SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-9172
NACCO Industries, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 34-1505819
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5875 LANDERBROOK DRIVE, MAYFIELD HEIGHTS, OHIO 44124
(Address of principal executive offices) Zip code
Registrant's telephone number, including area code (216) 449-9600
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the last 90 days.
YES X NO
Number of shares of Class A Common Stock outstanding at July 31, 1995: 7,251,265
---------
Number of shares of Class B Common Stock outstanding at July 31, 1995: 1,714,089
---------
NACCO INDUSTRIES, INC.
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets - June
30, 1995 and December 31, 1994
Unaudited Consolidated Statements of
Income for the Three and Six Months
Ended June 30, 1995 and 1994
Unaudited Consolidated Statements of
Cash Flows for the Six Months Ended
June 30, 1995 and 1994
Notes to Unaudited Consolidated
Financial Statements
Item 2 Management's Discussion and Analysis
of Results of Operations and
Financial Condition
Part II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
Exhibit Index
PART I
Item 1 - Financial Statements
CONSOLIDATED BALANCE SHEETS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
(Unaudited) (Audited)
JUNE 30 DECEMBER 31
1995 1994
(In thousands)
ASSETS
Current Assets
Cash and cash equivalents ...........................$ 30,359 $ 19,541
Accounts receivable, net ............................. 236,866 236,215
Inventories .......................................... 393,566 298,987
Prepaid expenses and other ........................... 29,455 31,893
---------- ----------
690,246 586,636
Other Assets ......................................... 44,007 41,341
Property, Plant and Equipment, Net ................... 506,865 485,314
Deferred Charges
Goodwill, net ........................................ 464,729 471,574
Deferred costs and other ............................. 54,712 69,257
Deferred income taxes ................................ 37,478 40,200
---------- ----------
556,919 581,031
---------- ----------
Total Assets $1,798,037 $1,694,322
========== ==========
See notes to unaudited consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
(Unaudited) (Audited)
JUNE 30 DECEMBER 31
1995 1994
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable ................................. $ 244,804 $ 226,892
Revolving credit agreements ...................... 66,509 30,760
Current maturities of long-term obligations ...... 15,655 63,509
Income taxes ..................................... 9,399 20,356
Accrued payroll .................................. 23,256 28,018
Other current liabilities ........................ 108,650 111,903
---------- ----------
468,273 481,438
Notes Payable - not guaranteed by
the parent company ............................... 354,593 286,717
Obligations of Project Mining Subsidiaries -
not guaranteed by the parent company or
its North American Coal subsidiary ............... 343,415 331,876
Obligation to United Mine Workers of America
Combined Benefit Fund ............................ 153,080 154,959
Self-insurance Reserves and Other .................... 128,259 119,399
Minority Interest .................................... 41,720 40,542
Stockholders' Equity
Common stock:
Class A, par value $1 per share, 7,249,361
shares outstanding (1994 - 7,228,739
shares outstanding) ........................ 7,249 7,229
Class B, par value $1 per share, convertible
into Class A on a one-for-one basis,
1,715,993 shares outstanding
(1994 - 1,722,981 shares outstanding) ...... 1,716 1,723
Capital in excess of par value ................... 3,528 2,788
Retained income .................................. 285,343 262,226
Foreign currency translation adjustment
and other ..................................... 10,861 5,425
---------- ----------
308,697 279,391
---------- ----------
Total Liabilities and Stockholders' Equity .... $1,798,037 $1,694,322
========== ==========
See notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1995 1994 1995 1994
(In thousands, except per share data)
Net sales ........................................... $ 514,288 $ 433,490 $ 1,014,254 $ 814,541
Other operating income .............................. 3,311 3,417 5,716 5,614
----------- ----------- ----------- -----------
Total Revenues ........... 517,599 436,907 1,019,970 820,155
Cost of sales ....................................... 417,890 348,238 819,510 653,707
----------- ----------- ----------- -----------
Gross Profit ........... 99,709 88,669 200,460 166,448
Selling, administrative and
general expenses .................................. 64,099 54,558 127,201 108,612
Amortization of goodwill ............................ 3,422 3,425 6,845 6,873
----------- ----------- ----------- -----------
Operating Profit ........... 32,188 30,686 66,414 50,963
Other income (expense)
Interest income ................................. 1,898 424 2,291 762
Interest expense ................................ (12,385) (13,728) (26,407) (28,496)
Other - net ..................................... 963 (106) 1,257 (1,390)
----------- ----------- ----------- -----------
(9,524) (13,410) (22,859) (29,124)
----------- ----------- ----------- -----------
Income Before Income Taxes,
Minority Interest and
Extraordinary Charge ........... 22,664 17,276 43,555 21,839
Provision for income taxes .......................... 7,448 7,846 15,326 9,847
----------- ----------- ----------- -----------
Income Before Minority Interest
and Extraordinary Charge ........... 15,216 9,430 28,229 11,992
Minority interest ................................... (484) (239) (692) (31)
----------- ----------- ----------- -----------
Income Before Extraordinary Charge
14,732 9,191 27,537 11,961
Extraordinary charge, net-of-tax .................... -- (3,218) (1,280) (3,218)
----------- ----------- ----------- -----------
Net Income ........... $ 14,732 $ 5,973 $ 26,257 $ 8,743
=========== =========== =========== ===========
Income Before Extraordinary Charge $ 1.64 $ 1.03 $ 3.07 $ 1.34
Extraordinary charge,
net-of-tax ................................. -- (.36) (0.14) (.36)
----------- ----------- ----------- -----------
Net Income ...................................... $ 1.64 $ .67 $ 2.93 $ .98
=========== =========== =========== ===========
Cash dividends per share ........................ $ 0.180 $ .170 $ 0.350 $ .335
=========== =========== =========== ===========
See notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
SIX MONTHS ENDED
JUNE 30
1995 1994
(In thousands)
Operating Activities
Net income ........................................................................... $ 26,257 $ 8,743
Adjustments to reconcile net income
to net cash provided by operating
activities:
Extraordinary charge, net-of-tax ................................................. 1,280 3,218
Depreciation, depletion and amortization ......................................... 39,603 39,995
Deferred income taxes ............................................................ 443 1,460
Other non-cash items ............................................................. 4,328 (4,082)
Working Capital Changes:
Accounts receivable .............................................................. (167) (1,659)
Inventories ...................................................................... (92,597) (67,284)
Other current assets ............................................................. 3,014 974
Accounts payable ................................................................. 22,071 38,500
Accrued income taxes ............................................................. (9,275) (12,181)
Other liabilities ................................................................ (13,143) 13,682
--------- ---------
Net cash provided (used) by operating activities .................... (18,186) 21,366
Investing Activities
Expenditures for property, plant and equipment ....................................... (33,801) (24,380)
Proceeds from the sale of assets ..................................................... 422 2,728
--------- ---------
Net cash used by investing activities .................... (33,379) (21,652)
Financing Activities
Additions to long-term obligations and
revolving credit ................................................................... 236,915 70,788
Reductions of long-term obligations and
revolving credit ................................................................... (177,061) (55,987)
Additions to obligations of project mining subsidiaries .............................. 26,855 27,217
Reductions of obligations of project mining subsidiaries ............................. (25,892) (32,542)
Cash dividends paid .................................................................. (3,137) (2,996)
Capital grants ....................................................................... 1,863 1,179
Other - net .......................................................................... 1,159 (352)
--------- ---------
Net cash provided by financing activities .................... 60,702 7,307
Effect of exchange rate changes on cash .............................................. 1,681 1,984
--------- ---------
Cash and Cash Equivalents
Increase for the period .............................................................. 10,818 9,005
Balance at the beginning of the period ............................................... 19,541 29,149
--------- ---------
Balance at the end of the period ..................................................... $ 30,359 $ 38,154
========= =========
See notes to unaudited consolidated financial statements.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
(Tabular Dollars in Millions, Except Per Share Data)
Note A - Basis of Presentation
NACCO Industries, Inc. ("NACCO") is a holding company with four operating
subsidiaries: The North American Coal Corporation ("North American Coal"), NACCO
Materials Handling Group, Inc. ("NMHG"), Hamilton Beach/Proctor-Silex, Inc.
