SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
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 October 31, 1994:
7,225,756
Number of shares of Class B Common Stock outstanding at October 31, 1994:
1,724,240
NACCO INDUSTRIES, INC.
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets -
September 30, 1994 and December 31, 1993
Unaudited Consolidated Statements of Income -for the Three
and Nine Months Ended September 30, 1994 and 1993
Unaudited Consolidated Statements of Cash Flows -for the
Nine Months Ended September 30, 1994 and 1993
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)
SEPTEMBER 30 DECEMBER 31
1994 1993
(In thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 33,520 $ 29,149
Accounts receivable, net 223,180 200,112
Inventories 324,779 238,168
Prepaid expenses and other 33,825 37,373
615,304 504,802
Other Assets 42,878 45,438
Property, Plant and Equipment, Net 485,558 496,213
Deferred Charges
Goodwill, net 475,359 487,963
Deferred costs and other 66,342 64,663
Deferred income taxes 36,022 43,414
577,723 596,040
Total Assets $1,721,463 $1,642,493
See notes to unaudited consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
(Unaudited) (Audited)
SEPTEMBER 30 DECEMBER 31
1994 1993
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 187,519 $ 148,397
Revolving credit agreements 95,089 35,178
Current maturities of long-term obligations 94,318 55,016
Income taxes 16,093 27,198
Other current liabilities 127,191 131,666
520,210 397,455
Notes Payable - not guaranteed by
the parent company 296,359 357,788
Obligations of Project Mining Subsidiaries -
not guaranteed by the parent company or
its North American Coal subsidiary 330,340 338,504
Obligation to United Mine Workers of America
Combined Benefit Fund 155,188 159,276
Self-insurance Reserves and Other 121,078 112,589
Minority Interests 39,314 41,255
Stockholders' Equity
Common stock:
Class A, par value $1 per share, 7,205,689
shares outstanding (1993--7,177,075 shares
outstanding) 7,206 7,177
Class B, par value $1 per share, convertible
into Class A on a one-for-one basis,
1,745,307 shares outstanding
(1993--1,763,503 shares outstanding) 1,745 1,764
Capital in excess of par value 2,735 2,548
Retained income 241,450 226,212
Foreign currency translation adjustment
and other 5,838 (2,075)
258,974 235,626
Total Liabilities and Stockholders' Equity $1,721,463 $1,642,493
See notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1994 1993 1994 1993
(In thousands, except per share data)
Net sales $477,101 $399,180 $1,291,642 $1,095,940
Other operating revenues 3,202 2,555 8,816 8,351
Total Revenues 480,303 401,735 1,300,458 1,104,291
Cost of sales 383,075 325,034 1,034,630 890,562
Gross Profit 97,228 76,701 265,828 213,729
Selling, administrative and
general expenses 58,455 48,461 167,067 148,957
Amortization of goodwill 3,427 3,446 10,300 10,343
Operating Profit 35,346 24,794 88,461 54,429
Other income (expense)
Interest income 453 399 1,215 1,319
Interest expense (15,053) (17,672) (45,701) (49,884)
Other - net 1,026 (3,478) (364) (3,932)
(13,574) (20,751) (44,850) (52,497)
Income Before Income Taxes,
Minority Interest and
Extraordinary Charge 21,772 4,043 43,611 1,932
Income tax provision 9,852 1,952 19,699 1,020
Net Income Before
Minority Interest and
Extraordinary Charge 11,920 2,091 23,912 912
Minority interest (906) (42) (937) 930
Income Before
Extraordinary Charge 11,014 2,049 22,975 1,842
Extraordinary charge,
net-of-tax (3,218) (3,292)
Net Income (Loss) $ 11,014 $ 2,049 $ 19,757 $ (1,450)
Per Share:
Income Before
Extraordinary Charge $ 1.23 $ .23 $ 2.57 $ .21
Extraordinary charge,
net-of-tax (.36) (.37)
Net Income (Loss) $ 1.23 $ .23 $ 2.21 $ (.16)
Dividends per share $ .170 $ .165 $ .505 $ .490
See notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
NINE MONTHS ENDED
SEPTEMBER 30
1994 1993
(In thousands)
Operating Activities
Net income (loss) $ 19,757 $(1,450)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Extraordinary charge, net-of-tax 1,790 2,269
Depreciation, depletion and amortization 60,273 58,381
Deferred income taxes 2,070 232
Other non-cash items (5,344) (3,159)
Working Capital Changes
Accounts receivable (14,136) (40,098)
Inventories (80,810) (11,770)
Other current assets 2,649 1,350
Accounts payable 31,589 26,203
Accrued income taxes (5,806) (6,892)
Other liabilities (3,114) (9,812)
Net cash provided by operating activities 8,918 15,254
Investing Activities
Expenditures for property, plant and equipment (34,573) (42,221)
Proceeds from the sale of assets 2,924 21,400
Net cash used by investing activities (31,649) (20,821)
Financing Activities
Additions to long-term obligations and
revolving credit 143,477 32,504
Reductions of long-term obligations and
revolving credit (109,015) (24,822)
Additions to obligations of Project
Mining Subsidiaries 41,842 37,100
Reductions of obligations of Project
Mining Subsidiaries (53,310) (49,605)
Cash dividends paid (4,518) (4,379)
Other - net 4,297 8,584
Net cash provided (used) by financing activities 22,773 (618)
Effect of exchange rate changes on cash 4,329 (1,175)
Cash and Cash Equivalents
Increase (decrease) for the period 4,371 (7,360)
Balance at the beginning of the period 29,149 33,847
Balance at the end of the period $ 33,520 $ 26,487
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. ("Hamilton Beach/Proctor-Silex"), and The Kitchen Collection, Inc.
("Kitchen Collection").
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 September 30, 1994, and the results of its
operations for the three and nine month periods and cash flows for the nine
month periods ended September 30, 1994 and 1993 have been included.
Operating results for the three and nine month periods ended September
30, 1994 are not necessarily indicative of the results that may be expected
for the year ended December 31, 1994. 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, 1993.
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:
September 30 December 31
1994 1993
Manufacturing inventories:
Finished goods and service parts $148.2 $117.6
Raw materials and work in process 147.7 95.6
LIFO reserve (11.3) (10.2)
Total manufacturing inventories 284.6 203.0
Coal and mining supplies 26.6 23.8
Retail inventories 13.6 11.4
$324.8 $238.2
The cost of manufacturing inventories has been determined by the
last-in, first-out (LIFO) method for 70% and 69% of such inventories as of
September 30, 1994 and December 31, 1993, respectively.
Note C - Extraordinary Charge
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
approximately $70.0 million of Hyster-Yale Materials Handling 12 3/8%
subordinated debentures ("debentures"). Approximately $48.0 million face
value of the debentures were retired in the third quarter of 1994 at the call
price of 105. This retirement took place in August using internally generated
funds of NMHG and an equity contribution of approximately $25.0 million by
existing stockholders.
In addition, NMHG amended its existing senior bank credit agreement
during the second quarter to permit the accelerated use of $25.0 million to
retire additional debentures. On November 9, 1994 NMHG gave notice to its
trustee to call approximately $24 million face value of additional
debentures.
The existing senior bank credit agreement also permits the retirement of
a further $25.0 million of debentures when NMHG achieves a 43% debt to total
capitalization ratio as defined in the agreement. At September 30, 1994, this
ratio was 47%.
The 1993 extraordinary charge, recognized in the second quarter of 1993,
relates to the retirement of approximately $50.0 million face value of
debentures during 1993.
Note D - Revolving Credit Agreements and Notes Payable
In May, 1994 Hamilton Beach/Proctor-Silex modified its credit agreement
to provide for a $135.0 million revolving credit facility. The expiration
date of this facility (which currently is May 1997) can be extended one
additional year, on an annual basis, upon the mutual consent of Hamilton
Beach/Proctor-Silex and the bank group, beginning in 1995. In conjunction
with this modification, Hamilton Beach/Proctor-Silex repaid the outstanding
balance of its term note of $28.1 million in May 1994. This agreement,
secured by all assets of Hamilton Beach/Proctor-Silex, allows borrowings to be
made at either LIBOR, or lender's prime rate, plus a margin. The borrowing
rates are subject to reductions based upon achievement of predetermined
interest coverage ratios. At the end of the first quarter the stated interest
rate was LIBOR plus 1.75%. As of May 10, 1994 the stated interest rate became
LIBOR plus 1.00%. In addition, the modified agreement allows Hamilton
Beach/Proctor-Silex to pay dividends, under certain conditions, to its
stockholders. On July 15, 1994 Hamilton Beach/Proctor-Silex paid a $15.0
million dividend to its stockholders.
