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Natural Resource Partners L.P. Reports 2011 Results and Issues 2012 Guidance

02/14/2012
Full Year 2011 Highlights
- Record revenues of $377.7 million up 25% over 2010
- Record distributable cash flow of $274.4 million, up 21%
- Net income per unit of $0.50 after impairments
- Before considering the impairments, net income per unit of $1.99
- Metallurgical production accounted for 34% of production and 45% of coal royalty revenues
Fourth Quarter 2011 Highlights:
- Revenues of $97.7 million, a 26% increase over 4Q2010
- Net loss per unit of $0.13 after impairment of Gatling OH assets
- Before considering the impairment, net income per unit of $0.52
- Distributable cash flow of $79.6 million, a 6% increase over 4Q2010
- Distribution of $0.55 per unit

HOUSTON, Feb. 14, 2012 /PRNewswire/ -- Natural Resource Partners L.P.(NYSE: NRP) today reported record revenues of $377.7 million for the full year 2011 and record distributable cash flow, a non-GAAP measure, of $274.4 million.  Due to a non-cash impairment of two properties totaling $161.3 million, or $1.49 per unit, net income for 2011 totaled $0.50 per unit.  Before considering the non-cash impairments, net income per unit rose 29% to $1.99, over the 2010 results of $1.54 per unit. Reconciliations of all non-GAAP numbers are included in the tables at the end of the release.

(Logo: http://photos.prnewswire.com/prnh/20060109/NRPLOGO)

For the quarter ended December 31, 2011, NRP reported revenues of $97.7 million, an increase of 26% over the fourth quarter 2010, resulting in a 6% increase in distributable cash flow to $79.6 million. Due to a $70.4 million impairment recorded for the Gatling Ohio property, NRP recorded a fourth quarter 2011 net loss of $0.13 per unit.  Before considering the non-cash impairment, net income would have been $0.52 per unit, up 33% from the $0.39 per unit recorded for the fourth quarter 2010.

As reported in January, Gatling Ohio LLC notified NRP that it had idled its mine in Meigs County, Ohio due to adverse geologic conditions.  Gatling is continuing to maintain the mine, and is evaluating various alternatives regarding the future of the mine, but has indicated that it does not anticipate any production from the mine in the near-term future.  As a result, NRP recorded a $70.4 million non-cash impairment charge in the fourth quarter. This mine represents approximately 1% of NRP's 2011 revenues and is not included in NRP's 2012 guidance.

The impairment had the following impact on the fourth quarter:

  • $70.4 million increase in operating costs and expenses
  • $69.0 million decrease in net income attributable to the limited partners
  • $0.65 per unit decrease in net income per limited partner unit

"NRP had a record year in 2011 for both revenues and distributable cash flow as a number of our lessees outperformed our expectations and we benefitted from strong markets for metallurgical coal.  Our earnings, however, were impacted by the impairments that we were required to record on the two Gatling mines in Northern Appalachia.  In spite of this unfortunate situation, we are pleased with our Cline relationship and the success of the Illinois mines," said Nick Carter, President and Chief Operating Officer.  "While 2011 was a record year, we began to see a slow-down in the coal markets in the fourth quarter that is reflected in our fourth quarter results. While revenues in the fourth quarter rose 26% over 2010, we saw a 6% decline in revenues from the third quarter 2011. We anticipate continued near-term weakness in the coal markets as unseasonably warm weather, low natural gas prices and lower global demand for metallurgical coal continue to impact the coal markets.  It is times like these that prove the value of maintaining a large cash balance, as well as the strength of our lessees."

Highlights

Quarter Ended


For the Year Ended


Dec

Dec

%


Dec

Dec

%


2011

2010

Change


2011

2010

Change


(in thousands except per unit, per ton and %)

Revenues








Total revenues

$  97,651

$ 77,543

26%


$ 377,683

$ 301,401

25%

Coal production

12,042

12,113

-1%


49,151

47,052

4%

Coal royalty revenues

$  67,638

$ 56,626

19%


$ 279,221

$ 221,761

26%

Average coal royalty revenue per ton

$      5.62

$     4.67

20%


$       5.68

$       4.71

21%

Revenues other than coal royalties

$  30,013

$ 20,917

43%


$   98,462

$   79,640

24%









Net Income (loss) as reported








Net income (loss) to limited partners

$ (14,036)