("HB/PS"), and The Kitchen Collection, Inc. ("KCI").
The accompanying unaudited consolidated financial statements include the
accounts of NACCO and its majority owned subsidiaries (NACCO Industries, Inc.
and Subsidiaries - the "Company"). Intercompany accounts have been eliminated.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of the financial position of the Company as of
June 30, 1995 and the results of its operations for the three and six month
periods and cash flows for the six month periods ended June 30, 1995 and 1994
have been included.
Operating results for the six month period ended June 30, 1995, are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1995. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1994.
Certain amounts in the prior periods' unaudited consolidated financial
statements have been reclassified to conform to the current period's
presentation.
Note B - Inventories
Inventories are summarized as follows:
June 30 December 31
1995 1994
Manufacturing inventories:
Finished goods and service parts
NACCO Materials Handling Group ........................................... $ 97.7 $ 82.3
Hamilton Beach/Proctor-Silex ............................................. 75.8 32.8
------ ------
173.5 115.1
------ ------
Raw materials and work in process
NACCO Materials Handling Group ........................................... 173.7 137.9
Hamilton Beach/Proctor-Silex ............................................. 17.4 15.9
------ -------
191.1 153.8
------ ------
LIFO reserve
NACCO Materials Handling Group ........................................... (14.3) (11.4)
Hamilton Beach/Proctor-Silex ............................................. (.4) (.1)
------ ------
(14.7) (11.5)
------ ------
Total manufacturing inventories ................................................ 349.9 257.4
North American Coal:
Coal ..................................................................... 10.6 8.4
Mining supplies .......................................................... 18.2 18.8
Retail inventories - Kitchen Collection ........................................ 14.9 14.4
------ ------
$393.6 $299.0
====== ======
The cost of manufacturing inventories has been determined by the last-in,
first-out (LIFO) method for 72 percent and 69 percent of such inventories as of
June 30, 1995 and December 31, 1994, respectively.
Note C - Revolving Credit Agreements and Notes Payable
On February 28, 1995, NMHG entered into a new long-term credit agreement to
replace its previous bank agreement and to refinance the majority of its
existing long-term debt. The new agreement provides NMHG with an unsecured
$350.0 million revolving credit facility to replace its previous senior credit
facility. The new credit facility has a five-year maturity with extension
options and performance-based pricing comparable to its previous senior credit
facility which provides NMHG with reduced interest rates upon achievement of
certain financial performance targets.
Note D - Extraordinary Charge
The 1995 extraordinary charge, of $1.3 million, net of $0.9 million in tax
benefits, relates to the write off of deferred financing fees associated with
NMHG's former revolving credit facility and senior term loan which was replaced
by the new long-term credit agreement discussed in Note C above. As previously
announced, NMHG retired the remaining $78.5 million outstanding Hyster-Yale 12
3/8% debentures on August 1, 1995 at a price of 102.5. An extraordinary charge
of $2.1 million was recorded when these debentures were retired.
Item 2 - Management's Discussion and Analysis of Results
of Operations and Financial Condition
(Tabular Dollars in Millions, Except Per Share Data)
FINANCIAL SUMMARY
NACCO's four operating subsidiaries function in distinct business environments,
and the results of operations and financial condition are best discussed at the
subsidiary level as presented below. The results for "North American Coal" have
been adjusted to exclude the previously combined results of Bellaire
Corporation, a non-operating subsidiary of NACCO.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1995 1994 1995 1994
REVENUES
NACCO Materials Handling Group ........................... $370.2 $ 290.4 $ 733.3 $535.7
Hamilton Beach/Proctor-Silex ............................. 79.7 76.1 146.7 144.7
North American Coal ...................................... 55.3 58.8 115.8 118.0
Kitchen Collection ....................................... 13.5 12.4 25.6 23.2
Bellaire ................................................. .3 .2 .3 .4
Eliminations ............................................. (1.4) (1.0) (1.7) (1.9)
------ -------- -------- ------
$517.6 $ 436.9 $1,020.0 $820.1
====== ======== ======== ======
AMORTIZATION OF GOODWILL
NACCO Materials Handling Group ........................... $ 2.7 $ 2.7 $ 5.4 $ 5.4
Hamilton Beach/Proctor-Silex ............................. .7 .7 1.4 1.4
----- ------- ------- -----
$ 3.4 $ 3.4 $ 6.8 $ 6.8
====== ======== ======== ======
OPERATING PROFIT (LOSS)
NACCO Materials Handling Group ........................... $ 21.9 $ 19.8 $ 45.5 $ 30.9
Hamilton Beach/Proctor-Silex ............................. 3.6 3.5 5.0 3.1
North American Coal ...................................... 9.2 9.4 21.0 21.4
Kitchen Collection ....................................... (.4) .2 (.8) --
Bellaire ................................................. -- -- (.1) --
NACCO .................................................... (2.1) (2.2) (4.2) (4.4)
------ -------- -------- ------
$ 32.2 $ 30.7 $ 66.4 $ 51.0
====== ======== ======== ======
OPERATING PROFIT (LOSS) EXCLUDING GOODWILL
AMORTIZATION
NACCO Materials Handling Group ........................... $ 24.6 $ 22.5 $ 50.9 $ 36.3
Hamilton Beach/Proctor-Silex ............................. 4.3 4.2 6.4 4.5
North American Coal ...................................... 9.2 9.4 21.0 21.4
Kitchen Collection ....................................... (.4) .2 (.8) --
Bellaire ................................................. -- -- (.1) --
NACCO .................................................... (2.1) (2.2) (4.2) (4.4)
------ -------- -------- ------
$ 35.6 $ 34.1 $ 73.2 $ 57.8
