However, the company did wrap up the year on a high with record tons produced and sold as well as record revenues.

Its income from operations was down in the quarter, to $31.2 million from $41.4 million last year.

Meanwhile, operating expenses were up, coming in at $279.6 million from $210.84 million in the prior-year quarter.

The company’s revenues rose 23.2% period-over-period and beat analyst estimates. For the period ended December 31, revenues were $310.8 million, up from 4Q07’s $252.3 million, and notably above the expected revenue of $293.47 million.

The rise in the 2008 quarter, it said, was mainly due to Alliance’s average coal sales price of $42.15 per ton, a record for the company. It also saw higher coal sales volumes, which jumped 15.1% to 7 million tons.

For the full year, Alliance saw records in its tons produced, tons sold and revenues.

Revenues rose 11.9% to $1.16 billion, while coal sales volumes increased 9.9% to 27.2Mt, compared to $1.03 billion and 24.7Mt, respectively, in 2007.

Net income, meanwhile, was $134.2 million for the year ended December 31, significantly lower than 2007’s full-year total of $170.4 million.

“With a solid customer base, substantial coal supply commitment levels, visible cash flow growth and ample liquidity, ARLP is well positioned to build on this strong performance in 2009,” company president Joseph Craft III said.

“While we are pleased with our results and optimistic about ARLP's future, we are also well aware of the near-term challenges caused by the current global recession.”

The decline of the economy and its impact on coal demand is resulting in lower-than-expected coal prices for 2009 and beyond, he noted.

“Fortunately, we have substantial future production committed under contracts at price levels that should allow ARLP to achieve substantial growth over 2008 results,” he said, adding that price predictions are “very difficult” at this time.

“The uncertain demand requirements combined with the evolving supply response have resulted in a lack of new contracts for physical deliveries of coal and, thus, any reliable price discovery to anticipate the future coal price curve.

“ARLP expects the coal markets to remain volatile until we see signs of an economic rebound."

Craft said company officials would continue to monitor its goals, the market and economy, and reassess when and if appropriate.

“Although we are faced with challenges and uncertainty, ARLP continues to anticipate significant cash flow growth in 2009 and beyond and remains committed to its long-stated objective of providing our unit holders with one of the highest distribution growth rates while maintaining one of the strongest distribution coverage ratios in the MLP sector," Craft said.

Looking ahead, Alliance officials said its total capital expenditures budget (including maintenance) for the coming year was estimated to be between $430 million and $480 million.

Alliance intends to invest some of the earmarked money for developments at the River View and Tunnel Ridge mines as well as facility and infrastructure improvements at the Warrior and Dotiki complexes.

Coal production for 2009 is expected to be in the range of 28.5-29Mt, and production from existing operations will likely go up about 2-4% this year versus 2008 levels, Alliance said.

At this time, more than 90% of its estimated production this year has been contractually priced.