COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2012

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

20. COMMITMENTS AND CONTINGENCIES

        Commitments—The ARLP Partnership leases buildings and equipment under operating lease agreements that provide for the payment of both minimum and contingent rentals. The ARLP Partnership also has a noncancelable lease with SGP (Note 19) and a noncancelable lease for equipment under a capital lease obligation. Future minimum lease payments are as follows (in thousands):

				Other Operating Leases
	Capital Lease
Year Ending December 31,				Affiliate		Others		Total
2013	$	2,135		$	240	$	1,413	$	1,653
2014		2,346			—		944		944
2015		2,496			—		910		910
2016		2,474			—		910		910
2017		1,916			—		910		910
Thereafter		14,829			—		683		683
Total future minimum lease payments	$	26,196		$	240	$	5,770	$	6,010
Less: amount representing interest		(6,583	)
Present value of future minimum lease payments		19,613
Less: current portion		(1,000	)
Long-term capital lease obligation	$	18,613

        Rental expense (including rental expense incurred under operating lease agreements) was $5.1 million, $5.3 million and $7.2 million for the years ended December 31, 2012, 2011 and 2010, respectively.

        Contractual Commitments—In connection with planned capital projects, the ARLP Partnership had contractual commitments of approximately $96.9 million at December 31, 2012. As of December 31, 2012, the ARLP Partnership had commitments to purchase, from external production sources, coal at an estimated cost up to $6.7 million in 2013.

        On September 22, 2011, the ARLP Partnership entered into a series of transactions with White Oak and related entities to support development of a longwall mining operation currently under construction. The ARLP Partnership's initial investment funding to White Oak at the Transaction date was $69.5 million and the ARLP Partnership has funded to White Oak $121.5 million between the Transaction Date and December 31, 2012. The ARLP Partnership has committed to fund total expenditures for the project of approximately $300.5 million to $425.5 million from the Transaction Date through the next two to three years which includes the funding made to White Oak through December 31, 2012 discussed above. The ARLP Partnership plans to utilize existing cash balances, future cash flows from operations, borrowings under revolving credit facilities and cash provided from the issuance of debt or equity to fund the commitments to the White Oak project. For more information on the White Oak transactions, please read Note 13.

        General Litigation—We are not engaged in any material litigation. The ARLP Partnership is involved in various lawsuits, claims and regulatory proceedings incidental to its business. The ARLP Partnership records 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, the ARLP Partnership believes the ultimate outcome of these outstanding lawsuits, claims and regulatory proceedings will not have a material adverse effect on its 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 the ARLP Partnership's accruals, then they could have a material adverse effect.

        Other—During October 2012, the ARLP Partnership completed its annual property and casualty insurance renewal with various insurance coverages effective October 1, 2012. The aggregate maximum limit in the commercial property program is $100.0 million per occurrence excluding a $1.5 million deductible for property damage, a 90-day waiting period for underground business interruption and a $10.0 million overall aggregate deductible. The ARLP Partnership can make no assurances that it will not experience significant insurance claims in the future that could have a material adverse effect on its business, financial condition, results of operations and ability to purchase property insurance in the future and consequently have a material adverse effect on our business, financial condition and results of operations.