Exhibit 99.1
NACCO INDUSTRIES, INC.
INTRODUCTION TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information of NACCO Industries, Inc. ("NACCO") and its wholly-owned subsidiaries (collectively, the "Company") gives effect to the spin-off ("the spin-off") of Hamilton Beach Brands Holding Company ("Hamilton Beach Holding" or "HBBHC"), which occurred on September 29, 2017. To complete the spin-off, NACCO paid a dividend of one share of Hamilton Beach Holding Class A common stock, par value $0.01 per share, and one share of Hamilton Beach Holding Class B common stock, par value $0.01 per share, after the close of trading on September 29, 2017 for each share of NACCO Class A common stock, par value $1.00 per share, and NACCO Class B common stock, par value $1.00 per share, outstanding as of 5:00 p.m. Eastern Time on the record date of September 26, 2017. Effective with the spin-off, Hamilton Beach Holding is accounted for as a discontinued operation in the Company's financial statements in accordance with Accounting Standards Codification 205, "Presentation of Financial Statements" ("ASC 205").
The historical financial information of the Company set forth below has been derived from the historical audited and unaudited consolidated financial statements of the Company included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 (the "Annual Report") and the Company's Quarterly Report on Form 10-Q for the six months ended June 30, 2017 (the "Quarterly Report"). The unaudited pro forma consolidated statements of income were prepared as if the spin-off occurred as of January 1, 2014. The unaudited pro forma consolidated balance sheet as of June 30, 2017 is prepared as if the spin-off occurred on that date. Pro forma income statements for the three most recently completed fiscal years are presented because the treatment of the spin-off has not yet been reflected as discontinued operations in the Company's historical information. The unaudited pro forma consolidated financial information does not include the impact of the transition services agreement that was entered into with Hamilton Beach Holding. Under the terms of the transition services agreement, NACCO will provide services to Hamilton Beach Holding on a transitional basis, as needed, for varying periods after the spin-off date. None of the transition services are expected to exceed one year. NACCO or Hamilton Beach Holding may extend the initial transition period for a period of up to three months for any service upon 30 days written notice to the other party prior to the initial termination date. Hamilton Beach Holding expects to pay net aggregate fees of approximately $1 million over the initial term of the transition services agreement.
The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable as of the date of this filing. However, actual adjustments may differ materially from the information presented and the pro forma adjustments may differ from those that will be calculated to report Hamilton Beach Holding as a discontinued operation by NACCO in future filings. The adjustments are directly attributable to the spin-off and are expected to have a continuing impact on the financial position and results of operations of the Company. The statements of income do not reflect any adjustments for non-recurring items. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma consolidated financial information of the Company has been made.
The unaudited pro forma consolidated financial information, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its Annual Report and its Quarterly Report. The unaudited pro forma consolidated financial statements presented do not purport to represent what the Company's results of operations or financial position would actually have been had the spin-off occurred on the dates presented, nor is it intended to be indicative of the Company's future results of operations or financial position.
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
Proforma adjustments | |||||||||||||||
As Reported NACCO JUNE 30, 2017 | Hamilton Beach Holding spin-off (1) | Other (2) | Proforma NACCO JUNE 30, 2017 | ||||||||||||
(In thousands, except share data) | |||||||||||||||
ASSETS | |||||||||||||||
Cash and cash equivalents | $ | 60,209 | $ | (5,328 | ) | $ | — | $ | 54,881 | ||||||
Accounts receivable, net | 85,025 | (69,857 | ) | — | 15,168 | ||||||||||
Accounts receivable from unconsolidated subsidiaries | 11,270 | — | — | 11,270 | |||||||||||