On May 10, 1994 Kitchen Collection modified its credit arrangement to
allow for an increase in the outstanding balance on its term loan to $5.0
million. In addition, the scheduled repayments, which previously were in
annual installments through 1997, are now payable in two equal installments
due January 1, 1999 and January 1, 2000. This modification also reduced
Kitchen Collection's stated interest rate to LIBOR plus 0.75% from LIBOR plus
1.50% and allows for increased levels of dividends to its stockholder. On May
27, 1994 Kitchen Collection paid a dividend of $2.6 million to NACCO.
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 NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1994 1993 1994 1993
(In thousands, except per share data)
REVENUES
NMHG $289.7 $217.5 $ 825.4 $ 660.9
Hamilton Beach/Proctor-Silex 106.9 107.7 251.7 239.4
North American Coal 68.1 63.1 185.3 170.8
Kitchen Collection 17.2 14.2 40.4 33.4
Bellaire .4 1.1 1.6 3.4
Eliminations (2.0) (1.9) (3.9) (3.6)
$480.3 $401.7 $1,300.5 $1,104.3
AMORTIZATION OF GOODWILL
NMHG $ (2.7) $ (2.7) $ (8.1) $ (8.1)
Hamilton Beach/Proctor-Silex (.7) (.7) (2.1) (2.1)
Kitchen Collection (.1) (.1)
$ (3.4) $ (3.4) $ (10.3) $ (10.3)
OPERATING PROFIT (LOSS)
NMHG $ 14.5 $ 6.0 $ 45.4 $ 23.5
Hamilton Beach/Proctor-Silex 9.6 7.3 12.7 2.8
North American Coal 11.9 11.8 34.6 32.4
Kitchen Collection 1.6 1.4 1.7 1.5
Bellaire .1 .3 .9 .4
NACCO (2.4) (2.0) (6.8) (6.2)
$ 35.3 $ 24.8 $ 88.5 $ 54.4
OPERATING PROFIT (LOSS)
EXCLUDING GOODWILL
AMORTIZATION
NMHG $ 17.2 $ 8.7 $ 53.5 $ 31.6
Hamilton Beach/Proctor-Silex 10.3 8.0 14.8 4.9
North American Coal 11.9 11.8 34.6 32.4
Kitchen Collection 1.6 1.4 1.8 1.6
Bellaire .1 .3 .9 .4
NACCO (2.4) (2.2) (6.8) (6.2)
$ 38.7 $ 28.2 $ 98.8 $ 64.7
FINANCIAL SUMMARY (Continued)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1994 1993 1994 1993
(In thousands, except per share data)
INTEREST INCOME
NMHG $ .3 $ .2 $ .6 $ .5
North American Coal .8 .5 2.1 1.4
Bellaire .3 .2 .9 .8
NACCO .4 .2 .9 1.7
Eliminations (1.3) (.7) (3.3) (3.1)
$ .5 $ .4 $ 1.2 $ 1.3
INTEREST EXPENSE
NMHG $ (8.2) $(10.0) $(26.2) $(31.2)
Hamilton Beach/Proctor-Silex (2.2) (2.2) (5.2) (5.8)
North American Coal (.5) (.5) (1.5) (.8)
Kitchen Collection (.1) (.2) (.1)
NACCO (.9) (1.0) (2.4) (1.6)
Eliminations 1.3 .7 3.3 3.1
(10.6) (13.0) (32.2) (36.4)
Project mining subsidiaries (4.5) (4.7) (13.5) (13.5)
$(15.1) $(17.7) $(45.7) $(49.9)
OTHER-NET, INCOME (EXPENSE)
NMHG $ .8 $ (1.3) $ .3 $ (1.3)
Hamilton Beach/Proctor-Silex (2.0) (.4) (2.3)
North American Coal (.6) (.4) (1.5) (.8)
Bellaire .7 .9
NACCO .1 .2 .3 .5
$ 1.0 $ (3.5) $ (.4) $ (3.9)
NET INCOME (LOSS)
Before extraordinary charge:
NMHG $ 3.5 $ (7.3) $ 9.7 $ (8.3)
Hamilton Beach/Proctor-Silex 4.0 1.3 3.7 (3.0)
North American Coal 4.6 2.9 13.5 11.2
Kitchen Collection .9 .8 .9 .9
Bellaire .8 2.6 1.7 3.2
NACCO and consolidating
eliminations (1.9) 1.7 (5.6) (3.1)
Minority interest (.9) (.9) .9
11.0 2.0 23.0 1.8
Extraordinary charge,
net-of-tax (3.2) (3.3)
$11.0 $ 2.0 $ 19.8 $ (1.5)
FINANCIAL SUMMARY (Continued)
NINE MONTHS ENDED
SEPTEMBER 30
1994 1993
DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE
NMHG $24.6 $23.9
Hamilton Beach/Proctor-Silex 11.5 11.6
North American Coal 1.2 1.1
Kitchen Collection .7 .6
NACCO .2 .4
38.2 37.6
Project mining subsidiaries 22.1 20.8
$60.3 $58.4
CAPITAL EXPENDITURES
NMHG $18.7 $14.8
Hamilton Beach/Proctor-Silex 8.4 10.7
North American Coal .3 .6
Kitchen Collection .8 .8
NACCO .1
28.2 27.0
Project mining subsidiaries 6.4 15.2
$34.6 $42.2
SEPTEMBER 30 DECEMBER 31
1994 1993
TOTAL ASSETS
NMHG $ 893.3 $ 833.0
Hamilton Beach/Proctor-Silex 328.0 300.3
North American Coal 75.2 63.7
Kitchen Collection 23.5 23.3
Bellaire 92.7 97.0
NACCO 22.5 22.8
1,435.2 1,340.1
Project mining subsidiaries 412.8 416.7
1,848.0 1,756.8
Consolidating eliminations (126.5) (114.3)
$1,721.5 $1,642.5
NORTH AMERICAN COAL
North American Coal mines and markets lignite for use primarily as fuel
for power generation by electric utilities and general industry. 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
Tons sold by North American Coal's four operating mines were as follows
for the three and nine months ended September 30:
Three Months Nine Months
1994 1993 1994 1993
(thousands of tons)
Coteau Properties 3,880 3,633 11,540 10,933
Falkirk Mining 1,843 2,029 5,292 5,611
Sabine Mining 879 952 2,441 2,567
Red River Mining 192 127 600 319
6,794 6,741 19,873 19,430
Revenues, income before taxes, provision for taxes and net income were
as follows for the three and nine months ended September 30:
Three Months Nine Months
1994 1993 1994 1993
Revenues
Coteau $31.1 $29.5 $ 84.5 $ 79.6
Falkirk 15.4 16.1 44.0 43.0
Sabine 15.6 13.2 39.8 36.5
Red River 3.4 2.8 10.8 7.3
65.5 61.6 179.1 166.4
Royalties and other 2.6 1.5 6.2 4.4
$68.1 $63.1 $185.3 $170.8
Income before taxes
Coteau 2.6 2.7 7.7 8.2
Falkirk 2.4 2.6 6.8 6.9
Sabine .8 .9 2.3 2.3
Red River .5 .5 1.8 .9
Total from operating mines 6.3 6.7 18.6 18.3
Royalty and other income, net 2.5 1.2 5.8 4.0
Headquarters expense (1.7) (1.3) (4.1) (3.6)
7.1 6.6 20.3 18.7
Provision for taxes 2.5 3.7 6.8 7.5
Net income $ 4.6 $ 2.9 $ 13.5 $ 11.2
North American Coal's three project mining subsidiaries (Coteau, Falkirk
and Sabine) ship lignite to 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 sales tons.
These operating costs include costs of operations, interest expense and
certain other income and expense items. Because of the nature of the
contracts at these mines, their results are best analyzed in terms of income
before taxes and net income.
Third Quarter of 1994 Compared with Third Quarter of 1993
The following schedule details the components of the changes in
revenues, income before taxes and net income for the three months ended
September 30:
Income Net
Revenues Before Taxes Income
1993 $63.1 $ 6.6 $2.9
Coteau
Tonnage volume 1.8 .2 .1
Mix of tons sold (.1) (.1)
Agreed profit per ton (.3) (.3) (.2)
Pass-through costs .2
Falkirk
Tonnage volume (1.4) (.2) (.1)
Pass-through costs .7
Sabine
Tonnage volume (.9) (.1)
Pass-through costs 3.3
Red River
Tonnage volume 1.4 .5 .3
Mix of tons sold (.5) (.5) (.3)
Average selling price (.4) (.4) (.3)
Operating costs .6 .4
Other income (expense) (.1) (.1)
Variances from operating mines 3.8 (.4) (.2)
Royalties and other income, net 1.2 1.4 .9
Headquarters expense (.5) (.4)
Differences between effective and
statutory tax rates 1.4
1994 $68.1 $7.1 $4.6
Higher fuel requirements resulted in increased customer demand and
caused the favorable tonnage volume impacts in 1994 at Coteau and Red River.
