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Natural Resource Partners L.P. Reports 4Q and 2009 Full Year Results

02/11/2010
HOUSTON, Feb 11, 2010 /PRNewswire via COMTEX/ -- Full Year 2009 Highlights:

  • Distributable cash flow of $178.4 million
  • Net income attributable to the limited partners of $79.0 million or $1.17 per unit
  • Revenues of $256.1 million
  • Metallurgical coal accounted for 26% of coal production and 33% of coal royalty revenues

Fourth Quarter 2009 Highlights:

  • Distributable cash flow of $63.8 million
  • Net income attributable to the limited partners of $27.4 million or $0.39 per unit
  • Revenues of $65.9 million
  • Metallurgical coal accounted for 35% of coal production and 41% of coal royalty revenues
  • Distribution of $0.54 per unit

Natural Resource Partners L.P. (NYSE: NRP) announced today distributable cash flow, a non-GAAP measure, of $178.4 million for the year ended December 31, 2009, down 16% from the prior year. Distributable cash flow is reconciled to net cash provided by operating activities, a GAAP measure, in a table attached. Net income attributable to the limited partners was $79.0 million, or $1.17 per unit, for the full year 2009 versus $127.5 million, or $1.95 per unit, for the full year 2008.

"As 2009 progressed, we began to see first a stabilization of the overall coal market and then, toward the end of the year, a strengthening of the market for metallurgical coal," said Nick Carter, President and Chief Operating Officer. "The recovery in the steam coal market is lagging behind the metallurgical coal market due to utility stockpiles that had been built up during the recession and the low natural gas prices that persisted through much of 2009. The recent cold weather in much of the country has caused stockpile levels to begin to decline and natural gas prices to increase to a level that is not as competitive with coal prices."

    Fourth Quarter 2009 versus Third Quarter 2009

                                               4Q09          3Q09    % Change
                                               ----          ----    --------
    Distributable cash flow:                $63,812       $30,061         112%
    Net income to limited partners:         $27,391       $25,161           9%
    Net income per unit:                      $0.39         $0.36           8%
    Total revenues:                         $65,902       $63,962           3%
    Coal production:                         11,299        11,283           -
    Coal royalty revenues:                  $48,327       $49,307         (2%)
    Average coal royalty revenue per ton:     $4.28         $4.37         (2%)


Distributable cash flow more than doubled from the third quarter 2009 to $63.8 million, predominantly due to improvements in working capital and an increase in revenues. The two largest positive changes in working capital were related to a $14.2 million increase in accrued interest and approximately $14.0 million in minimum payments received from NRP's lessees in the fourth quarter. A significant portion of the minimums received in the fourth quarter were related to acquisitions made in 2009.

Net income attributable to the limited partners rose $2.2 million, or 9%, in the fourth quarter to $27.4 million, mainly due to increased revenues. Net income per unit improved by $0.03 per unit to $0.39 per unit in the fourth quarter.

Total revenues in the fourth quarter increased $1.9 million, or 3% from the third quarter of 2009, primarily due to increases in coal transportation fees and oil and gas royalties. Coal production was flat, while average coal royalty revenue per ton decreased slightly this quarter due to pricing adjustments that were included in the third quarter causing the third quarter to be abnormally high. Further, metallurgical coal production increased by approximately 800,000 tons and royalty revenues from metallurgical coal increased approximately $3.4 million from the third quarter 2009. This increase brought metallurgical production to 35% of the total production and 41% of total coal royalty revenues for the fourth quarter 2009. Steam coal production and revenues in the same period declined due to unusually large coal stockpiles at utilities.

    Full Year and Fourth Quarter Results
                                                                          %
                                             %                          Change
                                           Change  Full Year Full Year   Year/
    Highlights       4Q09        4Q08      Qtr/Qtr    2009      2008     Year
                     ----        ----      -------    ----      ----     ----
                          (in thousands except per unit  and per ton)
    Total revenues: $65,902     $75,822     (13%)   $256,084   $291,665  (12%)
    Coal production: 11,299      15,073     (25%)     46,848     60,570  (23%)
    Coal royalty
     revenues:      $48,327     $58,749     (18%)   $196,621   $226,250  (13%)
    Average coal
     royalty revenue
     per ton:         $4.28       $3.90      10%       $4.20      $3.74   12%
    Net income to
     limited
     partners:      $27,391     $36,646     (25%)    $78,954   $127,490  (38%)
    Net income
     per unit:        $0.39       $0.56     (30%)      $1.17      $1.95  (40%)
    Average units
     outstanding:    69,451      64,891       7%      67,702     64,891    4%
    Distributable
     cash flow:     $63,812     $66,502      (4%)   $178,434   $212,721  (16%)

