.00%
Threshold distribution of net income per unit (in dollars per unit)	$ 0.375

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ORGANIZATION AND PRESENTATION

3 Months Ended

Mar. 31, 2014

ORGANIZATION AND PRESENTATION

ORGANIZATION AND PRESENTATION

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, the managing general partner of Alliance Resource Partners, L.P, also referred to as our managing general partner.

· References to “SGP” mean Alliance Resource GP, LLC, the special general partner of Alliance Resource Partners, L.P., also referred to as our special general partner.

· References to “Intermediate Partnership” mean Alliance Resource Operating Partners, L.P., the intermediate partnership of Alliance Resource Partners, L.P., also referred to as our intermediate partnership.

· References to “Alliance Coal” mean Alliance Coal, LLC, the holding company for the operations of Alliance Resource Operating Partners, L.P., also referred to as our 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 our managing general partner, and Kathleen S. Craft.  SGP, a Delaware limited liability company, is owned by ARH and holds a 0.01% general partner interest in each of ARLP and the Intermediate Partnership.

We are managed by our managing general partner, MGP, a Delaware limited liability company, which holds a 0.99% and a 1.0001% managing general partner interest in ARLP and the Intermediate Partnership, respectively, 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 on May 15, 2006.  AHGP owns directly and indirectly 100% of the members’ interest of MGP, the incentive distribution rights (“IDR”) in ARLP and 15,544,169 common units of 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, 2014 and December 31, 2013, and the results of our operations, comprehensive income and cash flows for the three months ended March 31, 2014 and 2013.  All of our intercompany transactions and accounts have been eliminated.

These condensed consolidated financial statements and notes are unaudited. However, in the opinion of management, these financial statements reflect all adjustments (which include only 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 for a full year.

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 should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2013.

Use of Estimates

The preparation of the ARLP Partnership’s condensed consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) of the United States (“U.S.”) 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.

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NET INCOME PER LIMITED PARTNER UNIT (Details 2) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
NET INCOME PER LIMITED PARTNER UNIT
Net income	$ 115,904		$ 102,937
Managing general partner's priority distributions	(31,684)		(28,277)
General partners' 2% equity ownership	(1,684)		(1,493)
LIMITED PARTNERS' INTEREST IN NET INCOME	82,536		73,167
Distributions to participating securities	(708)		(569)
Undistributed earnings attributable to participating securities	(559)		(432)
Net income available to limited partners	$ 81,269		$ 72,166
Weighted average limited partner units outstanding - basic and diluted (in units)	36,997,433		36,919,002
Basic and diluted net income per limited partner unit (in dollars per unit)	$ 2.20	[1]	$ 1.95	[1]
Ownership percentage by general partners	2.00%		2.00%
Anti-dilutive under the treasury stock method (in units)	373,896		324,315

[1] Diluted EPU gives effect to all dilutive potential common units outstanding during the period using the treasury stock method. Diluted EPU excludes all dilutive potential units calculated under the treasury stock method if their effect is anti-dilutive. For the three months ended March 31, 2014 and 2013, LTIP, SERP and Deferred Compensation Plan units of 373,896 and 324,315 respectively, were considered anti-dilutive under the treasury stock method.

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SEGMENT INFORMATION (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Reconciliation of consolidated Segment Adjusted EBITDA to net income
Consolidated Segment Adjusted EBITDA	$ 207,854	[1],[2]	$ 188,351	[1],[2]
General and administrative	(17,435)		(15,246)
Depreciation, depletion and amortization	(66,841)		(64,382)
Interest expense, net	(7,674)		(6,484)
Income tax (expense) benefit			698
NET INCOME	$ 115,904		$ 102,937

[1] Segment Adjusted EBITDA is defined as net income before net interest expense, income taxes, depreciation, depletion and amortization 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.

[2] Includes equity in income (loss) of affiliates for the three months ended March 31, 2014 and 2013 of $(6.3) million and $(4.2) million, respectively, included in the White Oak segment and $0.1 million and $0.3 million, respectively, included in the Other and Corporate segment.

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014		Dec. 31, 2013
CURRENT ASSETS:
Cash and cash equivalents	$ 14,396		$ 93,654
Trade receivables	199,554		153,662
Other receivables	294		776
Due from affiliates	2,497		1,964
Inventories	68,751		44,214
Advance royalties	11,454		11,454
Prepaid expenses and other assets	9,954		16,186
Total current assets	306,900		321,910
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost	2,681,406		2,645,872
Less accumulated depreciation, depletion and amortization	(1,062,256)		(1,031,493)
Total property, plant and equipment, net	1,619,150		1,614,379
OTHER ASSETS:
Advance royalties	20,741		18,813
Due from affiliate	11,458		11,560
Equity investments in affiliates	154,029		130,410
Other long-term assets	23,680		24,826
Total other assets	209,908		185,609
TOTAL ASSETS	2,135,958	[1]	2,121,898	[1]
CURRENT LIABILITIES:
Accounts payable	83,860		79,371
Due to affiliates	202		290
Accrued taxes other than income taxes	25,060		19,061
Accrued payroll and related expenses	43,116		47,105
Accrued interest	6,302		996
Workers' compensation and pneumoconiosis benefits	9,237		9,065
Current capital lease obligations	1,307		1,288
Other current liabilities	17,130		18,625
Current maturities, long-term debt	43,000		36,750
Total current liabilities	229,214		212,551
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities	790,000		831,250
Pneumoconiosis benefits	49,698		48,455
Accrued pension benefit	17,544		18,182
Workers' compensation	54,857		54,949
Asset retirement obligations	81,324		80,807
Long-term capital lease obligations	16,758		17,135
Other liabilities	6,407		7,332
Total long-term liabilities	1,016,588		1,058,110
Total liabilities	1,245,802		1,270,661
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited Partners - Common Unitholders 37,030,317 and 36,963,054 units outstanding, respectively	1,165,621		1,128,519
General Partners' deficit	(265,708)		(267,563)
Accumulated other comprehensive loss	(9,757)		(9,719)
Total Partners' Capital	890,156		851,237
TOTAL LIABILITIES AND PARTNERS' CAPITAL	$ 2,135,958		$ 2,121,898