At Falkirk tonnage volume was unfavorable due to equipment availability and
maintenance at the customers' generating station in 1994 which did not occur
in 1993. At Red River tons sold in excess of amounts specified in the
contract yield a lower price which resulted in an unfavorable sales mix in
1994.
Volume efficiencies at Red River due to the increased tonnage have
caused the favorable impact on operating costs. Royalties and other income
favorably affected operating results because of the receipt of royalties in
1994 relating to former coal properties which were not received in 1993.
First Nine Months of 1994 Compared with First Nine Months of 1993
The following schedule details the components of the changes in
revenues, income before taxes and net income for the nine months ended
September 30:
Income Net
Revenues Before Taxes Income
1993 $170.8 $18.7 $11.2
Coteau
Tonnage volume 4.0 .4 .3
Mix of tons sold (.3) (.3) (.2)
Agreed profit per ton (.8) (.8) (.5)
Pass-through costs 2.1
Falkirk
Tonnage volume (2.4) (.4) (.3)
Agreed profit per ton .3 .3 .2
Pass-through costs 3.0
Sabine
Tonnage volume (1.6) (.1) (.1)
Agreed profit per ton .1 .1
Pass-through costs 4.8
Red River
Tonnage volume 6.5 1.6 1.1
Mix of tons sold (2.2) (2.2) (1.4)
Average selling price (.8) (.8) (.6)
Operating costs 3.2 2.1
Other income (expense) (.9) (.6)
Variances from operating mines 12.7 .1
Royalties and other income, net 1.8 2.0 1.3
Headquarters expense (.5) (.2)
Differences between effective and
statutory tax rates 1.2
1994 $185.3 $20.3 $13.5
For explanation of the factors behind the changes in revenues, income
before tax and net income for the nine month period see the preceding
discussion about the third quarter.
Other Income and Expense
Items of other income (expense) for North American Coal were as follows
for the three and nine months ended September 30:
THREE MONTHS NINE MONTHS
1994 1993 1994 1993
Interest income
Project mining subsidiaries $ .2 $ .2 $ .5 $ .4
Other mining operations .6 .3 1.6 1.0
$ .8 $ .5 $ 2.1 $ 1.4
Interest expense
Project mining subsidiaries $(4.5) $(4.7) $(13.5) $(13.5)
Other mining operations (.5) (.5) (1.5) (.8)
$(5.0) $(5.2) $(15.0) $(14.3)
Other-net
Project mining subsidiaries $ $ $ .5 $ .1
Other mining operations (.6) (.4) (2.0) (.9)
$ (.6) $ (.4) $ (1.5) $ (.8)
Provision for Income Taxes
North American Coal's effective tax rate for the three months ended
September 30, 1994 and 1993 was 35.0% and 56.6%, respectively. For the nine
months ended September 30, 1994 the effective tax rate was 33.7% compared with
40.1% in 1993. In the third quarter of 1993, North American Coal recognized
additional tax expense to reflect the effect on their deferred taxes of the
one percent increase in the statutory tax rate.
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, beginning in 1994. North
American Coal had $27.0 million of its revolving credit facility available at
September 30, 1994.
The financing of the project mining subsidiaries, which is guaranteed by
North American Coal's utility customers, consists of 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 financing arrangements do not prevent the project mining
subsidiaries from paying dividends in amounts up to their retained earnings.
Supplemental financial data for North American Coal, excluding the
project mining subsidiaries, is presented below:
SEPTEMBER 30 DECEMBER 31
1994 1993
Total assets net of current
liabilities (excluding debt) $70.4 $59.0
Debt $24.4 $17.0
Stockholder's equity including
project mining subsidiaries equity $35.2 $33.7
Debt to total capitalization 41% 33%
NACCO MATERIALS HANDLING GROUP
NMHG, 97% owned by NACCO, designs, manufactures and markets forklift
trucks and related service parts under the Hyster and Yale brand names.
FINANCIAL REVIEW
The results of operations for NMHG were as follows for the three and
nine months ended September 30:
THREE MONTHS NINE MONTHS
1994 1993 1994 1993
Revenues
Americas $204.8 $157.1 $582.0 $469.1
Europe, Africa and Middle East 65.3 50.7 194.7 160.7
Asia-Pacific 19.6 9.7 48.7 31.1
$289.7 $217.5 $825.4 $660.9
Operating profit
Americas $11.5 $7.3 $35.7 $25.1
Europe, Africa and Middle East 1.0 (1.7) 5.0 (2.9)
Asia-Pacific 2.0 .4 4.7 1.3
$14.5 $6.0 $45.4 $23.5
Operating profit excluding
goodwill amortization
Americas $13.4 $9.2 $41.6 $31.0
Europe, Africa and Middle East 1.7 (.9) 7.1 (.8)
Asia-Pacific 2.1 .4 4.8 1.4
$17.2 $8.7 $53.5 $31.6
FINANCIAL REVIEW (Continued)
Third Quarter of 1994 Compared With Third Quarter of 1993
The following schedule details the components of the changes in
revenues, operating profit and net income (loss) for the third quarter of 1994
compared with 1993:
Net
Operating Income
Revenues Profit (Loss)
1993 $217.5 $6.0 $(7.3)
Increase (Decrease) in 1994 from:
Unit volume 60.3 12.4 8.1
Sales mix (3.5) (2.1) (1.4)
Average sales price 2.7 2.7 1.8
Service parts 7.8 3.5 2.3
Manufacturing cost (.9) (.6)
Other operating expense (7.5) (4.9)
Foreign currency 4.9 .4 .2
Other income and expense 2.7
Differences between effective
and statutory tax rates 2.6
1994 $289.7 $14.5 $ 3.5
Unit shipments were up approximately 31% and 27% in the Americas and in
Europe, respectively, in the third quarter of 1994 compared with 1993. In the
Americas, volume increased as the result of an expanded market size in North
America and improved share. In Europe, favorable unit volume was primarily
the result of share increases. European and Japanese markets remained slow
during the quarter, although signs of recovery began to appear.
The unfavorable sales mix during the third quarter of 1994 compared with
1993 was due to higher sales in low margin European countries and higher sales
of low margin products in North America. While discounting continued to be
prevalent in the forklift industry, pricing improved slightly, primarily in
North America. The worldwide service parts business is improving due to the
strength of the economy in North America and new marketing programs and
dealers in Europe. During the third quarter of 1994 a weaker U.S. Dollar
caused translated net sales to be higher compared with 1993.
The unfavorable manufacturing costs variance was due to shipment delays
caused by vendor parts shortages and increased warranty costs somewhat offset
by plant efficiencies caused by increased volumes. During the quarter other
operating expense increased due primarily to higher marketing expenses
associated with strategic programs and increased incentive based payroll
costs.
FINANCIAL REVIEW (Continued)
First Nine Months of 1994 Compared With First Nine Months of 1993
The following schedule details the components of the changes in
revenues, operating profit and net income (loss) for the first nine months of
1994 compared with 1993:
Net
Operating Income
Revenues Profit (Loss)
1993 $660.9 $23.5 $(11.6)
Increase (Decrease) in 1994 from:
Unit volume 133.8 26.6 17.3
Sales mix 5.6 1.9 1.2
Average sales price 7.3 7.3 4.8
Service parts 16.6 6.9 4.5
Manufacturing cost (3.4) (2.2)
Other operating expense (13.1) (8.5)
Foreign currency 1.2 (4.3) (3.1)
Other income and expense 4.7
Differences between effective
and statutory tax rates (.6)
1994 $825.4 $45.4 $6.5
For the first nine months of 1994 compared with 1993, unit shipments
in the Americas were approximately 22% above 1993 levels while in Europe
shipments increased approximately 24%. The factors causing the higher
shipments, improved selling prices and service parts business during the first
nine months are the same as those previously discussed for the third quarter.
The positive sales mix during the first nine months resulted from
sales of higher value lift trucks in 1994 which were new product introductions
in late 1993. During the first nine months the positive foreign currency
effect on revenues was caused by translation of the stronger Pound Sterling
and Australian Dollar to the U.S. Dollar while operating profit was adversely
affected by the strong Japanese Yen, which increased the cost of products
sourced from Japan.
