ARLP currently operates seven underground mining complexes in Illinois, Indiana, Kentucky and Maryland and one surface mining operation in Kentucky. ARLP is currently developing two additional underground mines, one in Kentucky and one in West Virginia. Its mining activities are conducted in three geographic regions commonly referred to in the coal industry as the Illinois Basin, Central Appalachia and Northern Appalachia regions. At ARLP’s Warrior Coal, LLC, or Warrior, mining complex located in the Illinois Basin region, ARLP hosts and operates a coal synfuel facility, supplies the facility with coal feedstock, assists with the marketing of coal synfuel and provides other services to the owner of the synfuel facility.

ARLP produces a diverse range of steam coals with varying sulfur and heat contents, which enables ARLP to satisfy the broad range of specifications required by ARLP’s customers.

ARLP’s Illinois Basin mining operations are located in western Kentucky, southern Illinois and southern Indiana. ARLP currently operates five mining complexes in the Illinois Basin. Additionally, ARLP hosts coal synfuel facilities at two of its mining complexes.

ARLP’s Central Appalachia mining operations are located in the Central Appalachia coal fields. ARLP’s Central Appalachia mines produce low-sulfur coal. ARLP operates two mining complexes in Central Appalachia.

ARLP’s Northern Appalachia mining operation is located in the Northern Appalachia coal fields. ARLP operates one mining complex in Northern Appalachia.

The Mt. Vernon transfer terminal leases land and operates a coal loading terminal on the Ohio River at Mt. Vernon, Indiana. Coal is delivered to Mt. Vernon by both rail and truck. The terminal has a capacity of 8 million tons per year with existing ground storage. During 2004, the terminal loaded approximately 1.8 million tons for Pattiki, Dotiki, and Gibson customers and for third-party shippers.

As markets allow, ARLP buys coal from outside producers principally throughout the eastern United States, which ARLP then resells, both directly and indirectly, primarily to utility customers. ARLP purchased and sold approximately 21,000 tons of outside coal from non-affiliates in 2004. ARLP has a policy of matching ARLP’s outside coal purchases and sales to minimize market risks associated with buying and reselling coal. Purchased coal that is delivered to ARLP’s operations and commingled with ARLP’s production is not classified as brokerage coal.

Operating expenses increased 19.4% to $377.4 million for the nine months ended September 30, 2005 from $316.1 million for the nine months ended September 30, 2004.

Interest expense decreased to $9.7 million for the nine months ended September 30, 2005 from $11.4 million for the nine months ended September 30, 2004.

Transportation revenues and expenses increased to $27.1 million for the nine months ended September 30, 2005 from $20.4 million for the nine months ended September 30, 2004.