====== ======== ======== ======
INTEREST INCOME
NACCO Materials Handling Group ........................... $ .4 $ .2 $ .7 $ .4
North American Coal ...................................... .9 .7 1.6 1.3
Bellaire ................................................. .5 .3 .8 .6
NACCO .................................................... 1.0 .2 1.1 .4
Eliminations ............................................. (.9) (1.0) (1.9) (1.9)
------ -------- -------- ------
$ 1.9 $ .4 $ 2.3 $ .8
====== ======== ======== ======
FINANCIAL SUMMARY - continued
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1995 1994 1995 1994
INTEREST EXPENSE
NACCO Materials Handling Group ................................... $ (8.0) $ (9.2) $(15.5) $(17.9)
Hamilton Beach/Proctor-Silex ..................................... (1.7) (1.8) (3.3) (3.2)
North American Coal .............................................. (.4) (.3) (.8) (.6)
Kitchen Collection ............................................... (.1) (.1) (.2) (.1)
NACCO ............................................................ (.8) (.8) (1.6) (1.5)
Eliminations ..................................................... .9 1.0 1.9 1.9
------ ------ ------ ------
(10.1) (11.2) (19.5) (21.4)
Project mining subsidiaries ...................................... (2.3) (2.5) (6.9) (7.1)
------ ------ ------ ------
$(12.4) $(13.7) $(26.4) $(28.5)
====== ====== ====== ======
OTHER-NET, INCOME (EXPENSE)
NACCO Materials Handling Group ................................... $ 1.0 $ .1 $ 1.1 $ (.5)
Hamilton Beach/Proctor-Silex ..................................... (.1) -- (.2) (.4)
North American Coal .............................................. -- (.3) .2 (.9)
Bellaire ......................................................... -- -- -- .1
NACCO ............................................................ .1 .1 .2 .3
------ ------ ------ ------
$ 1.0 $ (.1) $ 1.3 $ (1.4)
====== ====== ====== ======
NET INCOME (LOSS)
Before Extraordinary Charge
NACCO Materials Handling Group ................................... $ 8.9 $ 5.3 $ 18.6 $ 6.1
Hamilton Beach/Proctor-Silex ..................................... 1.1 .9 .9 (.3)
North American Coal .............................................. 5.4 4.6 10.6 9.4
Kitchen Collection ............................................... (.3) .1 (.6) --
Bellaire ......................................................... .4 .1 .6 .3
NACCO ............................................................ (.3) (1.6) (1.9) (3.6)
Minority interest ................................................ (.5) (.2) (.6) --
------ ------ ------ ------
14.7 9.2 27.6 11.9
Extraordinary charge,
net-of-tax ................................................... (3.2) (1.3) (3.2)
------ ------ ------ ------
$ 14.7 $ 6.0 $ 26.3 $ 8.7
====== ====== ====== ======
DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE
NACCO Materials Handling Group ................................... $ 16.2 $ 16.2
Hamilton Beach/Proctor-Silex ..................................... 8.0 7.7
North American Coal .............................................. .8 .8
Kitchen Collection ............................................... .5 .4
NACCO ............................................................ .1 .1
------ ------
25.6 25.2
Project mining subsidiaries ........................................ 14.0 14.7
------ ------
$ 39.6 $ 39.9
====== ======
CAPITAL EXPENDITURES
NACCO Materials Handling Group ................................... $ 17.9 $ 13.9
Hamilton Beach/Proctor-Silex ..................................... 4.3 6.0
North American Coal .............................................. 1.3 .3
Kitchen Collection ............................................... .9 .5
NACCO ............................................................ .1 --
------ ------
24.5 20.7
Project mining subsidiaries ...................................... 9.3 3.7
------ ------
$ 33.8 $ 24.4
====== ======
FINANCIAL SUMMARY - continued
JUNE 30 DECEMBER 31
1995 1994
TOTAL ASSETS
NACCO Materials Handling Group ........................................... $ 983.2 $ 906.2
Hamilton Beach/Proctor-Silex ............................................. 306.9 289.6
North American Coal ...................................................... 60.6 49.0
Kitchen Collection ....................................................... 23.3 26.0
Bellaire ................................................................. 85.2 87.1
NACCO .................................................................... 17.9 26.6
-------- --------
1,477.1 1,384.5
Project mining subsidiaries .............................................. 417.6 412.3
-------- --------
1,894.7 1,796.8
Consolidating eliminations ............................................... (96.7) (102.5)
-------- --------
$1,798.0 $1,694.3
======== ========
NORTH AMERICAN COAL
North American Coal mines and markets lignite for use primarily as fuel for
power generation by electric utilities. The lignite is surface mined in North
Dakota, Texas and Louisiana. Total coal reserves approximate 2.2 billion tons
with 1.4 billion tons committed to electric utility customers pursuant to
long-term contracts.
FINANCIAL REVIEW
North American Coal's three project mining subsidiaries (Coteau, Falkirk and
Sabine) mine lignite for utility customers pursuant to long-term contracts at a
price based on actual cost plus an agreed pretax profit per ton. Due to the
cost-plus nature of these contracts, revenues and operating profits are impacted
by increases and decreases in operating costs, as well as by sales tons. Net
income of these project mines, however, is not significantly affected by changes
in such operating costs, which include costs of operations, interest expense and
certain other income and expense items. Because of the nature of the contracts
at these mines, operating results are best analyzed in terms of income before
taxes and net income.
North American Coal's results for 1994 have been adjusted to include certain
royalty and other payments previously classified with Bellaire, a non-operating
subsidiary of NACCO, that are more appropriately classified with North American
Coal.