Revenues

Full Year

Revenues for the year ended December 31, 2009 declined $35.6 million, or 12%, from the twelve month period ended December 31, 2008 due primarily to decreases in coal royalty revenues. Coal royalty revenues for the same period decreased 13% to $196.6 million due to reductions in coal production of 13.7 million tons. These declines in production were due to lower demand for both metallurgical and steam coal during the last twelve months as the U.S. and global economies struggled. While some of that production was deferred for shipment into 2010 and later years, many of NRP's lessees reduced production to meet demand. However, much of NRP's production was priced in 2008 at higher prices for delivery in 2009. In the last twelve month period the average royalty revenue per ton increased by 12%, or $0.46 per ton, partially offsetting some of the decline in production.

Fourth Quarter

Fourth quarter revenues declined $9.9 million, or 13%, to $65.9 million compared to the fourth quarter of 2008 due to a decline in coal royalty revenues. Coal royalty revenues declined $10.4 million as a result of a 3.8 million ton decline in demand for coal offset somewhat by a $0.38, or 10%, per ton increase in the average royalty revenue per ton explained above.

Operating Expenses

Full Year

Total operating expenses increased $7.4 million, or 8%, in 2009 to $102.1 million from the $94.7 million reported for the full year 2008 mainly due to increased general and administrative expenses. General and administrative expenses were only 9% of total revenue in 2009, but did increase by $9.2 million mainly due to an increase in NRP's unit price that affected the accruals for its long term incentive plan and additional personnel to assist in managing recent acquisitions. The full year 2009 depreciation, depletion and amortization of $60.0 million was down from 2008 by $4.2 million. This number would have been even lower as a result of lower production levels except that it also included a non-cash charge of $8.2 million related to the termination of a lease due to a mine closure reported in the second quarter of 2009.

Fourth Quarter

Total operating expenses for the fourth quarter 2009 were $22.4 million up $1.8 million due to the reasons stated above.

Net Income Attributable to the Limited Partners

Full Year

Net income attributable to the limited partners was down $48.5 million in 2009 to $79 million when compared to the full year 2008 due to declines in revenue and higher accruals for both general and administrative expenses and interest. Interest expense increased $11.8 million due to the issuance of long term senior notes in March. This debt was incurred to pay down the credit facility for debt incurred for acquisitions. Also, the decrease in the net income attributable to the incentive distribution rights, which were reduced in the third and fourth quarters of 2009, increased net income attributable to the limited partners by $14.1 million or $0.21 per unit.

Net income per limited partner unit decreased to $1.17 per unit in 2009 from the $1.95 reported for 2008. Also impacting earnings per unit were the termination of the lease in the second quarter that accounted for a $0.12 per unit decrease and the issuance of additional units for acquisitions during 2009. Weighted average number of units outstanding increased by 2.8 million units due to units issued in connection with an acquisition.

Fourth Quarter

Net income attributable to the limited partners was down $9.3 million for the fourth quarter from the same period last year mainly due to the reduced revenues and increased interest expense as described above offset by decreased depreciation and depletion due to lower production and reduced allocations to the incentive distribution rights as described above.

Net income per limited partner unit decreased from the $0.56 reported in the fourth quarter 2008 to $0.39 for the fourth quarter 2009. In addition to lower income, the net income per unit was impacted by an additional 4.6 million units outstanding in 2009 over 2008 as mentioned above.

Distributable Cash Flow

Full Year

NRP reported a decline of $34.3 million, or 16%, in distributable cash flow to $178.4 million, from the previous full year. This decline in distributable cash flow was mainly due to an additional $15 million in reserves for future principal payments on NRP's senior private placement notes and a decline in revenues. These were offset by an additional $21.8 million of minimums received from NRP's lessees and other improvements in changes in operating assets and liabilities.

Fourth Quarter

Distributable cash flow was down modestly to $63.8 million in the fourth quarter 2009 versus the same period in 2008.