Accounts receivable from affiliates | — | (946 | ) | 2,915 | 1,969 | ||||||||||
Inventories, net | 163,759 | (135,397 | ) | — | 28,362 | ||||||||||
Assets held for sale | 1,373 | — | — | 1,373 | |||||||||||
Prepaid expenses and other | 22,323 | (9,073 | ) | — | 13,250 | ||||||||||
Total current assets | 343,959 | (220,601 | ) | 2,915 | 126,273 | ||||||||||
Property, plant and equipment, net | 132,126 | (16,550 | ) | — | 115,576 | ||||||||||
Goodwill | 6,253 | (6,253 | ) | — | — | ||||||||||
Other Intangibles, net | 51,062 | (6,590 | ) | — | 44,472 | ||||||||||
Deferred income taxes | 23,839 | (15,477 | ) | — | 8,362 | ||||||||||
Investments in unconsolidated subsidiaries | 27,254 | — | — | 27,254 | |||||||||||
Deferred costs | 10,598 | (8,609 | ) | — | 1,989 | ||||||||||
Other non-current assets | 26,169 | (3,102 | ) | — | 23,067 | ||||||||||
Total assets | $ | 621,260 | $ | (277,182 | ) | $ | 2,915 | $ | 346,993 | ||||||
LIABILITIES AND EQUITY | |||||||||||||||
Accounts payable | $ | 104,794 | $ | (98,480 | ) | $ | — | $ | 6,314 | ||||||
Accounts payable to affiliates | — | (1,969 | ) | 2,915 | 946 | ||||||||||
Revolving credit agreements of subsidiaries | 22,276 | (22,276 | ) | — | — | ||||||||||
Current maturities of long-term debt of subsidiaries | 1,212 | — | — | 1,212 | |||||||||||
Accrued payroll | 20,332 | (10,998 | ) | — | 9,334 | ||||||||||
Accrued cooperative advertising | 6,898 | (6,898 | ) | — | — | ||||||||||
Other current liabilities | 30,537 | (14,133 | ) | — | 16,404 | ||||||||||
Total current liabilities | 186,049 | (154,754 | ) | 2,915 | 34,210 | ||||||||||
Long-term debt of subsidiaries | 99,918 | (32,000 | ) | — | 67,918 | ||||||||||
Asset retirement obligations | 39,153 | — | — | 39,153 | |||||||||||
Pension and other postretirement obligations | 13,386 | — | — | 13,386 | |||||||||||
Other long-term liabilities | 51,794 | (27,467 | ) | — | 24,327 | ||||||||||
Total liabilities | 390,300 | (214,221 | ) | 2,915 | 178,994 | ||||||||||
Stockholders' equity | |||||||||||||||
Common stock: | |||||||||||||||
Class A, par value $1 per share, 5,266,268 shares outstanding | 5,266 | — | — | 5,266 | |||||||||||
Class B, par value $1 per share, convertible into Class A on a one-for-one basis, 1,570,448 shares outstanding | 1,570 | — | — | 1,570 | |||||||||||
Capital in excess of par value | — | — | — | — | |||||||||||
Retained earnings | 248,239 | (78,508 | ) | — | 169,731 | ||||||||||
Accumulated other comprehensive loss | (24,115 | ) | 15,547 | — | (8,568 | ) | |||||||||
Total stockholders' equity | 230,960 | (62,961 | ) | — | 167,999 | ||||||||||
Total liabilities and equity | $ | 621,260 | $ | (277,182 | ) | $ | 2,915 | $ | 346,993 |
See notes to pro forma unaudited condensed consolidated financial statements.
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
As Reported NACCO | Pro Forma adjustments | Pro Forma NACCO | |||||||||
Six Months Ended June 30, 2017 | Hamilton Beach Holding spin-off (1) | Six Months Ended June 30, 2017 | |||||||||
(In thousands, except per share data) | |||||||||||
Revenues | $ | 349,658 | $ | (293,258 | ) | $ | 56,400 | ||||
Cost of sales | 267,095 | (219,850 | ) | 47,245 | |||||||
Gross profit | 82,563 | (73,408 | ) | 9,155 | |||||||
Earnings of unconsolidated mines | 28,430 | — | 28,430 | ||||||||
Operating expenses | |||||||||||
Selling, general and administrative expenses | 94,192 | (73,011 | ) | 21,181 | |||||||
(Gain)/loss on sale of assets | (3,044 | ) | 19 | (3,025 | ) | ||||||
Amortization of intangible assets | 1,896 | (690 | ) | 1,206 | |||||||
93,044 | (73,682 | ) | 19,362 | ||||||||
Operating profit | 17,949 | 274 | 18,223 | ||||||||
Other expense (income) | |||||||||||
Interest expense | 2,737 | (877 | ) | 1,860 | |||||||
Income from other unconsolidated affiliates | (619 | ) | — | (619 | ) | ||||||
Closed mine obligations | 735 | — | 735 | ||||||||
Other, net, including interest income | (1,028 | ) | 979 | (49 | ) | ||||||
1,825 | 102 | 1,927 | |||||||||
Income before income tax provision (benefit) | 16,124 | 172 | 16,296 | ||||||||
Income tax provision (benefit) | 4,358 | 53 | 4,411 | ||||||||
Net income (loss) | $ | 11,766 | $ | 119 | $ | 11,885 | |||||
Basic earnings per share | $ | 1.73 | $ | 1.74 | |||||||
Diluted earnings per share | $ | 1.72 | $ | 1.74 | |||||||
Dividends per share | $ | 0.5400 | $ | 0.5400 | |||||||
Basic weighted average shares outstanding | 6,818 | 6,818 | |||||||||
Diluted weighted average shares outstanding | 6,847 | 6,847 |
See notes to pro forma unaudited condensed consolidated financial statements.