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
Tons sold by North American Coal's four operating mines were as follows for the
three and six month periods ended June 30:
Three Months Six Months
1995 1994 1995 1994
Coteau Properties ................................... 3.3 3.6 7.4 7.7
Falkirk Mining ...................................... 1.6 1.6 3.5 3.4
Sabine Mining ....................................... .7 .7 1.6 1.6
Red River Mining .................................... .3 .3 .4 .4
--- ---- ---- ----
5.9 6.2 12.9 13.1
=== ==== ==== ====
Revenues, income before taxes, provision for taxes and net income were as
follows for the three and six months ended June 30:
Three Months Six Months
1995 1994 1995 1994
Revenues from operating mines ........................... $52.3 $ 55.6 $110.5 $112.8
Royalties and other ..................................... 3.0 3.2 5.3 5.2
----- ------ ------ ------
$55.3 $ 58.8 $115.8 $118.0
===== ====== ====== ======
Income before tax from
operating mines ..................................... $ 5.9 $ 5.9 $ 12.7 $ 12.3
Royalty and other income, net ........................... 2.9 2.2 5.4 4.2
Headquarters expense .................................... (1.3) (1.1) (3.0) (2.4)
----- ------ ------ ------
7.5 7.0 15.1 14.1
Provision for taxes ..................................... 2.1 2.4 4.5 4.7
----- ------ ------ ------
Net income .......................................... $ 5.4 $ 4.6 $ 10.6 $ 9.4
===== ====== ====== ======
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
Second Quarter of 1995 Compared with Second Quarter of 1994
The following schedule details the components of the changes in revenues, income
before taxes and net income for the three months ended June 30:
Income
Before Net
Revenues Taxes Income
1994 $58.8 $7.0 $4.6
Increase (decrease) in 1995 from:
Project mining subsidiaries
Tonnage volume ................................................. (2.8) (.2) (.1)
Agreed profit per ton .......................................... .1 .1 .1
Pass-through costs ............................................. (1.2) -- --
Other Mining Operations
Tonnage volume ................................................. 1.0 .4 .2
Mix of tons sold ............................................... .5 .5 .4
Average selling price .......................................... (.9) (.9) (.6)
Operating costs ................................................ -- .1 .1
Other income (expense) ......................................... -- -- --
----- ---- ----
Variances from operating mines ........................................ (3.3) -- .1
Royalties and other income, net ................................... (.2) .7 .4
Headquarters expense .............................................. -- (.2) (.1)
Differences between effective and
statutory tax rates ............................................ -- -- .4
----- ---- ----
1995 $55.3 $7.5 $5.4
===== ==== ====
The unfavorable volume variance at the project mines relates primarily to
Coteau. Coteau's shipments to its customer have been reduced because of
shut-downs at its customer's generating plants due to upgrades and maintenance
and the availability of excess hydro-power from the northwestern United States
and Canada. The northwestern United States and Canada has experienced a high
level of rainfall in 1995 resulting in the increased availability of
hydro-power. Increased customer requirements at Red River caused the favorable
volume variance for other mining operations. In addition, Red River has a new
agreement with its customer that extends the contract term nine years in
exchange for a lower sales prices per ton, resulting in the unfavorable price
variance at other mining operations. Royalty income favorably impacted
operations due to the timing of the receipt of royalties relating to former
eastern coal reserves.
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
First Six Months of 1995 Compared with First Six Months of 1994
The following schedule details the components of the changes in revenues, income
before taxes and net income for the six months ended June 30:
Income
Before Net
Revenues Taxes Income
1994 $118.0 $14.1 $ 9.4
Increase (decrease) in 1995 from:
Project mining subsidiaries
Tonnage volume ................................................ (1.1) (.1) --
Mix of tons sold .............................................. .2 .2 .2
Agreed profit per ton ......................................... .2 .2 .1
Pass-through costs ............................................ (1.4) -- --
Other Mining Operations
Tonnage volume ................................................ .2 .1 --
Mix of tons sold .............................................. 2.6 2.6 1.7
Average selling price ......................................... (3.1) (3.1) (2.0)
Operating costs ............................................... .4 .2
Other income (expense) ........................................ .1 .1
--- --- ---
Variances from operating mines ...................................... (2.4) .4 .3
Royalties and other income, net ................................... .2 1.2 .8
Headquarters expense .............................................. (.6) (.4)
Differences between effective and
statutory tax rates ........................................... .5
--- --- ---
1995 $115.8 $ 15.1 $ 10.6
====== ===== =====
The reduction in customer demand at Coteau during the second quarter, partially
offset by higher shipments at Falkirk due to increased customer requirements
resulted in an unfavorable volume variance at the project mines during the fist
six months of 1995. The favorable mix variance at other mining operations during
the first six months of 1995 results from increased sales of base tons at Red
River which yield a higher price as specified in the supply contract. The
unfavorable price variance at other mining operations relates to the new
agreement Red River signed with its customer which extends the contract term in
exchange for a lower sales price per ton. The timing of the receipt of royalties
relating to former eastern coal reserves favorably impacted operations.
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
Other Income and Expense
Items of other income (expense) for the three and six months ended June 30:
Three Months Six Months
1995 1994 1995 1994
Interest income
Project mining subsidiaries ......................... $ .3 $ .2 $ .6 $ .3
Other mining operations ............................. .6 .5 1.0 1.0
---- ---- ---- -----
$ .9 $ .7 $1.6 $ 1.3
==== ==== ==== =====
Interest expense
Project mining subsidiaries ......................... $(2.3) $(2.5) $(6.9) $(7.1)
Other mining operations ............................. (.4) (.3) (.8) (.6)
---- ---- ---- -----
$(2.7) $(2.8) $(7.7) $(7.7)
==== ==== ===== =====
Other-net
Project mining subsidiaries ......................... -- $ .4 $ .1 .5
Other mining operations ............................. -- (.7) .1 (1.4)
---- ---- ---- -----
-- $(.3) $ .2 $ (.9)
==== ==== ==== =====
Provision for Income Taxes
North American Coal's effective tax rate for the three months ended June 30,
1995 and 1994 was 28.4 percent and 33.7 percent, respectively. North American
Coal's effective tax rate for the six months ended June 30, 1995 and 1994 was
29.5 percent and 33.3 percent, respectively. The reduction in the effective tax
rate in the second quarter and first six months of 1995 compared with 1994 is
due to the recognition of an income tax refund of approximately $0.1 million
(net of approximately $0.1 million in taxes on related interest) from prior tax
years in the second quarter of 1995 and certain state tax impacts.
LIQUIDITY AND CAPITAL RESOURCES
North American Coal has in place a $50.0 million revolving credit facility. The
expiration date of this facility (which currently is September 1997) can be
extended one additional year, on an annual basis, upon the mutual consent of
North American Coal and the bank group. North American Coal had $28.0 million of
its revolving credit facility available at June 30, 1995.
The financing of the project mining subsidiaries, which is guaranteed by the
utility customers, comprises long-term equipment leases, notes payable and
non-interest-bearing advances from customers. The obligations of the project
mining subsidiaries do not impact the short- or long-term liquidity of the
company and are without recourse to NACCO or North American Coal. These
arrangements allow the project mining subsidiaries to pay dividends in amounts
equal to their retained earnings.
NORTH AMERICAN COAL - continued
LIQUIDITY AND CAPITAL RESOURCES - continued
North American Coal's capital structure, excluding the project mining
subsidiaries, is presented below:
June 30 December 31
1995 1994
Total Tangible Assets ...................................................... $ 7.3 $ 9.5
Parent Company Advances .................................................... 32.5 22.7
----- -----
Total Assets ............................................................ $39.8 $32.2
===== =====
Debt Related to Parent Advances ............................................ $23.7 $16.7
Other Debt ................................................................. .3 0.4
----- -----
Total Debt .............................................................. 24.0 17.1
Stockholder's Equity ....................................................... 15.8 15.1
----- -----
Total Capitalization .................................................... $39.8 $32.2
===== =====
Debt to Total Capitalization ............................................... 60% 53%
NACCO MATERIALS HANDLING GROUP
NMHG, 97 percent-owned by NACCO, designs, manufactures and markets forklift
trucks and related service parts under the Hyster(R) and Yale(R) brand names.
