Suite 400, 1717 South Boulder Ave,TULSA,OK,74119 (918) 295-7600 (302) 655-5049

Alliance Resource Partners, L.P. ARLP:NASDAQ Alliance Resource Partners, L.P. (ARLP Partnership) is a producer and marketer of coals to United States utilities and industrial users. As of December 31, 2012, the Company had approximately 919.5 million tons of coal reserves in Illinois, Indiana, Kentucky, Maryland, Pennsylvania and West Virginia. Approximately 204.9 million tons of those reserves are leased to White Oak Resources LLC (White Oak). During the year ended December 31, 2012, the Company sold a record 35.2 million tons of coal and produced a record 34.8 million tons of coal. During 2012, the Company sold 93.1% of its total tons to electric utilities, of which 98.7% was sold to utility plants with installed pollution control devices. The Company operates 11 underground mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia. On April 2, 2012, the Company acquired Green River Collieries, LLC.

Compiled by : Andrew Spence

The dividend yield and dividend growth of Alliance Resource Partners has caught my attention. ARLP has yielded a 6% dividend this year, and for the last 5 years, has been able to grow their dividend distribution by 13.6% (See supplement fundamentals). The biggest risk buy-and-hold dividend investors will face when buying a stock that has a high dividend yield coupled with a high dividend growth rate, is the company' s inability to sustain their dividend stream. Alliance Resource Partners has been performing in such a manner that one would logically assume, they can sustain their dividend, and likely grow it.

Looking at Supplement #1 and Supplement #2, we can tell that every year Alliance Resource Partners has been increasing their payout ratio, which is not a good sign for those investors that are expecting dividend growth. The jump from the 2011 40% payout ratio to the 2012 60% payout ratio looks concerning, but can be explained by the additional amount of income allocated to investments. Alliance Resource Partners has been able to increase their assets relative to the amount of liabilities bi-annually. Looking at supplement #3, we can see that in 2008, Alliance Resource Partners had a total asset : total debt ratio of 1.37:1. By the end of 2012, Alliance Resource Partners had a total debt ratio of 1.55:1. Increasing dividends annually, while being able to lower the amount of debt necessary to run operations is a very good sign. In the chart regarding current assets : current debt under supplement #4, we see that our ratio falls dramatically in 2012. This can be explained by the acquisition of Green Rivers Collieries. By looking at the balance sheet, it is evident that Alliance Resource had purchased Green Rivers Collieries with predominantly liquid resources, with about 15% of the purchase being long term debt. ARLP's ability to provide quality dividends, without sacrificing their funds to operate their business, has lead me to believe that this company will be able to sustain their dividend for many years, and ultimately be a good buy for any buyand-hold dividend investor.

**Note - It's recommended to follow up on ARLP's 10-Qs and 10-Ks carefully **Note - As of August 21, 2013, Reuters has given ARLP a 10 out of 10 Disclosure : I am long ARLP

Supplement #1
Dividend Earnings 9 8 7 6 5 4 3 2 1 0 2008 2009 2010 2011 2012

Supplement #2
Payout Ratio 140 120 100 80 60 40 20 0 2009 2010 2011 2012 2013

Supplement #3

Total Assets : Total Liabilities 1,6 1,55 1,5 1,45 1,4 1,35 1,3 2008 2009 2010 2011 2012

Supplement #4

3,5 3 2,5 2 Current Assets : Current Debt 1,5 1 0,5 0 2008 2009 2010 2011 2012

Fundamentals
Profitability ARLP ARLP Peers Industry Average

Gross Margin (TTM) Operating Margin (TTM) Pretax Margin (TTM) Net Profit Margin (TTM)
Valuation

34.21% 18.72% 16.79% 16.84%

ARLP

22.88% -1.02% -3.69% -3.65%

ARLP Peers

23.23% 6.10% -6.48% -5.75%

Industry Average

P/E excluding extraordinary items (TTM) P/E Normalized (MRFY) P/Sales (TTM) P/Tangible book (TTM) P/Cash Flow (TTM)
Financial Strength