[1] Total assets at March 31, 2014 and 2013 include investments in affiliate of $152.4 million and $113.7 million, respectively, for the White Oak segment and $1.7 million and $1.9 million, respectively, for the Other and Corporate segment.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
NET INCOME	$ 115,904		$ 102,937
OTHER COMPREHENSIVE (LOSS)/INCOME:
Total adjustments	(38)		727
TOTAL COMPREHENSIVE INCOME	115,866		103,664
Defined benefit pension plan
OTHER COMPREHENSIVE (LOSS)/INCOME:
Amortization of actuarial (gain)/loss	225	[1]	559	[1]
Total adjustments	225		559
Pneumoconiosis benefits
OTHER COMPREHENSIVE (LOSS)/INCOME:
Amortization of actuarial (gain)/loss	(263)	[1]	168	[1]
Total adjustments	$ (263)		$ 168

[1] Amortization of actuarial (gain)/loss is included in the computation of net periodic benefit cost (see Notes 8 and 10 for additional details).

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WORKERS' COMPENSATION AND PNEUMOCONIOSIS (Details 2) (Black Lung, USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Black Lung
Accrued Workers Compensation And Pneumoconiosis Benefits
Service cost	$ 857		$ 954
Interest cost	566		563
Amortization of net (gain)/loss	(263)	[1]	168	[1]
Net periodic benefit cost	$ 1,160		$ 1,685

[1] Amortization of net (gain)/loss is included in the operating expenses line item within our condensed consolidated statements of income.

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NET INCOME PER LIMITED PARTNER UNIT (Tables)

3 Months Ended

Mar. 31, 2014

NET INCOME PER LIMITED PARTNER UNIT

Reconciliation of net income

The following is a reconciliation of net income used for calculating basic earnings per unit and the weighted average units used in computing EPU for the three months ended March 31, 2014 and 2013 (in thousands, except per unit data):

	Three Months EndedMarch 31,
	2014		2013
Net income	$	115,904	$	102,937
Adjustments:
Managing general partner’s priority distributions	(31,684)		(28,277)
General partners’ 2% equity ownership	(1,684)		(1,493)
Limited partners’ interest in net income	82,536		73,167
Less:
Distributions to participating securities	(708)		(569)
Undistributed earnings attributable to participating securities	(559)		(432)
Net income available to limited partners	$	81,269	$	72,166
Weighted average limited partner units outstanding — basic and diluted	36,997		36,919
Basic and diluted net income per limited partner unit (1)	$	2.20	$	1.95

(1) Diluted EPU gives effect to all dilutive potential common units outstanding during the period using the treasury stock method. Diluted EPU excludes all dilutive potential units calculated under the treasury stock method if their effect is anti-dilutive.  For the three months ended March 31, 2014 and 2013, LTIP, SERP and Deferred Compensation Plan units of 373,896 and 324,315 respectively, were considered anti-dilutive under the treasury stock method.

Schedule of pro forma net income per limited partner unit

	Three Months EndedMarch 31,
	2014		2013
PRO FORMA BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT	$	1.10	$	0.98

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COMPENSATION PLANS (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended				0 Months Ended	36 Months Ended	0 Months Ended	3 Months Ended
	Feb. 14, 2014 ARLP LTIP	Mar. 31, 2014 ARLP LTIP	Mar. 31, 2013 ARLP LTIP	Mar. 31, 2014 ARLP LTIP Phantom Share Units (PSUs)	Jan. 22, 2014 ARLP LTIP Phantom Share Units (PSUs)	Jan. 02, 2014 ARLP LTIP Phantom Share Units (PSUs) 2011 Grants	Dec. 31, 2013 ARLP LTIP Phantom Share Units (PSUs) 2011 Grants	Feb. 14, 2014 SERP and Deferred Compensation Plans	Mar. 31, 2014 SERP and Deferred Compensation Plans	Mar. 31, 2013 SERP and Deferred Compensation Plans	Mar. 31, 2014 SERP and Deferred Compensation Plans Phantom Share Units (PSUs)	Mar. 31, 2013 SERP and Deferred Compensation Plans Phantom Share Units (PSUs)
Compensation Plans
Units for which vesting requirements were deemed satisfied						101,371
Forfeited (in units)							7,045
Common units issued upon vesting	64,305							2,958
Additional grants authorized (in units)					185,205
Units granted				175,205							2,844	3,937
Fair value as intrinsic value at date of grant (in dollars per unit)				$ 81.16							$ 81.34	$ 61.67
Share based compensation expense		$ 2.1	$ 1.7						$ 0.3	$ 0.3
Units available for grant		2,000,000
Unrecognized compensation expense		19.9
Weighted-average period for recognition of expense		1 year 10 months 24 days
Intrinsic value of outstanding grants				35.5							14.6
Total unit based obligation recorded		$ 10.1							$ 11.6
Units outstanding											173,546

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COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS (Tables) (Defined benefit pension plan)

3 Months Ended

Mar. 31, 2014

Defined benefit pension plan

Defined Benefit Plan Disclosure

Components of Net Periodic Benefit Cost

Components of the net periodic benefit cost for each of the periods presented are as follows (in thousands):

	Three Months Ended March 31,
	2014			2013
Service cost	$	543		$	760
Interest cost	1,019			852
Expected return on plan assets	(1,401		)	(1,233		)
Amortization of net loss (1)	225			559
Net periodic benefit cost	$	386		$	938