FINANCIAL REVIEW
The results of operations for NMHG were as follows for the three and six months
ended June 30:
Three Months Six Months
1995 1994 1995 1994
Revenues
Americas ................................................ $240.5 $203.1 $490.0 $377.2
Europe, Africa and Middle East .......................... 107.3 70.8 203.0 129.4
Asia-Pacific ............................................ 22.4 16.5 40.3 29.1
------ ------ ------ ------
$370.2 $290.4 $733.3 $535.7
====== ====== ====== ======
Operating profit
Americas ................................................ $ 13.0 $ 14.8 $ 29.9 $ 24.2
Europe, Africa and Middle East .......................... 8.3 3.4 14.0 4.0
Asia-Pacific ............................................ .6 1.6 1.6 2.7
------ ------ ------ ------
$ 21.9 $ 19.8 $ 45.5 $ 30.9
====== ====== ====== ======
Operating profit excluding
goodwill amortization
Americas ................................................ $ 15.1 $ 16.8 $ 33.9 $ 28.2
Europe, Africa and Middle East .......................... 8.9 4.1 15.4 5.4
Asia-Pacific ............................................ .6 1.6 1.6 2.7
------ ------ ------ ------
$ 24.6 $ 22.5 $ 50.9 $ 36.3
====== ====== ====== ======
Net income before extraordinary charge ...................... $ 8.9 $ 5.3 $ 18.6 $ 6.1
Extraordinary charge, net-of-tax ............................ -- (3.2) (1.3) (3.2)
------ ------ ------ ------
Net income .............................................. $ 8.9 $ 2.1 $ 17.3 $ 2.9
====== ====== ====== ======
NACCO MATERIALS HANDLING GROUP - continued
FINANCIAL REVIEW - continued
Second Quarter of 1995 Compared With Second Quarter of 1994
The following schedule details the components of the changes in revenues,
operating profit and net income for the second quarter of 1995 compared with
1994:
Operating Net
Revenues Profit Income
1994 $ 290.4 $ 19.8 $ 2.1
Increase (Decrease) in 1995 from:
Unit volume ..................................................... 55.9 10.5 6.8
Sales mix ....................................................... (6.2) (3.0) (2.0)
Average sales price ............................................. 14.0 14.0 9.1
Service parts ................................................... 5.8 3.1 2.0
Foreign currency ................................................ 10.3 (5.7) (3.7)
Manufacturing cost .............................................. (9.6) (6.2)
Other operating expense ......................................... (7.2) (4.8)
Other income and expense ........................................ 1.2
Differences between effective
and statutory tax rates ..................................... 1.2
Extraordinary charge ............................................ 3.2
------ ----- ----
1995 $ 370.2 $ 21.9 $ 8.9
====== ===== ====
Unit volumes in the second quarter increased 17 percent in the Americas, 34
percent in Europe and 74 percent in Asia-Pacific. The lift truck market size in
North America remains steady while market size in Europe and Asia-Pacific
continue to improve. The price increases announced in mid-1994 favorably
impacted results of operations. NMHG announced additional price increases in the
spring of 1995 which will become effective later in 1995. These price increases
were enacted in order to offset the adverse affects of higher raw material costs
and the strength of the yen relative to the dollar which increased the cost of
purchases sourced from Japan. Manufacturing inefficiencies due to vendor parts
shortages, partially offset by higher factory throughput, resulted in an
unfavorable manufacturing cost variance. The increase in other operating
expenses in 1995 is due primarily to higher volume related customer service
costs and general inflation.
NACCO MATERIALS HANDLING GROUP - continued
FINANCIAL REVIEW - continued
First Six Months of 1995 Compared With First Six Months of 1994
The following schedule details the components of the changes in revenues,
operating profit and net income for the first six months of 1995 compared with
1994:
Operating Net
Revenues Profit Income
1994 $ 535.7 $ 30.9 $ 2.9
Increase (Decrease) in 1995 from:
Unit volume .................................................... 141.8 27.0 17.6
Sales mix ...................................................... (4.7) (5.7) (3.7)
Average sales price ............................................ 28.6 28.6 18.6
Service parts .................................................. 12.4 6.4 4.2
Foreign currency ............................................... 19.5 (7.0) (4.4)
Manufacturing cost ............................................. (19.0) (12.4)
Other operating expense ........................................ (15.7) (10.2)
Other income and expense ....................................... 2.3
Differences between effective
and statutory tax rates ...................................... .5
Extraordinary charge ........................................... 1.9
------ ----- -----
1995 $ 733.3 $ 45.5 $17.3
====== ===== =====
Unit volumes during the first six months of 1995 increased 27 percent in the
Americas, 45 percent in Europe and 62 percent in Asia-Pacific when compared with
1994. The price increases announced in mid-1994 favorably impacted operating
results during the first six months of 1995. These price increases were enacted
to offset the raw material cost increases and currency impacts noted below.
The negative impact from currency results from the strength of the yen relative
to the dollar which increased the cost of purchases sourced from Japan,
partially offset by the strength of certain European currencies relative to the
dollar. The unfavorable impact from manufacturing costs is due to increased
material prices and manufacturing inefficiencies caused by vendor parts
shortages partially offset by higher factory production levels. Increases in
volume related customer service costs and general inflation resulted in higher
other operating expenses.
NMHG's backlog of orders at June 30, 1995 was approximately 26,100 forklift
truck units compared to the 24,600 forklift truck units at December 31, 1994.
The continued high order rate, coupled with the vendor parts shortages, have
caused backlog to increase from December 31, 1994. The company expects to
resolve its vendor parts supply problems by the end of 1995.
NACCO MATERIALS HANDLING GROUP - continued
FINANCIAL REVIEW - continued
Other Income and Expense
Below is a detail of other income (expense) for the three and six months ended
June 30:
Three Months Six Months
1995 1994 1995 1994
Interest income .................................. $ .4 $ .2 $ .7 $ .4
Interest expense ................................. $(8.0) $(9.2) $(15.5) $(17.9)
Other-net ........................................ $ 1.0 $ .1 $ 1.1 $ (.5)
The lower interest expense in 1995 is primarily due to the retirements in 1994
of 12 3/8% subordinated debentures. The improvement in other-net in 1995 results
primarily from dividend income received from NMHG's unconsolidated Brazilian
subsidiary and reduced foreign exchange losses.