Current Market

In 2009, the coal market for our lessees was challenged due to economic conditions around the globe. Domestic electricity demand declined for two consecutive years for the first time in several decades. While overall electricity demand was down by approximately 4%, NRP estimates that coal-fired electricity demand was down by approximately 10%, due to lower industrial demand, low natural gas prices and a mild summer. A significant portion of electricity for industrial demand is provided by coal-fired power plants. In addition, global demand was down, causing U.S. exports to be down from 2008 by approximately 25-30%.

Recently, there have been signs of an improving global coal market. Metallurgical demand has increased around the world, particularly in China, Brazil and India. U.S. producers have recently announced several cargoes of metallurgical coal sales that are being shipped to Asia, which, in the past, has been very rare. South Africa, which has historically supplied Europe with a significant portion of its coal requirements, is now shipping significant coal tonnage to India, leaving that market more open for the U.S. producers as Europe's economy improves. Also, Brazil's needs for metallurgical coal are increasing and, due to location, U.S. metallurgical coal has a transportation advantage over Australian metallurgical coal. According to trade publications, increasing demand is having some impact on metallurgical pricing. As approximately 22% of NRP's reserves are metallurgical coal and approximately 20-25% of the historic production from NRP properties has been metallurgical, this should have a positive impact on NRP in 2010 and beyond.

Domestically, there have been some signs recently that the economy is improving and that electricity demand is increasing. With a very cold winter to date, stockpiles at coal-fueled power plants have begun to decline. Due to a lag time in reporting, it is hard to tell at this point how much the stockpiles have declined but it does bode well for 2010. NRP originally thought that it would be the second half of 2010 before there would be much of a reduction in the coal stockpiles. With continued cold weather across the nation, this could be sooner. There have also been some signs of improving industrial demand. U.S. manufacturing grew in January at its fastest pace in more than five years. While it is too early to have any statistics, this could give a boost to coal demand.

Acquisitions

In 2009, NRP made 6 acquisitions that totaled approximately $292 million, consisting of $192 million in cash and 4,560,000 units. These acquisitions further diversified NRP's asset base and included additional metallurgical coal in Central Appalachia, thermal coal and infrastructure in Northern Appalachia, aggregates in Texas and Arizona and a significant amount of thermal coal and infrastructure in the Illinois Basin. Three of these projects are under development and will provide future growth in production in 2011 and 2012, when NRP anticipates coal markets to be much stronger.

In the fourth quarter of 2009, NRP completed its 39th acquisition since its initial public offering by acquiring approximately 220 acres of mineral and surface rights related to sand and gravel reserves in southern Arizona.

Subsequent to the end of the fourth quarter, NRP completed its second of eight acquisitions of coal reserves at the Deer Run mine located in the Illinois Basin for $40 million. It is anticipated that an additional 3 acquisitions of coal reserves totaling $125 million, will be completed in 2010. NRP expects to close the final three Deer Run reserve acquisitions in 2011 and 2012 for an additional $80 million.

Liquidity

"With $82.6 million in cash on hand at year end, $229 million in credit capacity on our revolver after funding the second closing on Deer Run and the final payment on Blue Star in January, as well as cash generated from our operations in 2010, we anticipate NRP will have sufficient liquidity to fund our acquisition commitments and maintain our quarterly distribution to unitholders throughout 2010," said Dwight L. Dunlap, Chief Financial Officer.

Distributions

As reported on January 21, the Board of Directors of NRP's general partner declared a quarterly distribution of $0.54 per unit. This represents a 1% increase over the fourth quarter 2008 and is unchanged from the third quarter 2009. As discussed in the announcement of the Deer Run acquisition, the holders of the incentive distribution rights opted to forego the highest splits for the fourth quarter distribution of 2009. This equated to a savings to the partnership of $7.35 million in distributions for the fourth quarter.

In addition, on January 21, 2010, the Board of Directors announced its intention to maintain the $0.54 per quarter distribution through 2010. The current budget together with NRP's cash balance at the beginning of the year should be sufficient to maintain the distribution. However, if necessary, the holders of the incentive distribution rights have agreed to defer the distributions that the holders of the incentive distributions rights would receive in any quarter with regard to the highest splits.

Company Profile

Natural Resource Partners L.P. is headquartered in Houston, TX, with its operations headquarters in Huntington, WV. NRP is a master limited partnership that is principally engaged in the business of owning and managing mineral reserve properties. NRP owns coal reserves and coal handling and transportation infrastructure in the three major coal producing regions of the United States: Appalachia, the Illinois Basin and the Powder River Basin. In addition, the partnership owns and manages aggregate reserves in Texas, West Virginia and Washington.