(1) Amortization of net loss is included in the operating expenses line item within our condensed consolidated statements of income.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES	$ 140,099	$ 199,478
Property, plant and equipment:
Capital expenditures	(69,463)	(70,306)
Changes in accounts payable and accrued liabilities	(3,745)	(7,608)
Proceeds from sale of property, plant and equipment		9
Purchases of equity investments in affiliate	(30,000)	(29,700)
Payments to affiliate for acquisition and development of coal reserves	(1,401)	(12,064)
Advances/loans to affiliate		(1,643)
Net cash used in investing activities	(104,609)	(121,312)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities	82,800	45,000
Payments under revolving credit facilities	(117,800)	(50,000)
Payments on capital lease obligations	(358)	(284)
Net settlement of employee withholding taxes on vesting of Long-Term Incentive Plan	(2,991)	(3,015)
Cash contributions by General Partners	111	114
Distributions paid to Partners	(76,510)	(69,587)
Net cash used in financing activities	(114,748)	(77,772)
NET CHANGE IN CASH AND CASH EQUIVALENTS	(79,258)	394
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	93,654	28,283
CASH AND CASH EQUIVALENTS AT END OF PERIOD	14,396	28,677
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	3,255	3,906
NON-CASH INVESTING AND FINANCING ACTIVITY:
Accounts payable for purchase of property, plant and equipment	14,179	13,364
Market value of common units issued under Long-Term Incentive and Directors Deferred Compensation Plans before minimum statutory tax withholding requirements	$ 8,417	$ 8,583

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical)	Mar. 31, 2014	Dec. 31, 2013
CONDENSED CONSOLIDATED BALANCE SHEETS
Limited Partners, Common Unitholders, units outstanding	37,030,317	36,963,054

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COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS

3 Months Ended

Mar. 31, 2014

COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS

COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS

10. COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS

Eligible employees at certain of our mining operations participate in a defined benefit plan (the “Pension Plan”) that we sponsor.  The benefit formula for the Pension Plan is a fixed dollar unit based on years of service.

Components of the net periodic benefit cost for each of the periods presented are as follows (in thousands):

	Three Months Ended March 31,
	2014			2013
Service cost	$	543		$	760
Interest cost	1,019			852
Expected return on plan assets	(1,401		)	(1,233		)
Amortization of net loss (1)	225			559
Net periodic benefit cost	$	386		$	938

(1) Amortization of net loss is included in the operating expenses line item within our condensed consolidated statements of income.

We previously disclosed in our financial statements for the year ended December 31, 2013 that we expected to contribute $3.6 million to the Pension Plan in 2014.  As of March 31, 2014, we made a contribution payment of $0.8 million to the Pension Plan for the 2013 plan year.  On April 15, 2014, we made a contribution payment of $0.8 million for the 2014 plan year.  We expect to make additional contributions of $0.3 million for the 2013 plan year and $1.7 million for the 2014 plan year for the remainder of 2014 and, therefore, will contribute approximately $3.6 million to the Pension Plan in 2014.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2014	May 09, 2014
Document and Entity Information
Entity Registrant Name	ALLIANCE RESOURCE PARTNERS LP
Entity Central Index Key	0001086600
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Units Outstanding		37,030,317
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1

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SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2014

SEGMENT INFORMATION

SEGMENT INFORMATION

11.       SEGMENT INFORMATION

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 four reportable segments: the Illinois Basin, Appalachia, White Oak and Other and Corporate.  The first two 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 White Oak reportable segment includes our activities associated with the White Oak longwall Mine No. 1 development project more fully described below.

The Illinois Basin reportable segment is comprised of multiple operating segments, including Webster County Coal, LLC’s Dotiki mining complex, Gibson County Coal, LLC’s mining complex, which includes the Gibson North mine and Gibson South mine, Hopkins County Coal, LLC’s Elk Creek mining complex, White County Coal, LLC’s Pattiki mining complex, Warrior Coal, LLC’s mining complex, Sebree Mining, LLC’s mining complex, which includes the Onton mine, and River View Coal, LLC’s mining complex.  The development of the Gibson South mine is currently underway with incidental production beginning in April 2014.

The Appalachian reportable segment is comprised of multiple operating segments, including the Mettiki mining complex, the Tunnel Ridge, LLC mining complex, the MC Mining, LLC mining complex and the Penn Ridge Coal, LLC (“Penn Ridge”) property.  The Mettiki mining complex includes Mettiki Coal (WV), LLC’s Mountain View mine, Mettiki Coal, LLC’s preparation plant and a small third-party mining operation which has been idled since July 2013.  We are in the process of permitting the Penn Ridge property for future mine development.

The White Oak reportable segment is comprised of two operating segments, WOR Processing and WOR Properties.  WOR Processing includes both the surface operations at White Oak and the equity investment in White Oak.  WOR Properties owns coal reserves acquired from White Oak under lease-back arrangements (Note 6).

Other and Corporate includes marketing and administrative expenses, Alliance Service, Inc. (“ASI”) and its subsidiary, Matrix Design Group, LLC (“Matrix Design”), Alliance Design Group, LLC (“Alliance Design”) (collectively, Matrix Design and Alliance Design are referred to as the “Matrix Group”), ASI’s ownership of aircraft, the Mt. Vernon Transfer Terminal, LLC (“Mt. Vernon”) dock activities, coal brokerage activity, our equity investment in Mid-America Carbonates, LLC, certain activities of Alliance Resource Properties and the Pontiki Coal, LLC mining complex(“Pontiki”), which ceased operations in late November 2013.

As a result of the cessation of operations at Pontiki in November 2013, we evaluated the ongoing management of our mining operations and coal sales efforts to ensure that resources were appropriately allocated to maximize our overall results.  Based on this evaluation, we have realigned the management of our operating and marketing teams and changed our reportable segment presentation to reflect this realignment.  Due to the change in our reportable segment presentation in 2014, certain reclassifications of 2013 segment information have been made to conform to the 2014 presentation.  These reclassifications include changes to the Appalachian and Other and Corporate segments.

Reportable segment results as of and for the three months ended March 31, 2014 and 2013 are presented below.