Provision for Income Taxes
NMHG's effective tax rate for the three months ended June 30, 1995 and 1994 was
41.7 percent and 51.7 percent, respectively. NMHG's effective tax rate for the
first six months of 1995 and 1994 was 41.6 percent and 52.0 percent,
respectively. The higher level of pretax earnings in 1995 reduced the effect of
nondeductible goodwill amortization resulting in a lower effective tax rate in
1995. In addition, the recognition in the second quarter of 1995 of an income
tax refund of approximately $0.3 million (net of approximately $0.2 million in
taxes on related interest) from prior tax years also lowered the effective tax
rate in 1995.
Extraordinary Charge
The 1995 extraordinary charge of $1.3 million, net of $0.9 million in tax
benefits, which was recognized in the first quarter, relates to the write off of
deferred financing fees associated with NMHG's former revolving credit facility
and senior term loan which was replaced by the new long-term credit agreement
discussed in the following section. The 1994 extraordinary charge, recognized in
the second quarter, of $3.2 million, net of $2.0 million in tax benefits,
reflects the write-off of premiums and unamortized debt issuance costs
associated with the retirement of Hyster-Yale 12 3/8% debentures.
As previously announced, NMHG retired the remaining $78.5 million outstanding
Hyster-Yale 12 3/8% debentures on August 1, 1995 at a price of 102.5. An
extraordinary charge of $2.1 million was recorded when these debentures were
retired.
NACCO Materials Handling Group - continued
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $17.9 million during the
first six months of 1995. The increased demand for lift trucks has required NMHG
to invest in its productive capacity. NMHG is investing to break bottlenecks at
all of its plants and has undertaken expansion of its Craigavon, Northern
Ireland and Irvine, Scotland production facilities. It is estimated that NMHG's
capital expenditures for the remainder of 1995 will be approximately $11.6
million. The principal sources of financing for these capital expenditures are
internally generated funds, bank borrowings and government assistance grants.
On February 28, 1995, the company entered into a new long-term credit agreement
to replace its previous bank agreement and to refinance the majority of its
existing long-term debt. The new agreement provides the company with an
unsecured $350.0 million revolving credit facility to replace its previous
senior credit facility. The new credit facility has a five-year maturity with
extension options and performance-based pricing comparable to its previous
senior credit facility which provides the company with reduced interest rates
upon achievement of certain financial performance targets.
The company believes it can meet all of its current and long-term commitments
and operating needs from operating cash flows and funds available under
revolving credit agreements. At June 30, 1995 NMHG had available $152.0 million
of its $350.0 million revolving credit facility.
NMHG's capital structure is presented below:
JUNE 30 DECEMBER 31
1995 1994
Total Tangible Assets .......................................................... $251.4 $192.9
Goodwill at Cost ............................................................... 433.5 433.5
------ ------
Total Assets Before Goodwill Amortization .................................. 684.9 626.4
Less: Accumulated Goodwill Amortization ................................... 65.8 60.4
------ ------
Total Assets ............................................................ $619.1 $566.0
====== ======
Total Debt ..................................................................... $290.3 $260.1
Stockholders' Equity ........................................................... 328.8 305.9
------ ------
Total Capitalization .................................................... $619.1 $566.0
====== ======
Debt to Total Capitalization ................................................... 47% 46%
Hamilton Beach/Proctor-Silex
HB/PS, 80 percent-owned by NACCO, is a leading manufacturer of small electric
appliances. The housewares business is seasonal. A majority of revenues and
operating profit occurs in the second half of the year when sales of small
electric appliances increase significantly for the fall holiday selling season.
FINANCIAL REVIEW
The results of operations for HB/PS were as follows for the three and six months
ended June 30:
Three Months Six Months
1995 1994 1995 1994
Revenues ................................................ $79.7 $76.1 $146.7 $144.7
Operating profit ........................................ $ 3.6 $ 3.5 $ 5.0 $ 3.1
Operating profit excluding
goodwill amortization ............................ $ 4.3 $ 4.2 $ 6.4 $ 4.5
Net income (loss) ....................................... $ 1.1 $ .9 $ .9 $ (.3)
Second Quarter of 1995 Compared With Second Quarter of 1994
The following schedule details the components of the changes in revenues,
operating profit and net income for the second quarter of 1995 compared with
1994:
Operating Net
Revenues Profit Income
1994 $76.1 $3.5 $.9
Increase (Decrease) in 1995 from:
Unit volume
Good ........................................................ .3 .5 .3
Better ...................................................... .3 .3 .2
Best ........................................................ 2.9 1.0 .7
---- --- ---
3.5 1.8 1.2
Foreign currency translation ........................................ .1 .1 --
Manufacturing cost .................................................. (1.1) (.7)
Other operating expense ............................................. -- (.7) (.5)
Differences between effective
and statutory tax rates ............................................. -- -- .2
---- ---- ----
1995 $79.7 $3.6 $ 1.1
===== ==== ====
Hamilton Beach/Proctor-Silex - continued
FINANCIAL REVIEW - continued
Increased sales of coffeemakers, canopeners, mixers, irons, food processors,
slowcookers and blenders, slightly offset by reductions in domestic toaster oven
and toaster and Canadian sales, resulted in a favorable impact from volume on
results in the second quarter of 1995. In addition, a shift in sales to products
in the best category and favorable mix shifts within the good and better
categories to higher margin product lines favorably impacted operating profit
and net income. The increase in manufacturing costs relates primarily to
increased raw material prices and lower throughput at certain factories. Higher
marketing and selling expenditures caused the unfavorable variance from other
operating expenses.
First Six Months of 1995 Compared with First Six Months of 1994
The following schedule details the components of the changes in the revenues,
operating profit and net income (loss) for the first six months of 1995 compared
with 1994:
Net
Operating Income
Revenues Profit (Loss)
1994 $144.7 $ 3.1 $(.3)
Increase (Decrease) in 1995 from:
Unit volume
Good ........................................................ (5.2) (.1) (.1)
Better ...................................................... .1 .5 .3
Best ........................................................ 6.8 2.7 1.8
--- --- ---
1.7 3.1 2.0
Average sales price ................................................. .4 .4 .2
Foreign currency translation ........................................ (.1) (.1) --
Manufacturing cost .................................................. (.4) (.3)
Other operating expense ............................................. -- (1.1) (.7)
---- ---- ----
1995 $146.7 $ 5.0 $ .9
===== ==== ====
The favorable volume variance relates to increased sales of irons, coffeemakers,
canopeners, mixers, slowcookers and electric knives partially offset by reduced
blender, toaster oven and toaster sales domestically and Canadian sales. Sales
mix shifts to higher margin product lines within the good and better product
categories and an overall shift in sales to the best product category resulted
in improved profitability during the first six months of 1995. Increased raw
materials costs and lower throughput at certain factories caused the unfavorable
impact from manufacturing costs. Higher marketing and selling expenditures
caused the unfavorable variance in other operating expenses.