11.4 11.8 1.3 3.6 5.6

ARLP

30.0 22.8 1.0 1.3 6.0

ARLP Peers

0.0 17.2 0.8 2.2 5.6

Industry Average

Current Ratio (MRQ) Quick Ratio (MRQ) LT Debt/Equity (MRQ) Total Debt/Equity (MRQ) Payout Ratio (TTM)
Management Effectiveness

1.2 0.9 1.0 1.0 65.7

ARLP

1.3 1.0 1.0 1.1 46.9

ARLP Peers

1.5 1.2 1.2 1.2 0.0

Industry Average

Return on Assets (TTM) Return on Equity (TTM) Return on Investments (TTM)

Growth

18.78% 24.64% 21.26%

ARLP

-1.74% -5.21% -1.94%

ARLP Peers

-3.00% -8.47% 6.36%

Industry Average

Sales (5Yr) EPS (TTM over TTM) Dividend Growth (5Yr)

Short Interest

14.51% -10.62% 13.60%

ARLP

11.62% -93.79% 9.64%

ARLP Peers

16.40% -244.31% 0.43%

Industry Average

Short Ratio Short Interest as % of Float

*Last update received Jun 30, 2013.

5.4 1.51%

2.1 4.93%

0.1 0.00%

INCOME STATEMENT
12/31/2012 12 Months 12/31/2011 12 Months 12/31/2010 12 Months 12/31/2009 12 Months 12/31/2008 12 Months Restated 12/31/2009

12 Month Period Ending: Currency is US Dollar

Revenue and Gross Profit

Total Revenue
Operating Expenses

2,034

1,844

1,610

1,231

1,157

Cost of Revenue, Total Sell/Gen/AdminExpenses,Tot Depreciation/Amortization Inter/Invest Inc, Operating Litigation Impair-Assets Held for Use Unusual Expense (Income) Total Operating Expense Operating Income
Non-Operating Income & Expenses

1,364 59 218 --19 19 1,660 374

1,218 52 160 --0 0 1,431 413

1,061 51 147 0 0 -0 1,258 352

851 41 118 0 0 -0 1,009 222

870 37 105 (5.16) (2.79) -(2.79) 1,005 152

Inter Expse, Non-Operating Inter Capital, Non-Operat Inter Expse,Net Non-Operat Inter Income, Non-Operating Invest Income, Non-Operat Inter/Invest Inc, Non-Oper OtherNon-OperatInc (Expnse) Other, Net Income Before Tax
Income Taxes

(37) 8.44 (29) 0.23 (15) (14) 3.12 3.12 334

(37) 15 (22) 0.38 (3.40) (3.03) 0.98 0.98 389

(31) 0.89 (30) 0.20 0 0.20 0.85 0.85 323

(32) 1.29 (31) 1.05 0 1.05 1.25 1.25 193

(23) 0.81 (22) 3.73 -3.73 0.88 0.88 134

Income Tax - Total Income After Tax

Minority Interest and Equity in Affiliates

(1.08) 336

(0.43) 389

1.74 321

0.71 192

(0.48) 135

Minority Interest Net Inc Before Extra Items Net Income

-336 336

0 389 389

0 321 321

(0.19) 192 192

(0.42) 134 134

12 Month Period Ending: Currency is US Dollar

12/31/2012 12 Months

12/31/2011 12 Months

12/31/2010 12 Months

12/31/2009 12 Months

12/31/2008 12 Months Restated 12/31/2009

Adjustments to Net Income

Gen Partner's Distributions Misc Earnings Adjustment Total Adjust to Net Income Income Available to Common Excl. Extra. Items Income Available to Common Incl. Extra. Items
EPS Reconciliation

(107) (3.02) (110) 226 226

(86) (4.32) (91) 299 299

(73) (2.53) (76) 245 245

(61) (1.19) (62) 130 130

(46) (0.87) (47) 88 88

Basic/Primary Weighted Average Shares Basic/Primary EPS Excl. Extra. Items Basic/Primary EPS Incl. Extra. Items Diluted Weighted Average Shares Diluted EPS Excl. Extra. Items Diluted EPS Incl. Extra. Items
Common Stock Dividends