$ 41,656

-134%


$   52,945

$ 125,925

-58%

Net income (loss) per unit

$     (0.13)

$     0.39

-134%


$       0.50

$       1.54

-68%

Average units outstanding

106,028

106,028

0%


106,028

81,917

29%









Net income before considering the impairment (1)








Net income to limited partners

54,960

41,656

32%


211,055

125,925

68%

Net income per unit

$      0.52

$     0.39

33%


$       1.99

$       1.54

29%









Distributable cash flow

$  79,552

$ 75,154

6%


$ 274,415

$ 226,995

21%

(1) See Non-GAAP reconciliation



Revenues

Full Year

Total revenues for the year climbed 25% over the 2010 period to a record $377.7 million due to significant increases in nearly all categories. Coal royalty revenues rose 26% to a record $279.2 million, predominantly due to an increase of $0.97 in the combined average royalty revenue per ton to $5.68 per ton and a 4% increase in total tonnage to 49.2 million tons.  Production increases resulted primarily from a 5% increase in Appalachian production and a 22% increase in production in the Illinois Basin. While NRP saw increases in nearly all regions, the majority of the increase in coal royalty revenue per ton was due to the higher proportion of metallurgical coal sold in 2011 at much higher sales prices than in 2010.  Metallurgical coal accounted for 34% of NRP's production and 45% of its coal royalty revenues for 2011 compared to 32% of production and 38% of coal royalty revenues in 2010.

Revenues other than coal royalty revenues increased $18.8 million from 2010 to $98.5 million due to increases in all categories except minimums recognized as revenue.  Following is a discussion of the components generating the increases:

  • Oil and gas revenues increased $6.3 million primarily due to increased production and additional lease bonuses associated with the BRP assets.  
  • Revenues from infrastructure assets increased $6.0 million due to additional throughput on both the coal processing and transportation assets.  
  • Aggregate revenues increased $2.5 million due to increases in production on historical assets and new production on assets acquired in the last year, including the BRP assets.  
  • Other revenue increased $4.4 million due to increases in wheelage income, gain on a reserve swap and other increases from miscellaneous BRP assets.
  • Minimums recognized as revenue decreased $5.1 million due to $12.4 million of non-recoupable minimums recognized in 2010 on the Hillsboro property, which were recoupable in 2011 and therefore not recognized as revenue in 2011.

Fourth Quarter

Increases in every revenue item drove total revenues for the fourth quarter 2011 to climb 26% over the 2010 fourth quarter to $97.7 million.  A $0.95 per ton increase in the average coal royalty revenue per ton generated a 19% increase in coal royalty revenues to $67.6 million.

Revenues other than coal royalty increased 43% over the fourth quarter 2010 to $30.0 million due mainly to a non-cash gain on a reserve swap of $3.0 million that is included in other income, increased minimums recognized as revenue and override royalty revenue.  

Operating Expenses

Full Year

Total operating costs and expenses for 2011 were $273.5 million.  Before considering impairment charges of $161.3 million, total operating costs and expenses for 2011 increased 7% over 2010 to $112.2 million due to increases in non-cash depreciation, depletion and amortization as a result of increases in production and throughput on transportation and infrastructure assets.

Fourth Quarter

Total operating costs and expenses for the fourth quarter totaled $97.7 million including an impairment charge of $70.4 million.  Before considering the impairment, operating costs and expenses increased $2.6 million over 2010 to $27.3 million due to increased depreciation, depletion and amortization as a result of increased production and throughput volumes.

Net income (loss)

Full Year

Net income attributable to the limited partners for 2011 was $52.9 million. Before considering the impairment, net income to the limited partners increased $85.1 million, or 68%, when compared to 2010, predominantly due to improved revenues of $76.3 million.  Also included is a $26.0 million improvement due to the elimination of the incentive distribution rights in 2010.

Net income per unit for 2011, before considering impairments, rose by 29% over 2010 to $1.99 per unit, despite a 29% increase in the number of units outstanding.  

Fourth Quarter

Net loss to the limited partners totaled $14.0 million for the fourth quarter 2011.  Net income to the limited partners, before considering the impairment charge, increased 32% over fourth quarter 2010 to $55.0 million in the fourth quarter 2011. The increase was solely related to increased revenues.  