Hamilton Beach/Proctor-Silex - continued
FINANCIAL REVIEW - continued
Other Income and Expense
Below is a detail of other income (expense) for the three and six months ended
June 30:
Three Months Six Months
1995 1994 1995 1994
Interest expense ................................... $(1.7) $(1.8) $(3.3) $(3.2)
Other-net .......................................... $ (.1) -- $ (.2) $ (.4)
Provision for Income Taxes
HB/PS's effective tax rate for the three months ended June 30, 1995 and 1994 was
35.4 percent and 45.1 percent, respectively. HB/PS's effective tax rate for the
first six months of 1995 and 1994 was 33.5 percent and 45.1 percent,
respectively. The reduction in HB/PS's effective tax rate in 1995 is due to the
utilization of foreign tax credits, which reduced HB/PS's U.S. federal income
taxes, received as a result of the repatriation of foreign earnings previously
taxed at a rate in excess of the U.S. statutory tax rate.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $4.3 during the first six
months of 1995 and are estimated to be $8.4 million for the remainder of 1995.
The primary purpose of these expenditures is to increase manufacturing
efficiency and to acquire tooling for new and existing products. These
expenditures are funded primarily from internally generated funds.
HB/PS's credit agreement provides for a revolving credit facility ("Facility")
that permits advances up to $135.0 million. At June 30, 1995, HB/PS had $32.7
million available under this Facility. The expiration date of this Facility
(which currently is May 1998) may be extended annually for one additional year
upon the mutual consent of HB/PS and the bank group. On April 28, 1995 this
Facility was amended to provide a lower interest rate if HB/PS achieves a
certain interest coverage ratio and to allow for interest rates quoted under a
competitive bid option. At June 30, 1995, HBPS also had $23.0 million available
under separate facilities.
Hamilton Beach/Proctor-Silex - continued
FINANCIAL REVIEW - continued
LIQUIDITY AND CAPITAL RESOURCES - continued
HB/PS's capital structure is presented below:
JUNE 30 DECEMBER 31
1995 1994
Total Tangible Assets .......................................................... $143.2 $118.3
Goodwill at Cost ............................................................... 110.5 110.5
------ ------
Total Assets Before Goodwill Amortization .................................... 253.7 228.8
Less: Accumulated Goodwill Amortization ..................................... 17.2 15.8
------ ------
Total Assets .............................................................. $236.5 $213.0
====== ======
Total Debt ................................................................... $105.2 $ 82.6
Stockholders' Equity ......................................................... 131.3 130.4
------ ------
Total Capitalization ...................................................... $236.5 $213.0
====== ======
Debt to Total Capitalization ................................................. 44% 39%
KITCHEN COLLECTION
KCI is a national specialty retailer of kitchenware, tableware, small electric
appliances and related accessories. The specialty retail business is seasonal
with the majority of its revenues and operating profit generated in the fourth
quarter during the fall holiday selling season.
FINANCIAL REVIEW
Second Quarter of 1995 Compared With Second Quarter of 1994
The following schedule details the components of the changes in revenues,
operating profit and net income (loss) for the second quarter of 1995 compared
with 1994:
Operating Net
Profit Income
Revenues (Loss) (Loss)
1994 $ 12.4 $ .2 $ .1
Increase (decrease) in 1995 from:
Stores opened in 1995 ......................................... .3 (.1) (.1)
Stores opened in 1994 ......................................... 1.3 - -
Comparable stores ............................................. (.5) (.3) (.2)
Other ......................................................... (.2) (.1)
----- ---- ----
1995 $ 13.5 $(.4) $(.3)
===== ==== ====
First Six Months of 1995 Compared With First Six Months of 1994
The following schedule details the components of the changes in revenues,
operating profit and net loss for the first six months of 1995 compared with
1994:
Operating Net
Revenues Profit Loss
1994 $ 23.2 $ - $ -
Increase (decrease) in 1995 from:
Stores opened in 1995 ......................................... .3 (.1) (.1)
Stores opened in 1994 ......................................... 3.0 - -
Comparable stores ............................................. (.9) (.5) (.3)
Other ......................................................... (.2) (.2)
----- ----- ----
1995 $ 25.6 $(.8) $(.6)
===== ===== ====
KITCHEN COLLECTION - continued
FINANCIAL REVIEW - continued
Provision for Income Taxes
KCI'S effective tax rate for the three months ended June 30, 1995 and 1994 was
41.1 percent and 40.8 percent, respectively. KCI's effective tax rate for the
first six months of 1995 and 1994 was 40.9 percent and 38.9 percent,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $0.9 million during the
first six months of 1995. Estimated capital expenditures for the remainder of
1995 are $1.1 million. These expenditures are primarily for new store openings
and improvements to existing facilities. The principal source of funds for these
capital expenditures is internally generated funds. In May, Kitchen Collection
entered into a new $5.0 million revolving credit facility which replaced the
previous $2.5 million line of credit. This new facility has performance based
pricing which provides for reduced interest rates based on achievement of
certain financial performance measures. At June 30, 1995, KCI had $3.0 million
available under this facility.
KCI's capital structure is presented below:
JUNE 30 DECEMBER 31
1995 1994
Total Tangible Assets ............................................................ $12.7 $11.3
Goodwill at Cost ................................................................. 4.6 4.6
----- -----
Total Assets Before Goodwill Amortization ...................................... 17.3 15.9
Less: Accumulated Goodwill Amortization ...................................... .8 0.8
----- -----
Total Assets .............................................................. $16.5 $15.1
===== =====
Total Debt ....................................................................... $ 7.0 $ 5.0
Stockholder's Equity ............................................................. 9.5 10.1
----- -----
Total Capitalization .......................................................... $16.5 $15.1
===== =====
Debt to Total Capitalization ..................................................... 42% 33%
NACCO AND OTHER
FINANCIAL REVIEW
Second Quarter of 1995 Compared with Second Quarter of 1994
The following schedule details the components of the changes in parent company
operating loss and net loss for the second quarter of 1995 compared with 1994:
Operating Net
Loss Loss
1994 $ (2.2) $ (1.6)
Administrative and general expenses .............................................. .1 .1
Interest income .................................................................. .5
Consolidating and other tax adjustments .......................................... .7
----- ----
1995 $ (2.1) $ (.3)
====== =====
The favorable impact from interest income and tax adjustments is primarily due
to the recognition of an income tax refund of approximately $0.4 million (net of
$0.3 million in taxes on interest income) and related interest income of
approximately $0.9 million resulting from prior tax years.
First Six Months of 1995 Compared With First Six Months of 1994
The following schedule details the components of the changes in parent company
operating loss and net loss for the first six months of 1995 compared with 1994:
Operating Net
Loss Loss
1994 $ (4.4) $ (3.6)
Administrative and general expenses ............................................ .2 .2
Interest income ................................................................ .4
Interest expense ............................................................... (.1)
Other-net ...................................................................... (.1)
Consolidating and other tax adjustments ........................................ 1.3
--- ---
1995 $ (4.2) $ (1.9)
==== ====
The favorable impact from interest income and tax adjustments is primarily due
to the recognition of an income tax refund and related interest income resulting
from prior tax years.
