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	$	7,638	$	(3,088)	$	541,934
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)		(772)		-		207,750
Total assets (6)	1,119,868		620,775		343,040		58,013		(1,129)		2,140,567
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	$	-	$	26,422	$	(5,634)	$	547,970
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)		2,380		-		188,266
Total assets (6)	1,046,513		599,502		272,316		86,120		(1,439)		2,003,012
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 the ARLP Partnership’s 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, 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 the ARLP Partnership’s customers and consequently it does 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 (prior to the allocation of noncontrolling interest) before income taxes, net interest expense, 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 the ARLP Partnership’s 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	$207,750	$188,266
General and administrative	(17,899)	(15,713)
Depreciation, depletion and amortization	(66,841)	(64,382)
Interest expense, net	(7,674)	(6,484)
Income tax benefit	-	697
Net income	$115,336	$102,384

(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	$207,750	$188,266
General and administrative	(17,899)	(15,713)
Depreciation, depletion and amortization	(66,841)	(64,382)
Interest expense, net	(7,674)	(6,484)
Income tax benefit	-	697
Net income	$115,336	$102,384