	Illinois Basin		Appalachia		White Oak		Other and Corporate		Elimination (1)		Consolidated
	(in thousands)
Reportable segment results as of and for the three months ended March 31, 2014 were as follows:
Total revenues (2)	$	396,502	$	137,184	$	3,698	$	7,742	$	(3,088)	$	542,038
Segment Adjusted EBITDA Expense (3)	229,591		85,573		1,391		8,471		(3,088)		321,938
Segment Adjusted EBITDA (4)(5)	163,649		48,870		(3,997)		(668)		-		207,854
Total assets (6)	1,119,868		620,775		343,040		53,404		(1,129)		2,135,958
Capital expenditures (7)	55,709		10,128		1,959		3,068		-		70,864
Reportable segment results as of and for the three months ended March 31, 2013 were as follows:
Total revenues (2)	$	404,823	$	122,359	$	-	$	26,507	$	(5,634)	$	548,055
Segment Adjusted EBITDA Expense (3)	234,145		95,925		101		24,366		(5,634)		348,903
Segment Adjusted EBITDA (4)(5)	167,221		22,957		(4,292)		2,465		-		188,351
Total assets (6)	1,046,513		599,502		272,316		82,646		(1,439)		1,999,538
Capital expenditures (7)	52,031		12,555		16,953		831		-		82,370

(1) The elimination column represents the elimination of intercompany transactions and is primarily comprised of sales from the Matrix Group to our mining operations and coal sales and purchases between mining operations (2013 only).

(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, brokerage sales and Pontiki’s coal sales revenue (2013 only).

(3) Segment Adjusted EBITDA Expense includes operating expenses, outside 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.

The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to operating expenses (excluding depreciation, depletion and amortization) (in thousands):

	Three Months Ended
	March 31,
	2014			2013
Segment Adjusted EBITDA Expense	$	321,938		$	348,903
Outside coal purchases	(2		)	(602		)
Other income	306			274
Operating expenses (excluding depreciation, depletion and amortization)	$	322,242		$	348,575

(4) Segment Adjusted EBITDA is defined as net income before net interest expense, income taxes, depreciation, depletion and amortization 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.  Consolidated Segment Adjusted EBITDA is reconciled to net income as follows (in thousands):

	Three Months Ended
	March 31,
	2014			2013
Consolidated Segment Adjusted EBITDA	$	207,854		$	188,351
General and administrative	(17,435		)	(15,246		)
Depreciation, depletion and amortization	(66,841		)	(64,382		)
Interest expense, net	(7,674		)	(6,484		)
Income tax benefit	-			698
Net income	$	115,904		$	102,937

(5) Includes equity in income (loss) of affiliates for the three months ended March 31, 2014 and 2013 of $(6.3) million and $(4.2) million, respectively, included in the White Oak segment and $0.1 million and $0.3 million, respectively, included in the Other and Corporate segment.

(6) Total assets at March 31, 2014 and 2013 include investments in affiliate of $152.4 million and $113.7 million, respectively, for the White Oak segment and $1.7 million and $1.9 million, respectively, for the Other and Corporate segment.

(7) Capital expenditures shown above for the three months ended March 31, 2014 and 2013, included funding of $1.4 million and $12.1 million, respectively, for the acquisition and development of coal reserves from White Oak (Note 6), which is described as “Payments to affiliate for acquisition and development of coal reserves” in our condensed consolidated statements of cash flow.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
SALES AND OPERATING REVENUES:
Coal sales	$ 525,545		$ 534,509
Transportation revenues	6,005		6,934
Other sales and operating revenues	10,488		6,612
Total revenues	542,038	[1]	548,055	[1]
EXPENSES:
Operating expenses (excluding depreciation, depletion and amortization)	322,242		348,575
Transportation expenses	6,005		6,934
Outside coal purchases	2		602
General and administrative	17,435		15,246
Depreciation, depletion and amortization	66,841		64,382
Total operating expenses	412,525		435,739
INCOME FROM OPERATIONS	129,513		112,316
Interest expense (net of interest capitalized for the three months ended March 31, 2014 and 2013 of $772 and $2,531, respectively)	(8,063)		(6,618)
Interest income	389		134
Equity in loss of affiliates, net	(6,241)		(3,867)
Other income	306		274
INCOME BEFORE INCOME TAXES	115,904		102,239
INCOME TAX BENEFIT			(698)
NET INCOME	115,904		102,937
GENERAL PARTNERS' INTEREST IN NET INCOME	33,368		29,770
LIMITED PARTNERS' INTEREST IN NET INCOME	$ 82,536		$ 73,167
BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT (Note 7) (in dollars per unit)	$ 2.20	[2]	$ 1.95	[2]
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT (in dollars per unit)	$ 1.1975		$ 1.1075
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING - BASIC AND DILUTED (in units)	36,997,433		36,919,002

[1] 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, brokerage sales and Pontiki's coal sales revenue (2013 only).

[2] Diluted EPU gives effect to all dilutive potential common units outstanding during the period using the treasury stock method. Diluted EPU excludes all dilutive potential units calculated under the treasury stock method if their effect is anti-dilutive. For the three months ended March 31, 2014 and 2013, LTIP, SERP and Deferred Compensation Plan units of 373,896 and 324,315 respectively, were considered anti-dilutive under the treasury stock method.

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LONG-TERM DEBT

3 Months Ended

Mar. 31, 2014

LONG-TERM DEBT

LONG-TERM DEBT

5. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

	March 31, 2014		December 31, 2013
Revolving Credit facility	$	215,000	$	250,000
Senior notes	18,000		18,000
Series A senior notes	205,000		205,000
Series B senior notes	145,000		145,000
Term loan	250,000		250,000
	833,000		868,000
Less current maturities	(43,000)		(36,750)
Total long-term debt	$	790,000	$	831,250