NACCO AND OTHER - continued
LIQUIDITY AND CAPITAL RESOURCES
Although the subsidiaries have entered into substantial debt agreements, NACCO
has not guaranteed the long-term debt or any borrowings of its subsidiaries.
The debt agreements at HB/PS and KCI allow for the payment of dividends under
certain circumstances. The revised credit agreement entered into on February 28,
1995 at NMHG will allow the transfer of up to $25.0 million to NACCO.
There are no restrictions for North American Coal, and its dividends and
advances are the primary source of cash for NACCO.
The Company believes it can adequately meet all of its current and long-term
commitments and operating needs. This outlook is supported by the amounts
available under revolving credit facilities and the utility customers' funding
of the project mining subsidiaries.
BELLAIRE CORPORATION
Bellaire Corporation ("Bellaire") is a non-operating subsidiary of NACCO.
Bellaire's results primarily include mine closing activities related to the
Indian Head Mine, which ceased mining operations in April 1992. Bellaire's
results for 1994 have been adjusted to remove certain royalty and other payments
that are more appropriately classified with North American Coal's results. Cash
payments related to Bellaire's obligations, net of internally generated cash,
are funded by NACCO and amounted to $2.0 million and $2.2 million during the
first six months of 1995 and 1994, respectively.
For the second quarter ended June 30, 1995 Bellaire had revenues of $0.3 million
and an operating loss of $52,000 compared with revenues of $0.2 million and an
operating loss of $34,000 in 1994. Bellaire's net income in the second quarter
of 1995 and 1994 is $0.4 million and $0.1 million, respectively.
For the first six months of 1995 Bellaire had revenues of $0.3 million,
operating loss of $62,000 and net income of $0.6 million compared with revenues
of $0.4 million, operating loss of $35,000 and net income of $0.3 million in
1994.
NACCO AND OTHER - continued
BELLAIRE CORPORATION - continued
The condensed balance sheets for Bellaire were as follows:
JUNE 30 DECEMBER 31
1995 1994
Net current assets ........................................................... $ 14.0 $ 13.1
Property, plant and equipment, net ........................................... .5 .5
Deferred taxes and other assets .............................................. 63.3 64.1
Obligation to United Mine Workers of
America Combined Benefit Fund ............................................. (153.1) (155.0)
Other liabilities ............................................................ (25.5) (24.0)
------- -------
Deficit ...................................................................... $(100.8) $(101.3)
======= =======
Part II
Item 1 Legal Proceedings
None
Item 2 Change in Securities
None
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
The following matters were submitted to a vote of security
holders at the Annual Meeting of Stockholders held May 10, 1995,
with the results indicated:
Outstanding Shares Entitled to Vote Number of Votes
7,244,500 Class A Common 7,244,500
1,719,694 Class B Common 17,196,940
24,441,440
Item 1. Election of eleven directors for the ensuring year.
Votes
Director Nominee For Withheld Total
Owsley Brown II 22,041,847 502,411 22,544,258
John J. Dwyer 22,512,754 31,504 22,544,258
Robert M. Gates 22,519,186 25,072 22,544,258
Leon J. Hendrix, Jr. 22,517,388 26,870 22,544,258
Dennis W. LaBarre 22,468,888 75,370 22,544,258
Alfred M. Rankin, Jr. 22,521,824 22,434 22,544,258
Ian M. Ross 22,517,464 26,794 22,544,258
John C. Sawhill 22,521,824 22,434 22,544,258
Britton T. Taplin 22,489,973 54,285 22,544,258
Frank E. Taplin, Jr. 22,293,124 251,134 22,544,258
Item 2. Confirming the appointment of Arthur Andersen &
Co. as the independent certified public
accountants of the Company for the current fiscal
year.
For Against Abstain Total
22,529,818 2,599 11,841 22,544,258
Item 3. Authority to vote on other matters that may
properly come before the meeting.
For Against Total
22,542,608 1,650 22,544,258
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits. See Exhibit Index on page 33 of this
quarterly report on Form 10-Q.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NACCO Industries, Inc.
(Registrant)
Date August 14, 1995 Frank B. O'Brien
Frank B. O'Brien
Senior Vice President - Corporate
Development and Chief Financial
Officer
Date August 14,1995 Steven M. Billick
Steven M. Billick
Vice President and Controller
(Principal Accounting Officer)
Exhibit Index
Exhibit
Number** Description of Exhibit
(10) * (clxviii) Amendment No. 5 to the North American Coal
Deferred Compensation Plan for Management Employees,
dated June 30, 1995, is attached hereto as Exhibit
10(clxviii).
* (clxiv) Amendment No. 2 to the Hamilton
Beach/Proctor-Silex Unfunded Benefit Plan, date June
30, 1995, is attached hereto as Exhibit 10 (clxiv).
* (clxx) Amendment No. 3 to the NACCO Materials Handling
Group, Inc. Unfunded Benefit Plan (as amended and restated
effective October 1, 1994), dated June 30, 1995, is
attached hereto as Exhibit 10 (clxx).
* (clxxi) Amendment No. 2 to the Retirement Benefit Plan
for Alfred M. Rankin, Jr. (as amended and restated
effective January 1, 1994), dated June 30, 1995, is
attached hereto as Exhibit (clxxi)
* (clxxii) Amendment No. 4 to the North American Coal
Corporation Retirement Savings Plan, dated June 30, 1995,
is attached hereto as Exhibit 10 (clxxii).
* (clxxiii) Amendment No. 6 to the NACCO Materials
Handling Group, Inc. Profit Sharing Plan, dated June 30,
1995, is attached hereto as Exhibit 10 (clxxiii).
* (clxxiv) Amendment No. 4 to the NACCO Materials
Handling Group, Inc. Cash Balance Plan, dated as of
June 30, 1995, is attached hereto as Exhibit 10 (clxxiv).
* (clxxv) Master Trust Agreement by and between NACCO
Industries, Inc. and Vanguard Fiduciary Trust Company,
effective as of June 30, 1995, is attached hereto as
Exhibit 10 (clxxv).
* (clxxvi) Amendment No. 1 to the Hamilton
Beach/Proctor-Silex Retirement Savings Plan, effective
as of July 1, 1995, is attached hereto as Exhibit 10
(clxxvi).
(11) Computation of Earnings Per Common Share
(27) Financial Data Schedule
* Management Contract or compensation plan or arrangement
required to be filed as an exhibit pursuant to Item 6a of
this Quarterly Report on Form 10-Q.
** Numbered in accordance with Item 601 of Regulation S-K.