Net loss per unit for the fourth quarter 2011 was $0.13.  Before considering the impairment, net income per unit increased 33% to $0.52 per unit.

Distributable cash flow

Full Year

Distributable cash flow increased $47.4 million, or 21% over 2010, to a record $274.4 million for 2011 due to improved revenues.

Fourth Quarter

Distributable cash flow rose $4.4 million over the fourth quarter of 2010 to $79.6 million for the fourth quarter of 2011.  The improvement was due to increases in revenue.

Fourth Quarter 2011 compared to Third Quarter 2011

Highlights

4Q11

3Q11

% Change


(in thousands, except per ton and per unit)


Total revenues

$  97,651

$ 103,771

-6%

Coal production

12,042

13,625

-12%

Coal royalty revenues

$  67,638

$   76,430

-12%

Average coal royalty revenue per ton

$      5.62

$       5.61

0%

Revenues other than coal royalty

$  30,013

$   27,341

10%

Net (loss) to limited partners

$ (14,036)

$ (28,700)

51%

Net income to the limited partners, before considering the impairment(1)

$  54,960

$   60,413

-9%

Net (loss) per unit

$     (0.13)

$     (0.27)

52%

Net income per unit, before considering the impairment(1)

$      0.52

$       0.57

-9%

Average units outstanding

106,028

106,028

0%

Distributable cash flow

$  79,552

$   71,942

11%

(1) See Non-GAAP reconciliation



Revenues

Total revenues for the fourth quarter decreased 6% from the prior quarter to $97.7 million predominantly due to decreases in coal royalty revenues and oil and gas revenues.  Coal royalty revenues decreased $8.8 million to $67.6 million due to a 12% decrease in coal production.  The decrease predominantly related to unusually high Illinois Basin sales in the third quarter with normalization occurring in the fourth.  

Operating Expenses

Before considering impairments, total operating costs and expenses declined $2.1 million from the third quarter mainly due to decreases in depreciation, depletion and amortization as a result of decreased production in the fourth quarter offset by slightly higher general and administrative expenses.

Net income (loss)

Net income to the limited partners, before considering the impairment, declined $5.5 million in the fourth quarter from the previous quarter due to decreased revenues.  Net income per unit, before considering the impairment, was $0.52 for the fourth quarter of 2011 compared to $0.57 per unit for the third quarter.

Distributable cash flow

Distributable cash flow increased $7.6 million, or 11%, to $79.6 million primarily due to $5.6 million in lower interest payments in the fourth quarter.  Other improvements in the balance sheet more than offset the declines in revenue experienced in the fourth quarter over the third.

Acquisitions and Liquidity

In 2011, NRP invested $120.6 million in acquisitions, $12.8 million of which occurred in the fourth quarter, related to oil and gas mineral acreage acquired and further payments on construction related to aggregates.  These payments were funded with the excess cash proceeds from the 2011 private placements.

As of December 31, 2011, NRP had $300 million in available capacity under its credit facility and slightly under $215 million in cash.  Included in NRP's cash was $78.2 million from private placements of senior notes that has not yet been invested in acquisitions.  These proceeds will be used to fund future acquisitions. At year end, there were two future commitments on the Hillsboro acquisitions totaling $80 million, $40 million of which closed on February 2, 2012. The final $40 million acquisition of Hillsboro reserves is currently anticipated to occur in the third quarter of 2012.  In addition, NRP has continued to acquire additional mineral acreage in the Mississippian Lime Play in Oklahoma in the first quarter of 2012.

2012 Guidance

"With weaker global demand for metallurgical coal, a warmer than normal winter, competition from natural gas for power generation, and reports from several coal companies that they are reducing production until demand increases, NRP is anticipating slightly lower results in 2012 than 2011.  NRP expects coal royalty revenues in the range of $265 million to $295 million in 2012, with the midpoint of the range approximately flat with 2011. These revenue estimates are based upon an approximate 10% increase in production with a lower average realization per ton.  NRP anticipates total revenues in a range of $335 million to $380 million in 2012, with the midpoint of the range representing an approximate 4% decrease in total revenues from 2011.

NRP anticipates distributable cash flow in a range of $210 million to $240 million.  The distributable cash flow is impacted by an increase in the reserve for principal payments of approximately $22 million over the reserve for 2011.  Net income per unit is anticipated to be in a range of $1.65 per unit to $1.95 per unit.