The factors causing the unfavorable manufacturing costs variance during
the first nine months are the same as those previously discussed for the third
quarter. Other operating expenses increased during the first nine months
primarily due to higher marketing and engineering costs that support strategic
programs and increased incentive based payroll costs.
NMHG's backlog of orders at September 30, 1994 was approximately 23,800
units compared to the 12,000 units at December 31, 1993. Backlog has
increased due to a significant increase in orders both in North America and
Europe. The strong 1994 order rate has resulted in longer lead times for
selected NMHG models. Management believes that the NMHG backlog level is
consistent with overall increases in industry backlog levels. NMHG is
continuing to pursue ways to reduce its delivery lead times.
Other Income and Expense
Items of other income (expense) for NMHG were as follows for the three
and nine months ended September 30:
THREE MONTHS NINE MONTHS
1994 1993 1994 1993
Interest income $ .3 $ .2 $ .6 $ .5
Interest expense $(8.2) $(10.0) $(26.2) $(31.2)
Other-net $ .8 $ (1.3) $ .3 $ (1.3)
The reduction in interest expense in 1994 is due to lower levels of debt
in 1994 after retirements of debentures.
Other-net is favorable in 1994 compared with the prior year periods due
primarily to the improved results in 1994 of Sumitomo-Yale, a 50% owned
joint-venture. During the first nine months of 1993 other-net included a $2.1
million gain from the sale of a former plant site.
Provision for Income Taxes
Income (loss) before income taxes, provision (benefit) for income taxes
and the effective tax rate for NMHG were as follows for the three and nine
months ended September 30:
THREE MONTHS NINE MONTHS
1994 1993 1994 1993
Income (loss) before
income taxes $7.4 $(5.2) $20.2 $(8.5)
Provision (benefit) for
income taxes $3.8 $ 2.1 $10.5 $ (.2)
Effective tax rate 52.0% N.M. 52.0% N.M.
The effective tax rates were not meaningful in 1993 due to the effect on
pretax losses of items not deductible for tax purposes, primarily goodwill
amortization. In 1994, these same non-deductible items caused the effective
tax rate to exceed the statutory rate.
Extraordinary Charge
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 anticipated
retirement of approximately $70.0 million of Hyster-Yale Materials Handling 12
3/8% subordinated debentures ("debentures"). The 1993 extraordinary charge
related to the retirement of approximately $50.0 million face value of
debentures during 1993.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $18.7 million during
the first nine months of 1994. The increased unit volume 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 1994 will be approximately
$8.2 million. The principal sources of financing for these capital
expenditures are internally generated funds, bank borrowings and government
assistance grants.
The increased demand and shipment delays due to vendor shortages have
caused NMHG's inventory levels to increase from December 31, 1993 to September
30, 1994 approximately $52.9 million.
Approximately $48.0 million face value of the debentures were retired in
the third quarter of 1994 at the call price of 105. This retirement took
place in August using internally generated funds of NMHG and an equity
contribution of approximately $25.0 million by existing stockholders.
In addition, NMHG amended its existing senior bank credit agreement
during the second quarter to permit the accelerated use of $25.0 million to
retire additional debentures. On November 9, 1994 NMHG gave notice to its
trustee to call approximately $24 million face value of additional
debentures. At September 30, 1994 NMHG met its two margin
reduction ratios that will result in a 0.50% reduction in its interest rate
during the fourth quarter of 1994.
The existing senior bank credit agreement also permits the retirement of
a further $25.0 million of debentures when NMHG achieves a 43% debt to total
capitalization ratio as defined in the agreement. At September 30, 1994, this
ratio was 47%.
NMHG's management believes it can meet all of its current and long-term
commitments and operating needs. This is a result of its cash flow from
operations and additional funds available under revolving credit agreements.
At October 31, 1994 NMHG had available $94.3 million of its $100.0 million
revolving credit facility.
Supplemental financial data for NMHG is presented below:
SEPTEMBER 30 DECEMBER 31
1994 1993
Total assets net of current
liabilities (excluding debt) $675.0 $644.0
Goodwill, net $375.8 $383.9
Debt $312.7 $326.6
Stockholders' equity $296.9 $257.1
Debt to total capitalization 51% 56%
HAMILTON BEACH/PROCTOR-SILEX
Hamilton Beach/Proctor-Silex, 80% owned by NACCO, is a leading
manufacturer of small electric appliances. The housewares business is
seasonal. A majority of revenues and operating profit occur 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 Hamilton Beach/Proctor-Silex were as
follows for the three and nine months ended September 30:
THREE MONTHS NINE MONTHS
1994 1993 1994 1993
Revenues $106.9 $107.7 $251.7 $239.4
Operating profit $ 9.6 $ 7.3 $ 12.7 $ 2.8
Operating profit excluding
goodwill amortization $ 10.3 $ 8.1 $ 14.8 $ 5.3
Net income (loss) $ 4.0 $ 1.3 $ 3.7 $ (3.0)
Third Quarter of 1994 Compared With Third Quarter of 1993
The following schedule details the components of the changes in
revenues, operating profit and net income for the third quarter of 1994
compared with 1993:
Operating Net
Revenues Profit Income
1993 $107.7 $ 7.3 $1.3
Increase (Decrease) in 1994 from:
Unit volume (2.2) (.5) (.3)
Sales mix .5 .1 .1
Average sales price 1.4 1.4 .9
Foreign currency translation (.5) (.5) (.4)
Manufacturing cost 1.8 1.2
Other income and expense 1.3
Differences between effective
and statutory tax rates (.1)
1994 $106.9 $9.6 $4.0
During the third quarter of 1994 volume was unfavorable when compared
with 1993 due primarily to decreased sales of steam grills and irons offset
somewhat by increased sales of mixers and coffeemakers. The steam grill was a
new product that was emphasized in the third quarter of 1993.
Contributing to the positive sales mix were domestic sales of higher
value toasters, coffeemakers and toaster ovens and across the board increases
in sales of higher value Canadian products somewhat offset by sales of lower
value blenders and food processors. The favorable impact from price is due
mainly to domestic blenders, coffeemakers and toasters and Canadian sales.
The improvement in manufacturing costs relates primarily to increased
manufacturing efficiencies resulting from the successful completion of factory
consolidation programs and reduced transportation costs.
First Nine Months of 1994 Compared With First Nine Months of 1993
The following schedule details the components of the changes in
revenues, operating profit and net income (loss) for the first nine months of
1994 compared with 1993:
Net
Operating Income
Revenues Profit (Loss)
1993 $239.4 $ 2.8 $(3.0)
Increase (Decrease) in 1994 from:
Unit volume 8.9 2.1 1.4
Sales mix 2.1 .5 .3
Average sales price 2.9 2.9 1.9
Foreign currency translation (1.6) (1.6) (1.0)
Manufacturing cost 6.3 4.1
Other operating expense (.3) (.2)
Other income and expense 1.5
Differences between effective
and statutory tax rates (1.3)
1994 $251.7 $12.7 $3.7
On a year-to-date basis, volume is favorable as a result of higher
blender, food processor, mixer and domestic toaster sales partially offset by
the reduced steam grill sales. The factors driving the other variances for
the nine months are consistent with those previously described for the third
quarter.
Other Income and Expense
Items of other income (expense) for Hamilton Beach/Proctor-Silex were as
follows for the three and nine months ended September 30:
THREE MONTHS NINE MONTHS
1994 1993 1994 1993
Interest expense $(2.2) $(2.2) $(5.2) $(5.8)
Other-net $(2.0) $ (.4) $(2.3)
Other-net in the third quarter of 1993 included a non-recurring charge
for the settlement of certain litigation. The reduced interest expense in the
first nine months of 1994 compared with 1993 is the result of lower average
interest rates offset somewhat by higher average borrowings.
Provision for Income Taxes
Income (loss) before income taxes, provision (benefit) for income taxes
and the effective tax rate for Hamilton Beach/Proctor-Silex were as follows
for the three and nine months ended September 30:
THREE MONTHS NINE MONTHS
1994 1993 1994 1993
Income (loss) before income taxes $7.4 $3.1 $7.0 $(5.3)
Provision (benefit) for income
taxes $3.4 $1.8 $3.3 $(2.3)
Effective tax rate 45.9% 58.5% 46.0% 43.9%
The higher pretax earnings in the third quarter of 1994 compared with
1993 caused items not deductible for tax purposes, primarily goodwill
amortization, to have less of an effect on taxes resulting in a lower
effective tax rate for the quarter. These same non-deductible items reduced
the tax benefit recognized in the first nine months of 1993 and caused the
effective tax rate for the first nine months of 1994 to exceed the statutory
rate.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $8.4 million during
the first nine months of 1994 and are estimated to be $4.9 million for the
remainder of 1994. 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 and
short-term borrowings.