37 6.12 6.12 37 6.12 6.12

37 8.13 8.13 37 8.13 8.13

37 6.68 6.68 37 6.68 6.68

37 3.56 3.56 37 3.56 3.56

37 2.39 2.39 37 2.39 2.39

Div/Share-ComStockPrimIssue Gross Divid - Common Stock

Pro Forma Income

4.16 256

3.63 216

3.21 185

2.95 166

2.53 135

Pro Forma Net Income

Supplemental Items

--

--

--

--

--

Interest Expense, Suppl Interest Capitalized, Suppl Depreciat/Amort, Suppl

Normalized Income

29 (8.44) 216

22 (15) 159

30 (0.89) 146

31 (1.29) 117

22 (0.81) 105

Total Special Items Normalzd Income Before Tax Efct/SpecItemsIncTxs (STEC) IncTxsExcl ImpctofSpec Itms Normalized Income After Tax Normalzd Inc Avail to Common Basic Normalized EPS Diluted Normalized EPS
() = Negative Value Values are displayed in Millions

19 354 6.66 5.58 348 238 6.46 6.46

0 389 0 (0.43) 389 299 8.13 8.13

0 323 0 1.74 321 245 6.68 6.68

0 193 0 0.71 192 130 3.56 3.56

(2.79) 131 (0.98) (1.46) 133 86 2.34 2.34

BALANCE SHEET
2 Month Period Ending: Currency is US Dollar 12/31/2011 12/31/2012 Reclassified 12/31/2012 12/31/2010 12/31/2009 12/31/2008

Assets

Cash and Short Term Inv Trade Accts Recvble, Net Other Receivables Total Receivables, Net Invent. - Finished Goods Invent. - Raw Materials Inventories - Other Total Inventory Prepaid Expenses Total Current Assets Buildings Land/Improvements Machinery/Equipment Construction in Progress Prop./Plant/Equip. - Gross Accumulated Depreciation Prop./Plant/Equip. - Net Intangibles, Gross Accum. Intangible Amort. Intangibles, Net Long Term Investments Other Long Term Assets Total Assets
Liabilities

28 173 1.02 174 15 32 -47 32 281 208 304 1,720 130 2,362 (832) 1,530 25 (6.43) 19 89 38 1,956

274 134 3.53 137 7.79 26 -34 20 464 184 176 1,442 172 1,975 (793) 1,181 17 (3.83) 13 40 33 1,732

340 115 2.54 117 12 22 (2.24) 32 15 503 156 140 1,225 77 1,598 (649) 949 14 (2.42) 11 0 37 1,501

22 91 3.16 94 46 20 (1.37) 64 12 193 137 117 1,030 95 1,379 (556) 823 4.15 (1.33) 2.82 -33 1,051

245 88 6.02 94 9.19 17 -27 13 379 120 117 775 73 1,085 (469) 616 4.15 (0.85) 3.30 -32 1,031

Accounts Payable Accrued Expenses Notes Payable/ST Debt Curr. Port. LT Dbt/Cap Ls. Other Curr. Lblts, Total Total Current Liabilities Long Term Debt

101 69 0 19 20 208 773

97 63 0 19 15 195 686

64 56 0 18 17 155 704

63 46 0 18 11 138 422

64 45 0 18 12 139 440

2 Month Period Ending: Currency is US Dollar

12/31/2011 12/31/2012 Reclassified 12/31/2012

12/31/2010

12/31/2009

12/31/2008

Capital Lease Obligations Total Long Term Debt Total Debt Minority Interest Reserves Pension Benefits - Underfunded Other LT Liabilities Other Liabilities, Total Total Liabilities
Shareholder Equity

