ACQUISITION OF BUSINESS

12 Months Ended

Dec. 31, 2012

ACQUISITION OF BUSINESS

ACQUISITION OF BUSINESS

4. ACQUISITION OF BUSINESS

        On April 2, 2012, the ARLP Partnership acquired substantially all of Green River Collieries, LLC's ("Green River") assets related to its coal mining business and operations located in Webster and Hopkins Counties, Kentucky. The transaction includes the Onton No. 9 mining complex ("Onton mine"), which includes the mine, a dock, tugboat, and a lease for the preparation plant, and an estimated 40.0 million tons of coal reserves in the West Kentucky No. 9 coal seam. The Green River acquisition is consistent with the ARLP Partnership's general business strategy and complements its current coal mining operations.

        The following table summarizes the consideration paid to Green River and the final fair value allocation of assets acquired and liabilities assumed at the acquisition date (in thousands):

Consideration paid	$	100,000
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed:
Inventories		547
Advance royalties		888
Property, plant and equipment, including mineral rights and leased facilities		117,110
Noncompete agreement		1,200
Customer contracts, net		4,955
Permits		843
Capital lease obligation		(17,384	)
Asset retirement obligation		(6,032	)
Pneumoconiosis benefits		(2,127	)
Net tangible and intangible assets acquired	$	100,000

        During the quarter ended September 30, 2012, the ARLP Partnership finalized the purchase price allocation related to the assets acquired and liabilities assumed from Green River. The adjustments to the preliminary fair values resulted from additional information obtained about facts in existence on April 2, 2012. Prior financial statements have not been retrospectively adjusted due to immateriality.

        Intangible assets and liabilities related to coal supply agreements will be amortized over the average term of the contracts. Mine permits will be amortized over the estimated useful life of the Onton mine and the noncompete agreement will be amortized over the term of the agreement.

        The following unaudited pro forma information for the AHGP Partnership has been prepared for illustrative purposes and assumes that the business combination occurred on January 1, 2011. The unaudited pro forma results have been prepared based upon Green River's historical results with respect to the business acquired and estimates of the effects of the transactions that the ARLP Partnership believes are reasonable and supportable. The results are not necessarily reflective of the consolidated results of operations had the acquisition actually occurred on January 1, 2011, nor are they indicative of future operating results.

	Year Ended December 31,
	2012		2011
	(in thousands)
Total revenues
As reported	$	2,033,930	$	1,843,203
Pro forma	$	2,061,273	$	1,957,241
Net income
As reported	$	331,226	$	386,343
Pro forma	$	332,507	$	397,717

        The revenues and net income related to the acquired business are reflected in our consolidated statements of income beginning April 2, 2012 and totaled $81.6 million and $7.6 million, respectively, which are included in the total revenues and net income above for the year ended December 31, 2012.

        The pro forma net income includes adjustments to depreciation, depletion and amortization to reflect the new basis in property, plant and equipment and intangible assets acquired, elimination of income tax expense, and the elimination of interest expense of Green River as its debt was paid off in conjunction with the acquisition. Acquisition costs related to the business acquired of $0.6 million were reclassified to the beginning of 2011 in preparation of the pro forma results, as the acquisition was assumed to have been completed January 1, 2011 for the pro forma presentation.

        Synergies from the acquisition are not reflected in the pro forma results.