Hamilton Beach/Proctor-Silex's inventories have increased approximately
$28.8 million from December 31, 1993 to September 30, 1994. This increased
level of inventory relates to the seasonal nature of Hamilton Beach/Proctor-
Silex's business and also to level-loading of its factories in 1994.
In May, 1994 Hamilton Beach/Proctor-Silex modified its credit agreement
to provide for a $135.0 million revolving credit facility ("Facility"). As of
September 30, 1994 Hamilton Beach/Proctor-Silex had available $7.0 million of
this Facility and had $5.0 million available under a separate facility. The
expiration date of this Facility (which currently is May 1997) can be extended
one additional year, on an annual basis, upon the mutual consent of Hamilton
Beach/Proctor-Silex and the bank group, beginning in 1995. In conjunction
with this modification, Hamilton Beach/Proctor-Silex repaid the outstanding
balance of its term note of $28.1 million in May 1994.
This credit agreement, secured by all assets of Hamilton Beach/Proctor-
Silex, allows borrowings to be made at either LIBOR, or lender's prime rate,
plus a margin. The borrowing rates are subject to reductions based upon
achievement of predetermined interest coverage ratios. At the end of the
first quarter the stated interest rate was LIBOR plus 1.75%. As of May 10,
1994 the stated interest rate became LIBOR plus 1.00%. In addition, the
modified agreement allows Hamilton Beach/Proctor-Silex to pay dividends, under
certain conditions, to its stockholders. On July 15, 1994 Hamilton
Beach/Proctor-Silex paid a $15.0 million dividend.
Supplemental financial data for Hamilton Beach/Proctor-Silex is
presented below:
SEPTEMBER 30 DECEMBER 31
1994 1993
Total assets net of current
liabilities (excluding debt) $264.7 $237.9
Goodwill, net $ 95.3 $100.1
Debt $128.0 $ 86.5
Stockholders' equity $124.5 $138.6
Debt to total capitalization 51% 39%
KITCHEN COLLECTION
Kitchen Collection 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 being generated in the fourth quarter during the fall holiday selling
season.
FINANCIAL REVIEW
Third Quarter of 1994 Compared With Third Quarter of 1993
The following schedule details the components of the changes in
revenues, operating profit and net income for the third quarter of 1994
compared with 1993:
Operating Net
Revenues Profit Income
1993 $14.2 $1.4 $.8
Increase (decrease) in 1994 from:
Stores opened in 1994 1.6 .1 .1
Stores opened in 1993 1.2 .1 .1
Comparable stores .2
Other (.1)
1994 $17.2 $1.6 $.9
First Nine Months of 1994 Compared With First Nine Months of 1993
The following schedule details the components of the changes in
revenues, operating profit and net income for the first nine months of 1994
compared with 1993:
Operating Net
Revenues Profit Income
1993 $33.4 $1.5 $.9
Increase (decrease) in 1994 from:
Stores opened in 1994 2.1 .2 .1
Stores opened in 1993 4.5 .3 .2
Comparable stores .4
Other (.3) (.3)
1994 $40.4 $1.7 $.9
Provision for Income Taxes
Kitchen Collection's effective tax rate for the three months ended
September 30, 1994 and 1993 was 40.7% and 40.1% respectively. During the
first nine months of 1994 Kitchen Collection's effective tax rate was 40.8%
compared with 40.1% in 1993.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $0.8 million during
the first nine months of 1994. Estimated capital expenditures for the
remainder of 1994 are $0.3 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. At
September 30, 1994, Kitchen Collection had available all of its $2.5 million
line of credit. This credit line is renewable annually in May and has
currently been extended through May, 1995.
On May 10, 1994 Kitchen Collection modified its credit arrangement to
allow for an increase in the outstanding balance on its term loan to $5.0
million. At September 30, 1994 the outstanding balance was $5.0 million. In
addition the scheduled repayments, which previously were in annual
installments through 1997, are now payable in two equal installments due
January 1, 1999 and January 1, 2000. This modification also reduced Kitchen
Collection's stated interest rate to LIBOR plus 0.75% from LIBOR plus 1.50%
and allows for increased levels of dividends to its stockholder. On May 27,
1994 Kitchen Collection paid a dividend of $2.6 million to NACCO.
Supplemental financial data for Kitchen Collection is presented below:
SEPTEMBER 30 DECEMBER 31
1994 1993
Total assets net of current
liabilities (excluding debt) $16.1 $15.0
Goodwill, net $ 3.9 $ 4.0
Debt $ 5.0 $ 2.4
Stockholder's equity $11.0 $12.6
Debt to total capitalization 31% 16%
NACCO AND OTHER
FINANCIAL REVIEW
Third Quarter of 1994 Compared with Third Quarter of 1993
The following schedule details the components of the changes in
operating loss and net income (loss) for the third quarter of 1994 compared
with 1993:
Net
Operating Income
Loss (Loss)
1993 $(2.0) $ 1.7
Administrative and general expenses
Payroll related (.5) (.4)
Outside service .1 .1
Differences between effective and
statutory tax rates (3.3)
1994 $(2.4) $(1.9)
The increase in payroll related expenses in 1994 compared with 1993 is
due to higher incentive based compensation, profit sharing and medical
expenses. The differences between effective and statutory tax rates reflects
a reduction in 1994 in the consolidating income tax adjustment recognized at
the reporting entity level.
First Nine Months of 1994 Compared With First Nine Months of 1993
The following schedule details the components of the changes in
operating loss and net loss for the first nine months of 1994 compared with
1993:
Operating Net
Loss Loss
1993 $(6.2) $(3.1)
Administrative and general expenses
Payroll related (1.0) (.7)
Outside service .3 .2
Other .1 .1
Interest income (.5)
Interest expense (.5)
Other-net (.1)
Differences between effective and
statutory tax rates (1.0)
1994 $(6.8) $(5.6)
The reduction in interest income in the first nine months of 1994
compared with 1993 relates to the smaller amount of Hyster-Yale 12 3/8%
subordinated debentures owned by NACCO.
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.
As previously noted in this Management's Discussion and Analysis, the
debt arrangements at Hamilton Beach/Proctor-Silex and Kitchen Collection were
modified in May 1994. These modifications permit the payment of dividends by
Hamilton Beach/Proctor-Silex to NACCO under certain circumstances and
increases the level of dividends that can be paid by Kitchen Collection.
North American Coal continues to be allowed to pay dividends to NACCO.
On July 15, 1994 Hamilton Beach/Proctor-Silex paid a $12.0 million
dividend to NACCO. On May 27, 1994 Kitchen Collection paid a dividend of $2.6
million to NACCO.
The Company believes it can adequately meet all of its current and long-
term commitments and operating needs. This outlook stems from amounts
available under revolving credit facilities, the substantial prepayment of
scheduled debt payments 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 royalty payments received on
certain coal reserves and mine closing activities related to the Indian Head
Mine, which ceased mining operations in April 1992. Cash payments related to
Bellaire's obligations, net of internally generated funds, are funded by NACCO
and amounted to $2.5 million during the first nine months of 1994. During the
third quarter of 1994 Bellaire had revenues and operating profit of $0.4
million and $0.1 million, respectively, compared with revenues of $1.1 million
and operating profit of $0.3 million in 1993. Bellaire's net income in the
third quarter of 1994 and 1993 is $0.8 million and $2.6 million, respectively.
The decline in net income during the quarter is the result of a nonrecurring
tax benefit of $2.3 million recognized in 1993 to adjust Bellaire's deferred
federal income tax asset for a one percent increase in the statutory tax rate.
For the first nine months of 1994 Bellaire had revenues and operating
profit of $1.6 million and $0.9 million, respectively, compared with revenues
of $3.4 million and operating profit of $0.4 million in 1993. Bellaire's net
income in the first nine months of 1994 and 1993 is $1.7 million and $3.2
million, respectively.