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
As Reported NACCO | Pro Forma adjustments | Pro Forma NACCO | |||||||||
Year Ended DECEMBER 31, 2016 | Hamilton Beach Holding spin-off (1) | Year Ended DECEMBER 31, 2016 | |||||||||
(In thousands, except per share data) | |||||||||||
Revenues | $ | 856,438 | $ | (745,357 | ) | $ | 111,081 | ||||
Cost of sales | 650,585 | (551,586 | ) | 98,999 | |||||||
Gross profit | 205,853 | (193,771 | ) | 12,082 | |||||||
Earnings of unconsolidated mines | 55,238 | — | 55,238 | ||||||||
Operating expenses | |||||||||||
Selling, general and administrative expenses | 197,903 | (149,040 | ) | 48,863 | |||||||
Centennial asset impairment charge | 17,443 | — | 17,443 | ||||||||
(Gain)/loss on sale of assets | 146 | 24 | 170 | ||||||||
Amortization of intangible assets | 3,884 | (1,381 | ) | 2,503 | |||||||
219,376 | (150,397 | ) | 68,979 | ||||||||
Operating profit | 41,715 | (43,374 | ) | (1,659 | ) | ||||||
Other expense (income) | |||||||||||
Interest expense | 5,692 | (1,374 | ) | 4,318 | |||||||
Income from other unconsolidated affiliates | (1,221 | ) | — | (1,221 | ) | ||||||
Closed mine obligations | (214 | ) | — | (214 | ) | ||||||
Other, net, including interest income | 2,988 | (837 | ) | 2,151 | |||||||
7,245 | (2,211 | ) | 5,034 | ||||||||
Income before income tax provision (benefit) | 34,470 | (41,163 | ) | (6,693 | ) | ||||||
Income tax provision (benefit) | 4,863 | (14,984 | ) | (10,121 | ) | ||||||
Net income | $ | 29,607 | $ | (26,179 | ) | $ | 3,428 | ||||
Basic earnings per share | $ | 4.34 | $ | 0.50 | |||||||
Diluted earnings per share | $ | 4.32 | $ | 0.50 | |||||||
Dividends per share | $ | 1.0650 | $ | 1.0650 | |||||||
Basic weighted average shares outstanding | 6,818 | 6,818 | |||||||||
Diluted weighted average shares outstanding | 6,854 | 6,854 |
See notes to pro forma unaudited condensed consolidated financial statements.