Following is a table containing the 2012 guidance.

Guidance

Full Year 2012


(Range)


(in millions except per unit)

Coal royalty revenues

$ 265.0

-

$ 295.0

Coal production tonnage (mm tons)

52.0

-

58.0

Total revenues

$ 335.0

-

$ 380.0

Distributable cash flow

$ 210.0

-

$ 240.0

Net income per unit

$   1.65

-

$   1.95



Distributions

As reported on January 18, 2012, the Board of Directors of NRP's general partner declared a quarterly distribution of $0.55 per unit for the fourth quarter 2011, an increase of 1.9% over the fourth quarter 2010.  

Company Profile

Natural Resource Partners L.P. is a master limited partnership headquartered in Houston, TX, with its operations headquarters in Huntington, WV.  NRP is principally engaged in the business of owning and managing mineral reserve properties.  NRP primarily owns coal, aggregate and oil and gas reserves across the United States that generate royalty income for the partnership.

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 2012 guidance, 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)







Quarter Ended


For the Year Ended







Dec


Dec


Dec


Dec







2011


2010


2011


2010







(unaudited)


(unaudited)


(unaudited)


(unaudited)

Coal Royalties:










Coal royalty revenues:











Appalachia












Northern



$        5,986


$        4,452


$      20,578


$      18,676



Central



45,633


36,183


196,789


144,934



Southern



1,975


3,610


11,717


19,405




Total Appalachia


$      53,594


$      44,245


$    229,084


$    183,015


Illinois Basin



11,726


9,903


41,324


30,210


Northern Powder River Basin


1,523


2,396


7,658


8,444


Gulf Coast Lignite



795


82


1,155


92

Total





$      67,638


$      56,626


$    279,221


$    221,761

Coal royalty production (tons):










Appalachia












Northern



1,721


1,224


5,251


4,900



Central



6,799


6,639


29,555


27,056



Southern



285


528


1,695


2,824




Total Appalachia


8,805


8,391


36,501


34,780


Illinois Basin



2,327


2,466


9,445


7,753


Northern Powder River Basin


658


1,207


2,682


4,467


Gulf Coast Lignite



252


49


523


52

Total





12,042


12,113


49,151


47,052

Average royalty revenue per ton:










Appalachia












Northern



$          3.48


$          3.64


$          3.92


$          3.81



Central



6.71


5.45


6.66


5.36



Southern



6.93


6.84


6.91


6.87




Total Appalachia


6.09


5.27


6.28


5.26


Illinois Basin



5.04


4.02


4.38


3.90


Northern Powder River Basin


2.31


1.99


2.86


1.89


Gulf Coast Lignite



3.15


1.67


2.21


1.77

Combined average royalty











revenue per ton



$          5.62


$          4.67


$          5.68


$          4.71

Aggregates:










Royalty revenues



$        1,610


$        1,382


$        6,640


$        4,869

Aggregate royalty bonus



-


-


94


(639)

Production




1,312


1,789


5,930


4,365

Average base royalty per ton


$          1.23


$          0.77


$          1.12


$          1.12

Oil and gas:










Royalty revenues



$        3,970


$        3,521


$      14,017


$        7,720



Natural Resource Partners L.P.

Consolidated Statements of Income

(in thousands, except per unit data)
















Quarter Ended


For the Year Ended





Dec


Dec


Dec


Dec





2011


2010


2011


2010





(unaudited)


(unaudited)


(unaudited)


(audited)

Revenues:










Coal royalties


$      67,638


$      56,626


$    279,221


$ 221,761


Aggregate royalties


1,610


1,382


6,734


4,230


Processing fees


3,246


2,924


13,475


9,604


Transportation fees


4,080


3,461


16,688


14,564


Oil and gas royalties


3,970


3,521


14,017


7,720


Property taxes


3,077


2,285


12,640


11,270


Minimums recognized as revenue


5,218


3,625


9,148


14,199


Override royalties


3,857


2,509


14,523


11,258


Other


4,955


1,210


11,237


6,795



Total revenues


97,651


77,543


377,683


301,401

Operating costs and expenses:










Depreciation, depletion and amortization


15,477


12,930


65,118


56,978


Asset impairments


70,404


-


161,336


-


General and administrative


7,397


7,791


29,553


29,893


Property, franchise and other taxes


3,568


3,295


14,486


15,107


Transportation costs


502


428


2,033


1,864


Coal royalty and override payments


322


247


1,022


1,498



Total operating costs and expenses


97,670


24,691


273,548


105,340

Income (loss) from operations


(19)


52,852


104,135


196,061

Other income (expense)










Interest expense


(13,385)


(10,356)


(49,180)


(41,635)


Interest income


29


10


69


35

Income (loss) before non-controlling interest


$     (13,375)


$      42,506


$      55,024


$ 154,461


Less non-controlling interest


(947)


-


(998)


-

Net income (loss)


$     (14,322)


$      42,506


$      54,026


$ 154,461

Net income (loss) attributable to:










General partner


$          (286)


$           850


$        1,081


$     2,570


Holders of incentive distribution rights


$                -


$                -


$                -


$   25,966


Limited partners


$     (14,036)


$      41,656


$      52,945


$ 125,925












Basic and diluted net income (loss) per










limited partner unit:


$         (0.13)


$          0.39


$          0.50


$       1.54












Weighted average number of units outstanding:


106,028


106,028


106,028


81,917



Natural Resource Partners L.P.

Consolidated Statements of Cash Flow

(in thousands, except per unit data)






Quarter Ended


For the Year Ended






Dec


Dec


Dec


Dec






2011


2010


2011


2010






(unaudited)


(unaudited)


(unaudited)


(audited)

Cash flows from operating activities:










Net income (loss)


$     (14,322)


$      42,506


$      54,026


$ 154,461


Adjustments to reconcile net income (loss) to











net cash provided by operating activities:











Depreciation, depletion and amortization


15,477


12,930


65,118


56,978



Non-cash interest charge, net


132


125


625


540



Non-cash gain on reserve swap


(2,990)




(2,990)





Gain on sale of assets


-




(1,058)





Asset Impairments


70,404




161,336





Non-controlling interest


947




998


-


Change in operating assets and liabilities:











Accounts receivable


5,819


2,714


(6,951)


(2,627)



Other assets


(466)


(647)


90


(27)



Accounts payable and accrued liabilities


641


165


854


468



Accrued interest


2,660


6,969


950


(489)



Deferred revenue


5,210


13,237


31,277


42,491



Accrued incentive plan expenses


1,923


3,712


1,909


6,137



Property, franchise and other taxes payable


1,817


1,323


(610)


762




Net cash provided by operating activities:


87,252


83,034


305,574


258,694

Cash flows from investing activities:











Acquisition of land, coal and other mineral rights


(12,675)


(55,206)


(120,184)


(166,382)



Acquisition or construction of plant and equipment


(79)


(1,674)


(404)


(5,994)



Proceeds from sale of assets


-


772


5,500


1,580




Net cash used in investing activities


(12,754)


(56,108)


(115,088)


(170,796)

Cash flows from financing activities:











Proceeds from loans


50,000


55,000


385,000


140,000



Proceeds from issuance of units


-


-


-


110,436



Deferred financing costs


(183)




(2,957)


-



Repayment of loans


-


-


(210,519)


(106,234)



Payment of obligation related to acquisitions


-


-


(7,625)


(9,169)



Costs associated with equity transactions


-


(67)


(141)


(219)



Capital contribution by general partner


-


-


-


2,350



Fees associated with elimination of IDRs




(171)




(2,341)



Distributions to partners


(59,505)


(58,422)


(234,828)


(209,849)




Net cash used in financing activities


(9,688)


(3,660)


(71,070)


(75,026)

Net increase in cash and cash equivalents


64,810


23,266


119,416


12,872

Cash and cash equivalents at beginning of period


150,112


72,240


95,506


82,634

Cash and cash equivalents at end of period


$    214,922


$      95,506


$    214,922


$   95,506

SUPPLEMENTAL INFORMATION:











Cash paid during the period for interest


$      10,579


$        3,273


$      47,653


$   41,565


Non-cash  activities:











Mineral rights to be received


$                -


$                -


$                -


$             -



Stock received as partial consideration for lease


$             47




$             47





Liability associated with acquisitions




$           325




$     1,593



Non-controlling interest


$                -


$        2,290


$           373


(5,065)



Obligation related to purchase of reserves and












infrastructure


$                -


$                -


$        4,100


$     6,200



Natural Resource Partners L.P.