The condensed balance sheets for Bellaire were as follows:
SEPTEMBER 30 DECEMBER 31
1994 1993
Net current assets $ 17.4 $ 18.2
Property, plant and equipment, net .5 .5
Deferred taxes and other assets 64.1 67.0
Obligation to United Mine Workers of
America Combined Benefit Fund (155.2) (163.2)
Other liabilities (23.9) (21.2)
Deficit $(97.1) $(98.7)
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
None
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits. See Exhibit Index on page 32 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 November 10, 1994 Frank B. O'Brien
Frank B. O'Brien
Senior Vice President - Corporate
Development and Chief Financial
Officer
Date November 10, 1994 Steven M. Billilck
Steven M. Billick
Vice President and Controller
(Principal Accounting Officer)
Exhibit Index
Exhibit
Number** Description of Exhibit
(10) *(clxiii) Amendment No. 4 to the North American Coal Corporation
Salaried Employees Pension Plan (as amended and
restated as of January 1, 1989), effective January 1,
1994 is attached hereto as Exhibit 10(clxiii).
*(clxiv) Amendment No. 5 to The North American Coal Corporation
Salaried Employees Pension Plan (as amended and
restated as of January 1, 1989) effective as of July
1, 1994 is attached hereto as Exhibit (clxiv)
*(clxv) The North American Coal Corporation Supplemental
Retirement Benefit Plan as amended and restated
effective September 1, 1994 is attached hereto as
Exhibit 10(clxv).
*(clxvi) Amendment No. 1 to The NACCO Materials Handling Group,
Inc. Unfunded Benefit Plan (as amended and restated
effective October 1, 1994) is incorporated herein by
reference to Exhibit 10(xcix) to the Hyster-Yale
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994, Commission File Number 33-28812.
(clxvii) Amendment dated as of January 1, 1994 to the Third
Amendment and Restated Operating Agreement dated as of
November 7, 1991, between NACCO Materials Handling
Group and AT&T Commercial Finance Corporation is
incorporated herein by reference to Exhibit 10(c) to
the Hyster-Yale Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994, Commission File
Number 33-28812.
(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 6(a) of this Quarterly Report on Form 10-Q.
**Numbered in accordance with Item 601 of Regulation S-K.
Exhibit 11
NACCO Industries, Inc. And Subsidiaries
Form 10-Q
Computation of Earnings per Share
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1994 1993 1994 1993
(In thousands, except per share data)
Income (loss):
Income before
extraordinary charge $11,014 $2,049 $22,975 $ 1,842
Extraordinary charge,
net-of-tax (3,218) (3,292)
Net income (loss) $11,014 $2,049 $19,757 $(1,450)
Per share amounts reported
to stockholders Note 1:
Income before
extraordinary charge $1.23 $.23 $ 2.57 $ .21
Extraordinary charge,
net-of-tax (.36) (.37)
Net income (loss) $1.23 $.23 $ 2.21 $ (.16)
Primary:
Weighted average 8,951 8,938 8,947 8,937
shares outstanding
Dilutive stock options
Note 2 12 15 13 17
Totals 8,964 8,953 8,960 8,954
Per share amounts:
Income before
extraordinary charge $1.23 $ .23 $2.56 $ .21
Extraordinary charge,
net-of-tax (.35) (.37)
Net income (loss) $1.23 $ .23 $2.21 $ (.16)
Fully diluted Note 3:
Weighted average shares
outstanding 8,951 8,947
Dilutive stock options
Note 2 13 14
Per share amounts:
Income before
extraordinary charge $1.23 $2.56
Extraordinary charge,
net-of-tax (.35)
Net income $1.23 $2.21
Note 1 Per share earnings have been computed and reported to the
stockholders pursuant to APB Opinion No. 15, which provides that "any
reduction of less than 3% in the aggregate need not be considered as dilution
in the computation and presentation of earnings per share data."
Note 2 Dilutive stock options are calculated based on the treasury stock
method. For primary per share earnings the average market price is used. For
fully diluted per share earnings the quarter-end market price, if higher than
the average market price for the period, is used.
Note 3 Fully diluted per share earnings for the three and nine months ended
September 30, 1993 are not disclosed because the quarter-end market price did
not exceed the average market price for both the three and nine month periods
AMENDMENT NO. 4
TO
THE NORTH AMERICAN COAL CORPORATION
SALARIED EMPLOYEES PENSION PLAN
(As Amended and Restated as of January 1, 1989)
The North American Coal Corporation hereby adopts this
Amendment No. 4 to The North American Coal Corporation Salaried
Employees Pension Plan (As Amended and Restated as of January 1,
1989) (the "Plan"). The provisions of this Amendment shall be
effective as of January 1, 1994. Words and phrases used herein
with initial capital letters which are defined in the Plan are
used herein as so defined.
Section 1
A new Section 1.31A is hereby added to the Plan,
immediately following Section 1.31, to read as follows:
"1.31A Indexed Merged Plan Benefit: The Indexed
Merged Plan Benefit is calculated by increasing the
Participant's accrued benefit under the Merged Plan as of
December 31, 1993, determined in accordance with the terms
of the Merged Plan then in effect, expressed as a monthly
benefit payable in the form of a single life annuity
(without ancillary benefits) commencing on the Participant's
Normal Retirement Date, increased as set forth in the
following sentence. The increase described in the preceding
sentence shall be calculated at the rate of 4%, compounded
annually, for the number of full years between January 1,
1994 and the earlier of the Participant's first termination
of employment for any reason with the Controlled Group
(including retirement, death or disability) or the
termination of the Plan, and with simple interest at the
rate of .333% per month for any remaining full months to the
earlier of such termination of employment or the termination
of the Plan. The increase described in this Subsection
shall apply only to those Participants listed on Exhibit C
hereto (a) who were employed by NACCO Industries, Inc. on
December 31, 1993 or who transferred employment from NACCO
Industries, Inc. to another Controlled Group Member during
1993, (b) who had an accrued benefit under the Merged Plan
as of such date, and (c) whose Compensation did not exceed
$100,000 for the 1993 Plan Year, other than Participants who
continued to accrue benefits under the Plan as of January 1,
1994.
Section 2
Section 1.36 of the Plan is hereby amended in its
entirety to read as follows:
2
"1.36 Minimum Benefit: For a Participant who was a
Participant in the Plan on December 31, 1988, the
Participant's Accrued Benefit as of December 31, 1988
determined in accordance with the benefit formula contained
in Exhibit B attached hereto. For a Participant who was a
participant in the Merged Plan, the Participant's Indexed
Merged Plan Benefit (if applicable) or his accrued benefit
under the Merged Plan. In the event that a Participant is
described in both of the preceding sentences, the
Participant's Minimum Benefit shall be the greater of the
amounts determined under such sentence."
Section 3
The last sentence of Section 3.01 of the Plan (which
was added by Amendment No. 2 to the Plan) is hereby amended in
its entirety to read as follows:
"Notwithstanding the foregoing, except as specifically
described in Section 1.31A, the benefit payable as of
December 31, 1993 with respect to an Employee who was a
participant in the Merged Plan on December 31, 1993 (which
Plan was frozen as of such date) shall be determined by and
paid in accordance with the terms and provisions of the
Merged Plan as in effect on such date."
EXECUTED this 25th day of October, 1994, to be
effective as stated herein.
THE NORTH AMERICAN COAL CORPORATION
By Thomas A. Koza
Title: Vice President - Law
and Administration
AMENDMENT NO. 5
TO
THE NORTH AMERICAN COAL CORPORATION
SALARIED EMPLOYEES PENSION PLAN
(As Amended and Restated as of January 1, 1989)
The North American Coal Corporation hereby adopts this
Amendment No. 5 to The North American Coal Corporation Salaried
Employees Pension Plan (As Amended and Restated as of January 1,
1989) (the "Plan"). The provisions of this Amendment shall be
effective as of July 1, 1994. Words and phrases used herein with
initial capital letters which are defined in the Plan are used
herein as so defined.
Section 1
A new Section 4.04A is hereby added to the Plan,
immediately following Section 4.04, to read as follows:
"4.04A Special Early Retirement Window Benefits.
Notwithstanding the foregoing Sections of this Article, the
Pension of a Participant who satisfies the requirements described
in the following sentence ("a Window Participant") shall be
calculated by adding an additional three years of Benefit Service
or three years of age (or any combination thereof, as elected by
the Window Participant) to the years of Benefit Service and/or
age otherwise used for purposes of Pension calculations to the
extent that such additions result in an increased Pension
hereunder. In order to be a Window Participant, a Participant
must (i) be an Employee (other than an officer) of The North
American Coal Corporation or Bellaire Corporation, (ii) have
attained at least age 55 and be credited with at least 7 years of
Benefit Service or have attained at least age 52 and be credited
with at least 10 years of Benefit Service, in either case by
December 31, 1994, (iii) terminated employment with the
Controlled Group on or after August 1, 1994 and on or prior to
December 31, 1994, and (iv) not be a Highly Compensated Employee.
The Window Participants are listed on Exhibit D hereto.
EXECUTED this 25th day of October, 1994, to be
effective as stated herein.