For additional information, please contact Kathy H. Roberts at 713-751-7555 or kroberts@nrplp.com. Further information about NRP is available on the partnership's website at http://www.nrplp.com.

Disclosure of Non-GAAP Financial Measures

Distributable cash flow represents cash flow from operations less actual principal payments and cash reserves set aside for scheduled principal payments on the senior notes. Distributable cash flow is a "non-GAAP financial measure" that is presented because management believes it is a useful adjunct to net cash provided by operating activities under GAAP. Distributable cash flow is a significant liquidity metric that is an indicator of NRP's ability to generate cash flows at a level that can sustain or support an increase in quarterly cash distributions paid to its partners. Distributable cash flow is also the quantitative standard used throughout the investment community with respect to publicly traded partnerships. Distributable cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. A reconciliation of distributable cash flow to net cash provided by operating activities is included in the tables attached to this release. Distributable cash flow may not be calculated the same for NRP as other companies.

Forward-Looking Statements

This press release may include "forward-looking statements" as defined by the Securities and Exchange Commission. Such statements include the current coal market conditions and borrowing capacity. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the partnership based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the partnership. These risks include, but are not limited to, decreases in demand for coal; changes in operating conditions and costs; production cuts by our lessees; commodity prices; unanticipated geologic problems; changes in the legislative or regulatory environment and other factors detailed in Natural Resource Partners' Securities and Exchange Commission filings. Natural Resource Partners L.P. has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.


                           -Financial statements follow-


                           Natural Resource Partners L.P.
                               Operating Statistics
                         (In thousands except per ton data)

                                  Three Months Ended      For the Year Ended
                                     December 31,            December 31,
                                     ------------            ------------
                                  2009          2008      2009           2008
                                  ----          ----      ----           ----
                                     (unaudited)              (unaudited)
    Coal Royalties:
    Coal royalty revenues:
       Appalachia
         Northern                $5,028        $5,236   $14,959        $17,074
         Central                 30,669        38,467   132,543        156,109
         Southern                 4,627         5,142    19,382         19,839
                                  -----         -----    ------         ------
           Total Appalachia      $40,324       $48,845  $166,884      $193,022
       Illinois Basin             5,785         6,701    22,019         21,695
       Northern Powder
        River Basin               2,218         3,203     7,718         11,533
                                  -----         -----     -----         ------

      Total                     $48,327       $58,749  $196,621       $226,250
                                =======       =======  ========       ========

    Coal royalty production
     (tons):
       Appalachia
         Northern                 1,639         1,363     4,943          5,799
         Central                  6,070         8,537    28,032         35,967
         Southern                   795         1,034     3,233          4,273
                                    ---         -----     -----          -----
           Total Appalachia       8,504        10,934    36,208         46,039
       Illinois Basin             1,651         2,414     6,656          8,313
       Northern Powder
        River Basin               1,144         1,725     3,984          6,218
                                  -----         -----     -----          -----

      Total                      11,299        15,073    46,848         60,570
                                 ======        ======    ======         ======

    Average royalty revenue per
     ton:
       Appalachia
         Northern                 $3.07         $3.84     $3.03          $2.94
         Central                   5.05          4.51      4.73           4.34
         Southern                  5.82          4.97      6.00           4.64
           Total Appalachia        4.74          4.47      4.61           4.19
       Illinois Basin              3.50          2.78      3.31           2.61
       Northern Powder
        River Basin                1.94          1.86      1.94           1.85

       Combined average royalty
        revenue per ton           $4.28         $3.90     $4.20          $3.74

    Aggregates:
    Royalty revenues               $883        $1,244    $4,260         $6,275
    Aggregate royalty bonus          $-          $300    $1,320         $2,844
    Production:                     640           915     3,269          4,791
    Average base royalty per
     ton:                         $1.38         $1.36     $1.30          $1.31



                          Natural Resource Partners L.P.
                         Consolidated Statements of Income
                       (In thousands, except per unit data)