Consolidated Balance Sheets

(in thousands, except for unit information)


ASSETS






December 31,


December 31,



2011


2010



(unaudited)


(audited)

Current assets:





Cash and cash equivalents

$        214,922


$          95,506


Accounts receivable, net of allowance for doubtful accounts

30,923


26,195


Accounts receivable - affiliates

10,138


7,915


Other







832


910



Total current assets

256,815


130,526

Land









24,534


24,543

Plant and equipment, net

46,185


62,348

Coal and other mineral rights, net

1,257,501


1,281,636

Intangible assets, net

75,164


161,931

Loan financing costs, net

4,846


2,436

Other assets, net







604


616



Total assets

$     1,665,649


$     1,664,036













LIABILITIES AND PARTNERS' CAPITAL
















Current liabilities:











Accounts payable and accrued liabilities

$            2,366


$            1,388


Accounts payable - affiliates

375


499


Obligation related to acquisitions

500


-


Current portion of long-term debt

30,801


31,518


Accrued incentive plan expenses - current portion

8,374


6,788


Property, franchise and other taxes payable

6,316


6,926


Accrued interest

10,761


9,811



Total current liabilities

59,493


56,930

Deferred revenue







113,303


109,509

Accrued incentive plan expenses

11,670


11,347

Long-term debt







836,268


661,070

Partners' capital:











Common units outstanding (106,027,836)

629,251


806,529


General partner's interest

10,518


14,132


Non-controlling interest

5,639


5,065


Accumulated other comprehensive loss

(493)


(546)



Total partners' capital

644,915


825,180



Total liabilities and partners' capital

$     1,665,649


$     1,664,036



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"












Quarter Ended


For the Year Ended



Dec


Dec


Dec


Dec



2011


2010


2011


2010



(unaudited)


(unaudited)










Net cash provided by operating activities


$ 87,252


$ 83,034


$ 305,574


$ 258,694

Less scheduled principal payments




-


(31,518)


(32,234)

Less reserves for future scheduled principal payments


(7,700)


(7,880)


(31,159)


(31,699)

Add reserves used for scheduled principal payments




-


31,518


32,234

Distributable cash flow


$ 79,552


$ 75,154


$ 274,415


$ 226,995



Reconciliation of GAAP "Total operating costs and expenses"

to Non-GAAP "Total operating costs and expenses before considering the impairment"










Quarter Ended


For the Year Ended


Dec


Dec


Dec


Dec


2011


2010


2011


2010


(unaudited)


(unaudited)

Operating costs








Total operating costs as reported

$  97,670


$ 24,691


$  273,548


$ 105,340

Impairments

$ (70,404)


$           -


$ (161,336)


$             -

Total operating costs before considering the impairment

$  27,266


$ 24,691


$  112,212


$ 105,340









Reconciliation of GAAP "Net income attributable to the limited partners"

to Non-GAAP "Net income attributable to the limited partners before considering the impairment"










Quarter Ended


For the Year Ended


Dec


Dec


Dec


Dec


2011


2010


2011


2010


(unaudited)


(unaudited)

Net income (loss) attributable to the limited partners








Net income (loss) as reported

$ (14,322)


$ 42,506


$    54,026


$ 154,461

Impairments

$  70,404


$           -


$  161,336


$             -

Net income before considering the impairment

$  56,082


$ 42,506


$  215,362


$ 154,461

Net income, before considering the impairment, attributable to:








 General partner

$    1,122


$      850


$      4,307


$     2,570

 Holders of the IDRs

$            -


$           -


$             -


$   25,966

 Limited partners

$  54,960


$ 41,656


$  211,055


$ 125,925









Reconciliation of GAAP "Basic and diluted net income per unit"

to Non-GAAP "Net income per unit before considering the impairment"










Quarter Ended


For the Year Ended


Dec


Dec


Dec


Dec


2011


2010


2011


2010


(unaudited)


(unaudited)

Net income (loss) per unit








Net income (loss) per unit as reported

$     (0.13)


$     0.39


$        0.50


$       1.54

Adjustment for impairments

$      0.65


$           -


$        1.49


$             -

Net income per limited partner unit, before considering the impairment

$      0.52


$     0.39


$        1.99


$       1.54









Weighted number of units outstanding

106,028


106,028


106,028


81,917



SOURCE Natural Resource Partners L.P.

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