THE NORTH AMERICAN COAL CORPORATION
By: Thomas A. Koza
Title: Vice President - Law
and Administration
THE NORTH AMERICAN COAL CORPORATION
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
(As Amended and Restated effective September 1, 1994)
WHEREAS, The North American Coal Corporation (the
"Company") and NACCO Industries, Inc. ("NACCO"), its parent
corporation, previously established several qualified defined
benefit pension plans; and
WHEREAS, certain provisions of the Internal Revenue
Code of 1986, as amended, place certain limitations on the amount
of benefits that would otherwise be made available under the
pension plans for certain participants; and
WHEREAS, the Company and NACCO desire to provide the
benefits which would otherwise have been payable to such
participants under the pension plans except for such limitations,
in consideration of services performed and to be performed by
such participants for the Company and certain related
corporations; and
WHEREAS, effective as of August 31, 1994, (1) The NACCO
Industries, Inc. $200,000 Cap Plan was merged into and became a
part of The NACCO Industries, Inc. Supplemental Retirement
Benefit Plan (the "Plan"), (2) sponsorship of the merged Plan was
transferred from NACCO to the Company, and (3) the Plan was
renamed as "The North American Coal Corporation Supplemental
Retirement Benefit Plan."
NOW, THEREFORE, the Company hereby amends and restates
the Plan in its entirety to read as follows:
ARTICLE I
PREFACE
SECTION 1.1. Effective Date. The original effective
date of the Plan was January 1, 1983.
SECTION 1.2. Purpose of the Plan. The purpose of this
Plan is to provide additional retirement benefits for certain
management and highly compensated employees of the Company (and
other participating Employers).
SECTION 1.3. Governing Law. This Plan shall be
regulated, construed and administered under the laws of the State
of Ohio, except when preempted by federal law.
2
SECTION 1.4. Gender and Number. For purposes of
interpreting the provisions of this Plan, the masculine gender
shall be deemed to include the feminine, the feminine gender
shall be deemed to include the masculine, and the singular shall
include the plural, unless otherwise clearly required by the
context.
SECTION 1.5. Severability. If any provision of this
Plan or the application thereof to any circumstances(s) or
person(s) is held to be invalid by a court of competent
jurisdiction, the remainder of the Plan and the application of
such provision to other circumstances or persons shall not be
affected thereby.
ARTICLE II
DEFINITIONS
SECTION 2.1. Words and phrases used herein with
initial capital letters which are defined in a Pension Plan are
used herein as so defined, unless otherwise specifically defined
herein or the context clearly indicates otherwise. The following
words and phrases when used in this Plan with initial capital
letters shall have the following respective meanings, unless the
context clearly indicates otherwise:
SECTION 2.1(1). "Actual Pension Plan Benefit" shall
mean the amount of the monthly benefit in fact payable to the
Participant or his Beneficiary under the Pension Plan.
SECTION 2.1(2). "Beneficiary".
(a) In General. The term "Beneficiary" shall mean the
person who is entitled to receive part or all of a pension or
other benefit payable with respect to the Participant under a
Pension Plan.
(b) Change of Beneficiaries. Notwithstanding the
foregoing, each Participant may at any time and from time to
time, before and after retirement, change his Beneficiary
hereunder without the consent of any existing Beneficiary or any
other person. Therefore, the Beneficiary under the Plan need not
be the same as the Beneficiary under the Pension Plan. However,
as described in Subsection (c) of this Section, the Beneficiary
under the Pension Plan shall be used as the "measuring life" for
purposes of the amount and duration of the Supplemental
Retirement Benefits payable to any Beneficiary hereunder. The
change of a Beneficiary under the Plan may be made, and may be
revoked, only by an instrument (in form acceptable to the
Company) signed by the Participant and filed with the Nominating,
Organization and Compensation Committee of the Board of Directors
of the Company (the "Committee") prior to the Participant's
3
death. If two or more persons designated as a Participant's
Beneficiary are in existence, the amount of any payment to the
Beneficiary under this Plan shall be divided equally among such
persons unless the Participant's designation specifically
provided to the contrary.
(c) Effect of Change of Beneficiary. Supplemental
Retirement Benefits shall be payable to a Beneficiary hereunder
only so long as Actual Pension Plan Benefits are being paid to
the Beneficiary under the Pension Plan. In the event that the
Beneficiary hereunder is different than the Beneficiary under the
Pension Plan, (i) if the Beneficiary hereunder dies after the
Participant but while the Beneficiary under the Pension Plan is
still living, any remaining payments hereunder shall be payable,
as they come due, to the estate of the Beneficiary hereunder or,
if applicable, to the contingent Beneficiary designated hereunder
by the Participant, (ii) if the Beneficiary hereunder predeceases
the Beneficiary under the Pension Plan and the Participant, the
Beneficiary hereunder shall revert to the Beneficiary last
effectively designated under the Pension Plan unless and until
the Participant again makes a change of Beneficiary pursuant to
Subsection (b) above, and (iii) if the Beneficiary under the
Pension Plan predeceases the Beneficiary hereunder, Supplemental
Retirement Payments hereunder shall cease.
(d) Community Property States. In states with
community property laws, a Participant may designate someone
other than his Spouse as his Beneficiary hereunder to the extent
of such Spouse's community property interest in the Supplemental
Retirement Payments, or revoke or change his Beneficiary
designation hereunder to such extent, only with the consent of
his Spouse. To the extent necessary, the provisions of this
Subsection (d) shall apply to each person who is or was a Spouse
of a Participant regardless of whether the Participant and such
person are married at the applicable time. Notwithstanding the
foregoing, however, a Participant's present or former Spouse
shall have no greater rights under this Plan than such Spouse has
pursuant to the applicable state community property laws.
SECTION 2.1(3). "Code" shall mean the Internal Revenue
Code of 1986, as it has been and may be amended from time to
time.
SECTION 2.1(4). "Code Limitations" shall mean the
limitations imposed by Sections 401(a)(17) and 415 of the Code,
or any successor(s) thereto, on the amount of the benefits which
may be payable to a Participant from a Pension Plan.
SECTION 2.1(5). "Compensation". Effective January 1,
1995, Compensation shall have the same meaning as under the
Pension Plan, except that Compensation (a) shall not be subject
4
to the dollar limitation imposed by Code Section 401(a)(17) and
(b) shall be deemed to include the amount of compensation
deferred by a Participant under the North American Coal
Corporation Deferred Compensation Plan for Management Employees.
SECTION 2.1(6). "Employer(s)" shall mean the Company
and/or any other member of the Controlled Group which shall adopt
this Plan pursuant to Section 5.4.
SECTION 2.1(7). "Instrument of Adoption" shall mean
the Instrument referred to in Section 5.4 by which an Employer,
among other things, evidences its adoption of the Plan.
SECTION 2.1(8). "Minimum Benefit" shall mean the
amount of a Participant's "excess retirement benefit" under The
NACCO Industries, Inc. $200,000 Cap Plan as of August 31, 1994.
SECTION 2.1(9). "Participant" shall mean each Employee
of an Employer (other than Alfred M. Rankin, Jr.) (a) who is
either a highly compensated or a management employee, (b) who is
a participant in a Pension Plan, and (c) who, as a result of
participation in this Plan, is entitled to a Supplemental
Retirement Benefit under this Plan. Upon a termination of
employment with the Controlled Group, a former Participant shall
remain as an inactive Participant until all vested Supplemental
Retirement Benefits have been paid to him or his Beneficiary.
SECTION 2.1(10). "Pension Plan" shall mean The NACCO
Industries, Inc. Pension Plan for Salaried Employees (terminated
November 30, 1986), The North American Coal Corporation Pension
Plan for Salaried Employees (terminated December 31, 1989) or The
North American Coal Corporation Salaried Employees Pension Plan
(which includes The NACCO Industries, Inc. Pension Plan for
Salaried Employees which was merged into such Plan on December
31, 1993).
SECTION 2.1(11). "Plan" shall mean The North American
Coal Corporation Supplemental Retirement Benefit Plan, as it may
be amended from time to time.
SECTION 2.1(12). "Plan 006 Participants" shall mean
those Participant listed on Exhibit A hereto (a) who were
participants in The NACCO Industries, Inc. Pension Plan for
Salaried Employees on December 31, 1993, (b) who were employed by
NACCO Industries, Inc. on December 31, 1993 or who transferred
employment from NACCO Industries, Inc. to another Controlled
Group Member during 1993, and (c) whose Compensation exceeded
$100,000 for the 1993 Plan Year.