                                Three Months Ended         For the Year Ended
                                   December 31,               December 31,
                                   ------------               ------------
                                2009          2008         2009          2008
                                ----          ----         ----          ----
                                   (Unaudited)                 (Unaudited)
    Revenues:
      Coal royalties          $48,327       $58,749     $196,621     $226,250
      Aggregate royalties         883         1,544        5,580        9,119
      Coal processing fees      1,865         3,083        7,673        8,781
      Transportation fees       3,883         3,463       12,517       11,656
      Oil and gas royalties     3,871         2,323        7,520        7,902
      Property taxes            2,600         2,040       11,636        9,800
      Minimums recognized as
       revenue                    201            64        1,266        1,257
      Override royalties        3,290         3,689        9,251       11,327
      Other                       982           867        4,020        5,573
                                  ---           ---        -----        -----
            Total revenues     65,902        75,822      256,084      291,665
    Operating costs and
     expenses:
      Depreciation, depletion
       and amortization        11,986        15,405       60,012       64,254
      General and
       administrative           5,176         1,151       23,102       13,922
      Property, franchise and
       other taxes              3,597         2,989       14,996       13,558
      Transportation costs        467           456        1,611        1,416
      Coal royalty and
       override payments        1,174           569        2,388        1,508
                                -----           ---        -----        -----
            Total operating
             costs and
             expenses          22,400        20,570      102,109       94,658
                               ------        ------      -------       ------
    Income from operations     43,502        55,252      153,975      197,007
    Other income (expense)
      Interest expense        (10,592)       (7,020)     (40,108)     (28,356)
      Interest income              17           231          213        1,355
                                  ---           ---          ---        -----
    Net income                $32,927       $48,463     $114,080     $170,006
                              =======       =======     ========     ========
    Net income attributable
     to:
      General partner            $559          $748       $1,611       $2,602
                                 ====          ====       ======       ======
      Holders of incentive
       distribution rights     $4,977       $11,069      $33,515      $39,914
                               ======       =======      =======      =======
      Limited partners        $27,391       $36,646      $78,954     $127,490
                              =======       =======      =======     ========

    Basic and diluted net
     income per limited
     partner unit:              $0.39         $0.56        $1.17        $1.95
                                =====         =====        =====        =====

    Weighted average number
     of units outstanding:     69,451        64,891       67,702       64,891
                               ======        ======       ======       ======



                           Natural Resource Partners L.P.
                              Statements of Cash Flows
                                   (In thousands)

                              Three Months Ended        For the Year Ended
                                  December 31,             December 31,
                                  ------------             ------------
                                2009          2008      2009          2008
                                ----          ----      ----          ----
                                   (Unaudited)                    (Unaudited)
    Cash flows from operating
     activities:
      Net income              $32,927       $48,463  $114,080      $170,006
      Adjustments to reconcile
       net income to net cash
       provided by operating
       activities:
         Depreciation,
          depletion and
          amortization         11,986        15,405    60,012        64,254
         Non-cash interest
          charge                  127            12     1,463           278
         Loss from disposition
          of assets                 -             1         -            33
      Change in operating
       assets and liabilities:
         Accounts receivable      601         6,708       581        (4,586)
         Other assets            (646)         (714)      (67)          178
         Accounts payable and
          accrued liabilities      10        (1,931)     (133)       (1,484)
         Accrued interest       7,064         3,342     3,850           143
         Deferred revenue      15,958           479    26,264         4,468
         Accrued incentive plan
          expenses              2,169        (2,535)    4,577        (3,041)
         Property, franchise
          and other taxes
          payable               1,674         1,583        42          (293)
                                -----         -----       ---          ----
           Net cash provided
            by operating
            activities         71,870        70,813   210,669       229,956
                               ------        ------   -------       -------

    Cash flows from investing
     activities:
         Acquisition of land,
          coal and other
          mineral rights       (3,768)       (5,500) (118,754)       (5,500)
         Acquisition or
          construction of
          plant and equipment       -          (616)   (1,157)      (10,568)
         Change in restricted
          assets                    -         6,240         -         6,240
                                  ---         -----       ---         -----
           Net cash used in
            investing
            activities         (3,768)          124  (119,911)       (9,828)
                               ------           ---  --------        ------