Our Intermediate Partnership has $18.0 million in senior notes (“Senior Notes”), $205.0 million in Series A and $145.0 million in Series B senior notes (collectively, the “2008 Senior Notes”), a $700.0 million revolving credit facility (“Revolving Credit Facility”) and a $250.0 million term loan (collectively, with the Senior Notes, the 2008 Senior Notes and the Revolving Credit Facility, the “ARLP Debt Arrangements”), which are guaranteed by all of the material direct and indirect subsidiaries of our Intermediate Partnership. The ARLP Debt Arrangements contain various covenants affecting our Intermediate Partnership and its subsidiaries restricting, among other things, the amount of distributions by our Intermediate Partnership, the incurrence of additional indebtedness and liens, the sale of assets, the making of investments, the entry into mergers and consolidations and the entry into transactions with affiliates, in each case subject to various exceptions.  The ARLP Debt Arrangements also require the Intermediate Partnership to remain in control of a certain amount of mineable coal reserves relative to its annual production.  In addition, the ARLP Debt Arrangements require our Intermediate Partnership to maintain (a) debt to cash flow ratio of not more than 3.0 to 1.0 and (b) 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 1.17 to 1.0 and 20.4 to 1.0, respectively, for the trailing twelve months ended March 31, 2014.  We were in compliance with the covenants of the ARLP Debt Arrangements as of March 31, 2014.

At March 31, 2014, we had borrowings of $215.0 million and $24.2 million of letters of credit outstanding with $460.8 million available for borrowing under the Revolving Credit Facility.  We utilize the Revolving Credit Facility, as appropriate, for working capital requirements, anticipated capital expenditures and investments in affiliates, scheduled debt payments and distribution payments.  We incur an annual commitment fee of 0.25% on the undrawn portion of the Revolving Credit Facility.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2014

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

4. FAIR VALUE MEASUREMENTS

We apply the provisions of FASB ASC 820, Fair Value Measurement, which, among other things, defines fair value, requires disclosures about assets and liabilities carried at fair value and establishes a hierarchal disclosure framework based upon the quality of inputs used to measure fair value.

Valuation techniques are based upon observable and unobservable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our own market assumptions.  These two types of inputs create the following fair value hierarchy:

· Level 1 – Quoted prices for identical instruments in active markets.

· 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 – Instruments whose significant value drivers are unobservable.

The carrying amounts for cash equivalents, accounts receivable, accounts payable, due from affiliates and due to affiliates approximate fair value because of the short maturity of those instruments.  At March 31, 2014 and December 31, 2013, the estimated fair value of our long-term debt, including current maturities, was approximately $845.5 million and $884.8 million, respectively, based on interest rates that we believe are currently available to us for issuance of debt with similar terms and remaining maturities (Note 5). The fair value of debt, which is based upon interest rates for similar instruments in active markets, is classified as a Level 2 measurement under the fair value hierarchy.

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WORKERS' COMPENSATION AND PNEUMOCONIOSIS (Tables)

3 Months Ended

Mar. 31, 2014

Accrued Workers Compensation And Pneumoconiosis Benefits

Reconciliation of Changes in Workers Compensation Liability

The changes in the workers’ compensation liability (including current and long-term liability balances) for each of the periods presented were as follows (in thousands):

	Three Months EndedMarch 31,
	2014		2013
Beginning balance	$	62,909	$	77,046
Accruals increase	2,183		3,965
Payments	(2,749)		(2,876)
Interest accretion	646		620
Ending balance	$	62,989	$	78,755

Black Lung

Accrued Workers Compensation And Pneumoconiosis Benefits

Components of Net Periodic Benefit Cost

Components of the net periodic benefit cost for each of the periods presented are as follows (in thousands):

	Three Months EndedMarch 31,
	2014		2013
Service cost	$	857	$	954
Interest cost	566		563
Amortization of net (gain)/loss (1)	(263)		168
Net periodic benefit cost	$	1,160	$	1,685

(1) Amortization of net (gain)/loss is included in the operating expenses line item within our condensed consolidated statements of income.

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2014

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

12.       SUBSEQUENT EVENTS

On April 28, 2014, we declared a quarterly distribution for the quarter ended March 31, 2014, of $1.2225 per unit, on all common units outstanding, totaling approximately $77.9 million (which includes our managing general partner’s incentive distributions), payable on May 15, 2014 to all unitholders of record as of May 8, 2014.

Other than the event described above and in Note 7, there were no other subsequent events.

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WORKERS' COMPENSATION AND PNEUMOCONIOSIS

3 Months Ended

Mar. 31, 2014

WORKERS' COMPENSATION AND PNEUMOCONIOSIS

WORKERS' COMPENSATION AND PNEUMOCONIOSIS

8. WORKERS’ COMPENSATION AND PNEUMOCONIOSIS

The changes in the workers’ compensation liability (including current and long-term liability balances) for each of the periods presented were as follows (in thousands):

	Three Months EndedMarch 31,
	2014		2013
Beginning balance	$	62,909	$	77,046
Accruals increase	2,183		3,965
Payments	(2,749)		(2,876)
Interest accretion	646		620
Ending balance	$	62,989	$	78,755

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, or black lung, benefits to eligible employees and former employees and their dependents.  Components of the net periodic benefit cost for each of the periods presented are as follows (in thousands):

	Three Months EndedMarch 31,
	2014		2013
Service cost	$	857	$	954
Interest cost	566		563
Amortization of net (gain)/loss (1)	(263)		168
Net periodic benefit cost	$	1,160	$	1,685

(1) Amortization of net (gain)/loss is included in the operating expenses line item within our condensed consolidated statements of income.

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WHITE OAK TRANSACTIONS

3 Months Ended

Mar. 31, 2014

WHITE OAK TRANSACTIONS

WHITE OAK TRANSACTIONS

6. WHITE OAK TRANSACTIONS

On September 22, 2011 (the “Transaction Date”), we entered into a series of transactions with White Oak Resources LLC (“White Oak”) and related entities to support development of a longwall mining operation currently under construction.  The transactions feature several components, including an equity investment in White Oak (represented by “Series A Units” containing certain distribution and liquidation preferences), the acquisition and lease-back of certain coal reserves and surface rights and a construction loan.  Our initial investment funding to White Oak at the Transaction Date, consummated utilizing existing cash on hand, was $69.5 million and we have funded White Oak $248.1 million between the Transaction Date and March 31, 2014.  We expect to fund a total of approximately $395.5 million to $425.5 million from the Transaction Date through December 31, 2015, which includes the funding made to White Oak through March 31, 2014 discussed above.  On the Transaction Date, we also entered into a coal handling and services agreement, pursuant to which we constructed and are operating a preparation plant and other surface facilities.  We expect to fund these additional commitments utilizing existing cash balances, future cash flows from operations, borrowings under credit facilities and cash provided from the issuance of debt or equity.  The following information discusses each component of these transactions in further detail.