19 792 811 -82 160 9.15 251 1,251

2.50 688 707 -71 147 6.77 224 1,108

0.17 704 722 0 56 118 13 187 1,045

0.46 422 441 1.12 53 108 9.04 170 732

0.78 441 459 0.93 56 99 5.46 161 741

Pref. Stock-Non Rdmbl, Net Common Stock Other Equity, Total Total Equity Total Liabilities & Shareholders' Equity Ttl Comm. Shares Outs. Trsy. Shrs-Comm. Primary Iss.
() = Negative Value Values are displayed in Millions

(273) 1,021 (42) 705 1,956 37 0

(279) 943 (40) 624 1,732 37 0

(287) 762 (19) 456 1,501 37 --

(293) 630 (17) 320 1,051 37 --

(296) 605 (20) 289 1,031 37 --

CASH FlOW
12/31/2012 12 Months 12/31/2011 12 Months 12/31/2010 12 Months 12/31/2008 12/31/2009 12 Months 12 Months Reclassified 12/31/2009

12 Month Period Ending: Currency is US Dollar

Cash From (used by) Operating Activities

Net Income Depreciation/Depletion Unusual Items Equity in Net Earnings/Loss Other Non-Cash Items Non-Cash Items Cash Taxes Pd, Supplemental Cash Interest Pd, Suppl Accounts Receivable Inventories Prepaid Expenses Accounts Payable Accrued Expenses Changes in Working Capital Total Cash from Operations
Plus: Cash From (used by) Investing Activities

336 218 19 15 9.44 43 0 36 (42) (16) (7.77) 12 13 (41) 556

389 160 0 3.40 11 14 0.30 36 (18) (2.82) (5.15) 24 12 10 574

321 147 1.20 0 8.85 10 1.80 31 (22) 31 (3.04) 9.12 15 43 521

192 118 0 0 9.17 9.17 0.23 32 (0.46) (41) (2.13) (6.18) 4.04 (36) 283

135 105 (5.16) -7.58 2.42 0 23 3.03 (0.96) (5.22) 4.24 7.52 19 261

Capital Expenditures Acquisition of Business Sale of Fixed Assets Sale/Maturity of Investment Purchase of Investments Other Investing Cash Flow OtherInvestCashFlowItms,Tot Total Cash from Investing
Plus: Cash From (used by) Financing Activities

(425) (100) 0.11 -(65) (34) (199) (623)

(322) 0 1.53 0 (43) (38) (79) (401)

(290) -0.38 0 0 (5.50) (5.12) (295)

(328) -0.01 4.53 (4.53) 8.02 8.03 (320)

(176) -9.87 0 0 (18) (7.64) (184)

Financing Cash Flow Items Total Cash Dividends Paid Short Term Debt Issued Short Term Debt Reduction Short Term Debt, Net Long Term Debt Issued

(5.86) (258) 279 (124) 155 250

(2.24) (218) 0 0 0 0

(2.64) (186) 95 (95) 0 300

(1.10) (167) 0 0 0 0

(0.86) (136) 89 (117) (28) 350

12 Month Period Ending: Currency is US Dollar

12/31/2012 12 Months

12/31/2011 12 Months

12/31/2010 12 Months

12/31/2008 12/31/2009 12 Months 12 Months Reclassified 12/31/2009

Long Term Debt Reduction Long Term Debt, Net Iss (Retirmnt) of Debt, Net Total Cash From Financing
Equals: Increase (Decrease) in Cash

(319) (69) 86 (178)

(19) (19) (19) (239)

(18) 282 282 93

(18) (18) (18) (187)

(18) 332 304 167

Foreign Exchange Effects Net Change in Cash NetCash-BeginBal/RsvdforFutUse NetCash-EndBal/RsrvforFutUse Depreciation, Supplemental Cash Interest Pd, Suppl Cash Taxes Pd, Supplemental
() = Negative Value Values are displayed in Millions

0 (245) 274 28 218 36 0

0 (66) 340 274 160 36 0.30

(0.27) 318 22 340 147 31 1.80

0.65 (223) 245 22 118 32 0.23

0 244 1.12 245 105 23 0