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
As Reported NACCO | Pro Forma adjustments | Pro Forma NACCO | |||||||||
Year Ended DECEMBER 31, 2015 | Hamilton Beach Holding spin-off (1) | Year Ended DECEMBER 31, 2015 | |||||||||
(In thousands, except per share data) | |||||||||||
Revenues | $ | 915,860 | $ | (767,862 | ) | $ | 147,998 | ||||
Cost of sales | 736,364 | (577,134 | ) | 159,230 | |||||||
Gross profit | 179,496 | (190,728 | ) | (11,232 | ) | ||||||
Earnings of unconsolidated mines | 48,432 | — | 48,432 | ||||||||
Operating expenses | |||||||||||
Selling, general and administrative expenses | 193,925 | (153,820 | ) | 40,105 | |||||||
(Gain)/loss on sale of assets | (1,811 | ) | 27 | (1,784 | ) | ||||||
Amortization of intangible assets | 3,987 | (1,381 | ) | 2,606 | |||||||
196,101 | (155,174 | ) | 40,927 | ||||||||
Operating profit (loss) | 31,827 | (35,554 | ) | (3,727 | ) | ||||||
Other expense (income) | |||||||||||
Interest expense | 6,924 | (1,962 | ) | 4,962 | |||||||
Income from other unconsolidated affiliates | (2,040 | ) | — | (2,040 | ) | ||||||
Closed mine obligations | 919 | — | 919 | ||||||||
Other, net, including interest income | 1,225 | (1,556 | ) | (331 | ) | ||||||
7,028 | (3,518 | ) | 3,510 | ||||||||
Income (loss) before income tax provision (benefit) | 24,799 | (32,036 | ) | (7,237 | ) | ||||||
Income tax provision (benefit) | 2,815 | (12,325 | ) | (9,510 | ) | ||||||
Net income | $ | 21,984 | $ | (19,711 | ) | $ | 2,273 | ||||
Basic earnings per share | $ | 3.14 | $ | 0.32 | |||||||
Diluted earnings per share | $ | 3.13 | $ | 0.32 | |||||||
Dividends per share | $ | 1.0450 | $ | 1.0450 | |||||||
Basic weighted average shares outstanding | 7,001 | 7,001 | |||||||||
Diluted weighted average shares outstanding | 7,022 | 7,022 |
See notes to pro forma unaudited condensed consolidated financial statements.
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
As Reported NACCO | Pro Forma adjustments | Pro Forma NACCO | |||||||||
Year Ended DECEMBER 31, 2014 | Hamilton Beach Holding spin-off (1) | Year Ended DECEMBER 31, 2014 | |||||||||
(In thousands, except per share data) | |||||||||||
Revenues | $ | 896,782 | $ | (724,080 | ) | $ | 172,702 | ||||
Cost of sales | 711,710 | (535,408 | ) | 176,302 | |||||||
Gross profit | 185,072 | (188,672 | ) | (3,600 | ) | ||||||
Earnings of unconsolidated mines | 48,396 | — | 48,396 | ||||||||
Operating expenses | |||||||||||
Selling, general and administrative expenses | 198,697 | (160,797 | ) | 37,900 | |||||||
Centennial long-live asset impairment charge | 105,119 | — | 105,119 | ||||||||
(Gain)/loss on sale of assets | (7,339 | ) | 360 | (6,979 | ) | ||||||
Amortization of intangible assets | 3,300 | (58 | ) | 3,242 | |||||||
299,777 | (160,495 | ) | 139,282 | ||||||||
Operating profit (loss) | (66,309 | ) | (28,177 | ) | (94,486 | ) | |||||
Other expense (income) | |||||||||||
Interest expense | 7,566 | (1,504 | ) | 6,062 | |||||||
Income from other unconsolidated affiliates | (161 | ) | — | (161 | ) | ||||||
Closed mine obligations | 2,582 | — | 2,582 | ||||||||
Other, net, including interest income | 277 | (1,197 | ) | (920 | ) | ||||||
10,264 | (2,701 | ) | 7,563 | ||||||||
Income (loss) before income tax provision (benefit) | (76,573 | ) | (25,476 | ) | (102,049 | ) | |||||
Income tax provision (benefit) | (38,455 | ) | (7,273 | ) | (45,728 | ) | |||||
Net income (loss) | $ | (38,118 | ) | $ | (18,203 | ) | $ | (56,321 | ) | ||
Basic earnings (loss) per share | $ | (5.02 | ) | $ | (7.42 | ) | |||||
Diluted earnings (loss) per share | $ | (5.02 | ) | $ | (7.42 | ) | |||||
Dividends per share | $ | 1.0225 | $ | 1.0225 | |||||||
Basic weighted average shares outstanding | 7,590 | 7,590 | |||||||||
Diluted weighted average shares outstanding | 7,590 | 7,590 |
See notes to pro forma unaudited condensed consolidated financial statements.
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Pro Forma Unaudited Condensed Consolidated Financial Statements
(1) The Hamilton Beach Holding spin-off column represents the historical financial results of the Hamilton Beach Holding business as such operating results were included in NACCO's consolidated financial statements for the periods presented (and accordingly are reflected in the As Reported NACCO columns).
(2) Represents intercompany accounts receivable and intercompany accounts payable between NACCO and Hamilton Beach Holding at June 30, 2017.