Hamilton County, Illinois Reserve Acquisition

On the Transaction Date, Alliance WOR Properties, LLC (“WOR Properties”) acquired from White Oak the rights to approximately 204.9 million tons of proven and probable high-sulfur coal reserves, of which 105.2 million tons are currently being developed for future mining by White Oak, and certain surface properties and rights in Hamilton County, Illinois (the “Reserve Acquisition”), which is adjacent to White County, Illinois, where our White County Coal, LLC Pattiki mine is located.  The asset purchase price of $33.8 million cash paid at closing was allocated to owned and leased coal rights.  Between the Transaction Date and December 31, 2012, WOR Properties provided $51.6 million to White Oak for development of the acquired coal reserves, fulfilling its initial commitment for further development funding.  During the twelve months ended December 31, 2013, WOR Properties acquired from White Oak, for $25.3 million cash paid at various closings, an additional 90.1 million tons of reserves.  During the three months ended March 31, 2014, WOR Properties acquired from White Oak, for $1.4 million cash paid at closing, an additional 5.1 million tons of reserves.  Of the additional tons acquired in 2013 and the three months ended March 31, 2014, 48.5 million tons are currently being developed for future mining by White Oak.  At March 31, 2014, WOR Properties has provided $112.1 million to acquire a total of 300.1 million tons of coal reserves and fund the development of the acquired reserves.  WOR Properties has a remaining commitment of $27.9 million for additional coal reserve acquisitions and development funding.

Equity Investment – Series A Units

Concurrent with the Reserve Acquisition, our subsidiary, Alliance WOR Processing, LLC (“WOR Processing”), made an initial equity investment of $35.7 million in White Oak to purchase Series A Units representing ownership in White Oak.  WOR Processing purchased $129.3 million of additional Series A Units between the Transaction Date and December 31, 2013, and fulfilled WOR Processing’s minimum equity investment commitment of $150.0 million.  During the three months ended March 31, 2014, WOR Processing purchased $30.0 million of additional Series A Units, bringing the total investment in Series A Units to $195.0 million at March 31, 2014.

WOR Processing’s ownership and member’s voting interest in White Oak at March 31, 2014 were 29.0% based upon currently outstanding voting units.  The remainder of the equity ownership in White Oak, represented by Series B Units, is held by other investors and members of White Oak management.

We continually review all rights provided to WOR Processing and us by various agreements with White Oak and continue to conclude all such rights are protective or participating in nature and do not provide WOR Processing or us the ability to unilaterally direct any of the primary activities of White Oak that most significantly impact its economic performance.  As such, we recognize WOR Processing’s interest in White Oak as an equity investment in affiliate in our consolidated balance sheets.  As of March 31, 2014, WOR Processing had invested $195.0 million in Series A Units of White Oak equity, which represents our current maximum exposure to loss as a result of our equity investment in White Oak exclusive of capitalized interest.  White Oak has made no distributions to us.

We record WOR Processing’s equity in earnings or losses of affiliates under the hypothetical liquidation at book value method of accounting due to the preferences to which WOR Processing is entitled on distributions.  For the three months ended March 31, 2014 and 2013, we were allocated losses of $6.3 million and $4.2 million, respectively.

Services Agreement

Simultaneous with the closing of the Reserve Acquisition, WOR Processing entered into a Coal Handling and Preparation Agreement with White Oak pursuant to which WOR Processing committed to construct and operate a coal preparation plant and related facilities and a rail loop and loadout facility to service the White Oak longwall Mine No. 1.  For the quarter ended March 31, 2014, WOR Processing earned throughput fees of $3.6 million from White Oak for processing and loading coal through the facilities.

In addition, the Intermediate Partnership agreed to loan $10.5 million to White Oak for the construction of various assets on the surface property, including but not limited to, a bathhouse, office and warehouse (“Construction Loan”).  The Construction Loan has a term of 20 years, with repayment scheduled to begin in 2015.  White Oak had borrowed the entire amount available under the Construction Loan as of March 31, 2014.

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NET INCOME PER LIMITED PARTNER UNIT

3 Months Ended

Mar. 31, 2014

NET INCOME PER LIMITED PARTNER UNIT

NET INCOME PER LIMITED PARTNER UNIT

7. NET INCOME PER LIMITED PARTNER UNIT

We apply the provisions of FASB ASC 260, Earnings Per Share, which requires the two-class method in calculating basic and diluted earnings per unit (“EPU”).  Net income 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 managing general partner, the holder of the IDR pursuant to our partnership agreement, which are declared and paid following the end of each quarter. Under the quarterly IDR provisions of our partnership agreement, our managing general partner is entitled to receive 15% of the amount we distribute in excess of $0.275 per unit, 25% of the amount we distribute in excess of $0.3125 per unit, and 50% of the amount we distribute in excess of $0.375 per unit.  Our partnership agreement contractually limits our distributions to available cash; therefore, undistributed earnings of the ARLP Partnership are not allocated to the IDR holder.  In addition, our outstanding awards under our Long-Term Incentive Plan (“LTIP”) and phantom units in notional accounts under our Supplemental Executive Retirement Plan (“SERP”) and the MGP Amended and Restated Deferred Compensation Plan for Directors (“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 used for calculating basic earnings per unit and the weighted average units used in computing EPU for the three months ended March 31, 2014 and 2013 (in thousands, except per unit data):