    Cash flows from financing
     activities:
         Proceeds from loans    6,000             -   331,000             -
         Deferred financing
          costs                     -             -      (661)            -
         Repayments of loans        -             1  (168,235)      (17,234)
         Retirement of purchase
          obligation related to
          reserve and
          infrastructure       (9,000)            -   (72,000)            -
         Costs associated
          with issuance of
          units                     -             -       (21)            -
         Distributions to
          partners            (43,348)      (45,422) (188,135)     (171,307)
                              -------       -------  --------      --------
           Net cash used in
            financing
            activities        (46,348)      (45,421)  (98,052)     (188,541)
                              -------       -------   -------      --------
    Net increase or
     (decrease) in cash and
     cash equivalents         (21,754)       25,516    (7,294)       31,587
    Cash and cash equivalents
     at beginning of period    60,880        64,412    89,928        58,341
                               ------        ------    ------        ------
    Cash and cash equivalents
     at end of period         $82,634       $89,928   $82,634       $89,928
                              =======       =======   =======       =======

    SUPPLEMENTAL INFORMATION:
         Cash paid during
          the period for
          interest             $3,394        $3,556   $34,710       $27,735
                               ======        ======   =======       =======

    Non-cash investing
     activities:
         Equity issued for
          acquisitions             $-            $-   $95,910            $-
         Liability assumed
          in acquisition            -             -     1,170             -

    Non-cash financing activities:
       Purchase obligation
        related to reserve
        and infrastructure
        acquisition                $-            $-   $74,022            $-



                         Natural Resource Partners L.P.
                          Consolidated Balance Sheets
                   (In thousands, except for unit information)


                                     ASSETS


                                                    December 31, December 31,
                                                        2009         2008
                                                        ----         ----
                                                    (unaudited)    (audited)
    Current assets:
       Cash and cash equivalents                      $82,634      $89,928
       Accounts receivable, net of
        allowance for doubtful accounts                27,141       31,883
       Accounts receivable - affiliate                  4,342        1,351
       Other                                              930          934
                                                          ---          ---
         Total current assets                         115,047      124,096
    Land                                               24,343       24,343
    Plant and equipment, net                           64,267       67,204
    Coal and other mineral rights, net              1,151,313      979,692
    Intangible assets                                 165,160      102,828
    Loan financing costs, net                           2,891        2,679
    Other assets, net                                     569          498
                                                          ---          ---
        Total assets                               $1,523,590   $1,301,340
                                                   ==========   ==========

    LIABILITIES AND PARTNERS' CAPITAL

    Current liabilities:
        Accounts payable and accrued
         liabilities                                     $914         $861
        Accounts payable - affiliate                      179          365
        Obligation related to acquisitions              2,969            -
        Current portion of long-term debt              32,235       17,235
        Accrued incentive plan expenses -
         current portion                                4,627        3,179
        Property, franchise and other taxes
         payable                                        6,164        6,122
        Accrued interest                               10,300        6,419
                                                       ------        -----
              Total current liabilities                57,388       34,181
    Deferred revenue                                   67,018       40,754
    Accrued incentive plan expenses                     7,371        4,242
    Long-term debt                                    626,587      478,822
    Partners' capital:
        Common units (69,451,136 in 2009,
         64,891,136 in 2008)                          747,437      719,341
        General partner's interest                     13,409       13,579
        Holders of incentive distribution
         rights                                         4,977       11,069
        Accumulated other comprehensive
         loss                                            (597)        (648)
                                                         ----         ----
              Total partners' capital                 765,226      743,341
                                                      -------      -------
              Total liabilities and partners'
               capital                             $1,523,590   $1,301,340
                                                   ==========   ==========



                        Natural Resource Partners L.P.
               Reconciliation of GAAP Financial Measurements
                    to Non-GAAP Financial Measurements
                               (In thousands)

        Reconciliation of GAAP "Net cash provided by operating activities"
                       To Non-GAAP "Distributable cash flow"

                               Three Months Ended        For the Year Ended
                                   December 31,              December 31,
                                 2009        2008        2009          2008
                                 ----        ----        ----          ----
                                   (unaudited)              (unaudited)

    Net cash provided by
     operating activities      $71,870     $70,813    $210,669      $229,956
    Less scheduled
     principal payments              -           -     (17,235)      (17,234)
    Less reserves for
     future principal
     payments                   (8,058)     (4,311)    (32,235)      (17,235)
    Add reserves used for
     scheduled principal
     payments                        -           -      17,235        17,234
                                   ---         ---      ------        ------
    Distributable cash
     flow                      $63,812     $66,502    $178,434      $212,721
                               =======     =======    ========      ========



SOURCE Natural Resource Partners L.P.

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