ALLIANCE RESOURCE PARTNERS LP

We are party to various lawsuits, claims and regulatory proceedings incidental to our business. We record an accrual for a loss contingency when we determine that a loss is probable and the amount can be reasonably estimated. We evaluate these matters at least quarterly, considering the status of each proceeding, the advice of legal counsel and our historical experience resolving claims of a similar nature.

For matters where a loss is reasonably possible, we estimate the range of reasonably possible loss in excess of amounts accrued. This may include matters in early stages where discovery has not begun. For all of those matters we base the estimate on known facts and circumstances, our historical experience resolving claims of a similar nature and the amounts at issue. Based on this evaluation, we estimate that the reasonably possible loss in excess of amounts accrued for these matters, individually and in the aggregate, is not material to our consolidated financial statements.

Our estimates are based on currently available information and involve significant judgment. As matters progress, the outcome may differ from our estimates, and we will adjust accruals and disclosures as appropriate.