	Three Months EndedMarch 31,
	2014		2013
Net income	$	115,904	$	102,937
Adjustments:
Managing general partner’s priority distributions	(31,684)		(28,277)
General partners’ 2% equity ownership	(1,684)		(1,493)
Limited partners’ interest in net income	82,536		73,167
Less:
Distributions to participating securities	(708)		(569)
Undistributed earnings attributable to participating securities	(559)		(432)
Net income available to limited partners	$	81,269	$	72,166
Weighted average limited partner units outstanding — basic and diluted	36,997		36,919
Basic and diluted net income per limited partner unit (1)	$	2.20	$	1.95

(1) Diluted EPU gives effect to all dilutive potential common units outstanding during the period using the treasury stock method. Diluted EPU excludes all dilutive potential units calculated under the treasury stock method if their effect is anti-dilutive.  For the three months ended March 31, 2014 and 2013, LTIP, SERP and Deferred Compensation Plan units of 373,896 and 324,315 respectively, were considered anti-dilutive under the treasury stock method.

On April 28, 2014, we also announced a two-for-one split of our common units. The unit split will take place in the form of a one unit distribution on each unit outstanding, with units to be distributed on June 16, 2014 to unitholders of record as of May 30, 2014. This unit split will result in the issuance of approximately 37.0 million common units. Following the unit split, the quarterly distribution per unit will be reduced by half; for example, the distribution for the quarter ended March 31, 2014 of $1.2225 per unit would become $0.61125 per unit, or an annualized rate of $2.445 per unit. Also following the unit split, the target threshold for the IDR per unit will be reduced by half and accordingly, the quarterly IDR paid will remain unchanged. The following pro forma net income per limited partner unit assumes a two-for-one split on June 16, 2014:

	Three Months EndedMarch 31,
	2014		2013
PRO FORMA BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT	$	1.10	$	0.98

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COMPENSATION PLANS

3 Months Ended

Mar. 31, 2014

COMPENSATION PLANS

COMPENSATION PLANS

9. COMPENSATION PLANS

Long-Term Incentive Plan

We have the LTIP for certain employees and officers of our managing general partner and its affiliates who perform services for us.  The LTIP awards are grants of non-vested “phantom” or notional units, which upon satisfaction of vesting requirements, entitle the LTIP participant to receive ARLP common units.  Annual grant levels and vesting provisions for designated participants are recommended by our President and Chief Executive Officer, subject to review and approval of the compensation committee of the MGP board of directors (the “Compensation Committee”).  On January 22, 2014, the Compensation Committee determined that the vesting requirements for the 2011 grants of 101,371 restricted units (which is net of 7,045 forfeitures) had been satisfied as of January 1, 2014.  As a result of this vesting, on February 14, 2014, we issued 64,305 unrestricted common units to the LTIP participants. The remaining units were settled in cash to satisfy the individual statutory minimum tax obligations of the LTIP participants.  On January 22, 2014, the Compensation Committee authorized additional grants of up to 185,205 restricted units, of which 175,205 were granted during the three months ended March 31, 2014 and will vest on January 1, 2017, subject to satisfaction of certain financial tests.  The fair value of these 2014 grants is equal to the intrinsic value at the date of grant, which was $81.16 per unit.  LTIP expense was $2.1 million and $1.7 million for the three months ended March 31, 2014 and 2013, respectively.  After consideration of the January 1, 2014 vesting and subsequent issuance of 64,305 common units, approximately 2.0 million units remain available under the LTIP for issuance in the future, assuming all grants issued in 2012, 2013 and 2014 currently outstanding are settled with common units, without reduction for tax withholding, and no future forfeitures occur.

As of March 31, 2014, there was $19.9 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 1.9 years.  As of March 31, 2014, the intrinsic value of the non-vested LTIP grants was $35.5 million.  As of March 31, 2014, the total obligation associated with the LTIP was $10.1 million and is included in the partners’ capital-limited partners line item in our condensed consolidated balance sheets.

As provided under the distribution equivalent rights provisions of the LTIP, all non-vested grants include contingent rights to receive quarterly cash distributions in an amount equal to the cash distributions we make to unitholders during the vesting period.

SERP 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.  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.

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.

For the three months ended March 31, 2014 and 2013, SERP and Deferred Compensation Plan participant notional account balances were credited with a total of 2,844 and 3,937 phantom units, respectively, and the fair value of these phantom units was $81.34 per unit and $61.67 per unit, respectively, on a weighted-average basis.  Total SERP and Deferred Compensation Plan expense was approximately $0.3 million for the three months ended March 31, 2014 and 2013, respectively.

As of March 31, 2014, there were 173,546 total phantom units outstanding under the SERP and Deferred Compensation Plan and the total intrinsic value of the SERP and Deferred Compensation Plan phantom units was $14.6 million.  As of March 31, 2014, the total obligation associated with the SERP and Deferred Compensation Plan was $11.6 million and is included in the partners’ capital-limited partners line item in our condensed consolidated balance sheets.  On February 14, 2014, we issued 2,958 ARLP common units to directors under the Deferred Compensation Plan.

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WORKERS' COMPENSATION AND PNEUMOCONIOSIS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Reconciliation of the changes in workers' compensation liability
Beginning balance	$ 62,909	$ 77,046
Accruals increase	2,183	3,965
Payments	(2,749)	(2,876)
Interest accretion	646	620
Ending balance	$ 62,989	$ 78,755

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LONG-TERM DEBT (Tables)

3 Months Ended

Mar. 31, 2014

LONG-TERM DEBT

Schedule of Long-Term Debt Instruments

Long-term debt consists of the following (in thousands):

	March 31, 2014		December 31, 2013
Revolving Credit facility	$	215,000	$	250,000
Senior notes	18,000		18,000
Series A senior notes	205,000		205,000
Series B senior notes	145,000		145,000
Term loan	250,000		250,000
	833,000		868,000
Less current maturities	(43,000)		(36,750)
Total long-term debt	$	790,000	$	831,250

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ORGANIZATION AND PRESENTATION (Details)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Ownership interests
Ownership percentage by general partners	2.00%	2.00%
ARLP | SGP
Ownership interests
Ownership percentage by general partners	0.01%
ARLP | MGP
Ownership interests
Ownership percentage by general partners	0.99%
ARLP | AHGP
Ownership interests
Ownership percentage of managing general partner by parent	100.00%
Units owned by parent	15,544,169
Intermediate Partnership | SGP
Ownership interests
Ownership percentage by general partners	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%

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SUBSEQUENT EVENTS (Details) (Subsequent event, USD $) In Millions, except Per Share data, unless otherwise specified	0 Months Ended
	Apr. 28, 2014
Subsequent event
Subsequent Event
Distributions declared per unit	$ 1.2225
Approximate distribution to be paid	$ 77.9

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Interest expense, interest capitalized	$ 772	$ 2,531

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CONTINGENCIES

3 Months Ended

Mar. 31, 2014

CONTINGENCIES

CONTINGENCIES

3. CONTINGENCIES

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.

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FAIR VALUE MEASUREMENTS (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
FAIR VALUE MEASUREMENTS
Fair value of long-term debt, including current maturities (Level 2)	$ 845.5	$ 884.8

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SEGMENT INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014 segment		Mar. 31, 2013		Dec. 31, 2013
Segment Information
Number of reportable segments	4
Number of reportable segments corresponding to major coal producing regions in the eastern U.S.	2
Reportable segment results
Total revenues	$ 542,038	[1]	$ 548,055	[1]
Segment Adjusted EBITDA Expense	321,938	[2]	348,903	[2]
Segment Adjusted EBITDA	207,854	[3],[4]	188,351	[3],[4]
Total assets	2,135,958	[5]	1,999,538	[5]	2,121,898	[5]
Capital expenditures	70,864	[6]	82,370	[6]
Additional information
Equity in income (loss) of affiliates	(6,241)		(3,867)
Investments in affiliate	154,029				130,410
Payments to affiliate for acquisition and development of coal reserves	1,401		12,064
White Oak
Segment Information
Number of operating segments within the reportable segment	2
Operating segments | Illinois Basin
Reportable segment results
Total revenues	396,502	[1]	404,823	[1]
Segment Adjusted EBITDA Expense	229,591	[2]	234,145	[2]
Segment Adjusted EBITDA	163,649	[3],[4]	167,221	[3],[4]
Total assets	1,119,868	[5]	1,046,513	[5]
Capital expenditures	55,709	[6]	52,031	[6]
Operating segments | Appalachia
Reportable segment results
Total revenues	137,184	[1]	122,359	[1]
Segment Adjusted EBITDA Expense	85,573	[2]	95,925	[2]
Segment Adjusted EBITDA	48,870	[3],[4]	22,957	[3],[4]
Total assets	620,775	[5]	599,502	[5]
Capital expenditures	10,128	[6]	12,555	[6]
Operating segments | White Oak
Reportable segment results
Total revenues	3,698	[1]
Segment Adjusted EBITDA Expense	1,391	[2]	101	[2]
Segment Adjusted EBITDA	(3,997)	[3],[4]	(4,292)	[3],[4]
Total assets	343,040	[5]	272,316	[5]
Capital expenditures	1,959	[6]	16,953	[6]
Additional information
Equity in income (loss) of affiliates	(6,300)		(4,200)
Investments in affiliate	152,400		113,700
Operating segments | Other And Corporate
Reportable segment results
Total revenues	7,742	[1]	26,507	[1]
Segment Adjusted EBITDA Expense	8,471	[2]	24,366	[2]
Segment Adjusted EBITDA	(668)	[3],[4]	2,465	[3],[4]
Total assets	53,404	[5]	82,646	[5]
Capital expenditures	3,068	[6]	831	[6]
Additional information
Equity in income (loss) of affiliates	100		300
Investments in affiliate	1,700		1,900
Elimination
Reportable segment results
Total revenues	(3,088)	[1],[7]	(5,634)	[1],[7]
Segment Adjusted EBITDA Expense	(3,088)	[2],[7]	(5,634)	[2],[7]
Total assets	$ (1,129)	[5],[7]	$ (1,439)	[5],[7]

[1] 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, brokerage sales and Pontiki's coal sales revenue (2013 only).

[2] Segment Adjusted EBITDA Expense includes operating expenses, outside 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.

[3] Segment Adjusted EBITDA is defined as net income before net interest expense, income taxes, depreciation, depletion and amortization 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.

[4] Includes equity in income (loss) of affiliates for the three months ended March 31, 2014 and 2013 of $(6.3) million and $(4.2) million, respectively, included in the White Oak segment and $0.1 million and $0.3 million, respectively, included in the Other and Corporate segment.

[5] Total assets at March 31, 2014 and 2013 include investments in affiliate of $152.4 million and $113.7 million, respectively, for the White Oak segment and $1.7 million and $1.9 million, respectively, for the Other and Corporate segment.

[6] Capital expenditures shown above for the three months ended March 31, 2014 and 2013, included funding of $1.4 million and $12.1 million, respectively, for the acquisition and development of coal reserves from White Oak (Note 6), which is described as "Payments to affiliate for the acquisition and development of coal reserves" in our condensed consolidated statements of cash flow.

[7] The elimination column represents the elimination of intercompany transactions and is primarily comprised of sales from the Matrix Group to our mining operations and coal sales and purchases between mining operations (2013 only).

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ORGANIZATION AND PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2014

ORGANIZATION AND PRESENTATION

Basis of Presentation

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, 2014 and December 31, 2013, and the results of our operations, comprehensive income and cash flows for the three months ended March 31, 2014 and 2013.  All of our intercompany transactions and accounts have been eliminated.

These condensed consolidated financial statements and notes are unaudited. However, in the opinion of management, these financial statements reflect all adjustments (which include only 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 for a full year.

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 should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2013.

Use of Estimates

Use of Estimates

The preparation of the ARLP Partnership’s condensed consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) of the United States (“U.S.”) 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.