SECTION 2.1(13). "Supplemental Retirement Benefit"
shall mean the retirement benefits determined under Article III.
5
ARTICLE III
SUPPLEMENTAL RETIREMENT BENEFIT
SECTION 3.1. Amount of Supplemental Retirement
Benefit.
(1) In General. Each Participant or Beneficiary of a
deceased Participant whose benefits under the Pension Plan
payable on or after the Effective Date are reduced due to the
Code Limitations shall be entitled to a Supplemental Retirement
Benefit, which shall be determined as hereinafter provided.
(2) Participants in a Single Pension Plan. The
Supplemental Retirement Benefit shall be a monthly retirement
benefit equal to the difference between (a) the amount of the
monthly benefit payable to the Participant or his Beneficiary
under the Pension Plan, determined under the Pension Plan as in
effect on the date of the Participant's termination of employment
with the Controlled Group (and payable in the same optional form
as his Actual Pension Plan Benefit) but calculated as if (i) the
Pension Plan did not contain the Code Limitations and (ii) the
definition of "Compensation" contained in Section 2.1(5) hereof
were substituted for the definition of Compensation under the
Pension Plan and (b) the amount of the Actual Pension Plan
Benefit.
(3) Participants in Multiple Pension Plans. If a
person has been a Participant in more than one Pension Plan, the
Supplemental Retirement Benefit shall be a monthly retirement
benefit equal to the difference between (a) the largest amount of
the monthly benefit payable to the Participant or his Beneficiary
under any of the Pension Plans, determined under the Pension
Plans as in effect on the date of the Participant's termination
of employment with the Controlled Group (and payable in the same
optional form as his Actual Pension Plan Benefit) but calculated
as if the Pension Plans (i) did not contain the Code Limitations,
(ii) did not provide that the benefits thereunder are reduced by
the benefits payable under the Other Group Plans, and (iii) the
definition of "Compensation" contained in Section 2.1(5) hereof
were substituted for the definition of Compensation under the
Pension Plan and (b) the amount of the Actual Pension Plan
Benefit payable under all of the Pension Plans.
(4) Minimum Benefit. Notwithstanding any provision of
the Plan to the contrary, in no event shall a Participant's
Supplemental Retirement Benefit hereunder be less than the amount
of the Participant's Minimum Benefit.
6
(5) Effect of QDRO. In the event that any portion of
a Participant's benefit under any Pension Plan is allocated to an
alternate payee pursuant to the terms of a qualified domestic
relations order, the Participant's Supplemental Retirement
Benefit hereunder shall be calculated without taking into account
such allocation. In no event may an alternate payee receive a
distribution or an allocation of any portion of a Supplemental
Retirement Benefit hereunder.
(6) Withholding/Taxes. To the extent required by
applicable law, the Employers shall withhold from the
Supplemental Retirement Benefits any taxes required to be
withheld therefrom by an federal, state or local government.
SECTION 3.2. Additional Supplemental Retirement
Benefit for Plan 006 Participants. In addition to the
Supplemental Retirement Benefit described in Section 3.1, the
Plan 006 Participants shall also receive the Supplemental
Retirement Benefit described in this Section 3.2. A Plan 006
Participant shall receive a monthly Supplemental Retirement
Benefit in an amount equal to the sum of A plus B, where:
A = the difference between (1) the Indexed Merged Plan
Benefit (as defined in The North American Coal
Corporation Salaried Employees Pension Plan) that
would be payable to the Plan 006 Participant if he
were eligible for such Benefit and (2) the Plan
006 Participant's accrued benefit under the Merged
Plan as of December 31, 1993; and
B = the difference between (1) the Plan 006
Participant's Supplemental Retirement Benefit
under this Plan as of December 31, 1993, expressed
as a monthly benefit payable in the form of a
single life annuity (without ancillary benefits)
commencing on the Plan 006 Participant's Normal
Retirement increased at the rate of 4%, compounded
annually, for the number of full years between
January 1, 1994 and the earlier of the Plan 006
Participant's first termination of employment for
any reason with the Controlled Group (including
retirement, death, disability) or the termination
of the Plan, with simple interest at the rate of
.333% per month for any remaining five months to
the earlier of such termination of employment or
the termination of the Plan, and (2) the Plan 006
Participant's Supplemental Retirement Benefit.
SECTION 3.2A Special Early Retirement Window Benefits
for Certain Participants. In addition to the Supplemental
Retirement Benefit described in Section 3.1, a Participant who
7
(i) is an Employee (other than an officer) of The North American
Coal Corporation or Bellaire Corporation, (ii) has attained at
least age 55 and is credited with at least 7 years of Benefit
Service under The North American Coal Corporation Salaried
Employees Pension Plan ("Plan 005") or has attained at least age
52 and is credited with at least 10 years of Benefit Service
under Plan 005, in either case by December 31, 1994, (iii)
terminated employment with the Controlled Group on or after
August 1, 1994 and on or prior to December 31, 1994, and (iv) is
a Highly Compensated Employee whose Compensation for the 1993 or
1994 Plan Year was at least $100,000 (a "Window Participant")
shall also receive the Supplemental Retirement Benefit described
in this Section. The Window Participants are listed on Exhibit B
hereto. The additional Supplemental Retirement Benefit shall be
a monthly amount equal to the difference between (a) the amount
of monthly benefit payable to the Window Participant or his
Beneficiary under Plan 005, calculated by adding an additional
three years of Benefit Service or three years of age (or any
combination thereof, as elected by the Window Participant) to the
years of Benefit Service and/or age otherwise used for purposes
of calculating a Pension under Plan 005 (to the extent that such
additions result in an increased Pension thereunder) and (b) the
amount of the actual Pension Plan Benefit.
SECTION 3.3. Time and Manner of Payment.
(1) In General. A Participant's (or Beneficiary's)
Supplemental Retirement Benefit shall commence at the same time
and under the same conditions as the benefits payable to the
Participant (or Beneficiary) under the Pension Plan. The
Supplemental Retirement Benefit shall be payable in the same form
and for the same duration as the benefits payable to the
Participant (or Beneficiary) under the Pension Plan. If the
Participant or his Beneficiary is entitled to benefits under more
than one of the Pension Plans and such benefits are not payable
at the same time and for the same period, the Committee shall
determine the time and manner of payment of the Supplemental
Retirement Benefits hereunder; provided that the time and manner
chosen by the Committee shall be one of the times and manners
selected by the Participant under one of the Pension Plans.
(2) Cash-Out of Small Benefits. Notwithstanding the
foregoing, if the present value of a Participant's or
Beneficiary's Supplemental Retirement Benefit hereunder at the
time of the Participant's termination of employment with the
Controlled Group is $5,000 or less, such Benefit shall be paid as
soon as practicable following such termination in a lump sum that
is the Actuarial Equivalent of such Benefit. Such $5,000 amount
shall be calculated using an interest rate equal to the
Applicable Interest Rate in effect on January 1 of the Plan Year
8
in which the distribution is made. The Supplemental Retiremental
Retirement Benefit described in Section 3.2A shall not be subject
to the provisions of this Subsection.
9
SECTION 3.4. Liability for Payment.
(1) The Employer by which the Participant was employed
at the time of his termination of employment with the Controlled
Group shall pay the Supplemental Retirement Benefit to the
Participant and/or his Beneficiary, but such Employer's liability
hereunder shall be limited to its proportionate share of such
Supplemental Retirement Benefit, determined as hereinafter
provided. If the benefits payable to the Participant and/or his
Beneficiary under a Pension Plan are based on the Participant's
employment with more than one Employer, the amount of the
Supplemental Retirement Benefit shall be shared by all such
Employers (by reimbursement to the Employer making such payment)
as may be agreed to between them in good faith, taking into
consideration the Participant's Benefit Service and Compensation
paid by each such Employer and as will permit the deduction (for
purposes of federal income taxes) by each such Employer of its
portion of the payments made and to be made hereunder.
(2) The liabilities of the Employers hereunder shall
be several liabilities and no Employer shall be liable for the
default of any other Employer hereunder, even though it has, for
convenience of administration, agreed to pay directly to the
Participant or Beneficiary the entire Supplemental Retirement
Benefit as provided in Subsection (1) of this Section.
ARTICLE IV
VESTING
SECTION 4.1. Vesting. A Participant shall become
vested in his Supplemental Retirement Plan Benefit in accordance
with the vesting provisions of the Pension Plans.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Limitation on Rights of Participants and
Beneficiaries - No Lien. This Plan is an unfunded, nonqualified
plan and the entire cost of this Plan shall be paid from the
general assets of one or more of the Employers. No trust has
been established for the Participants or Beneficiaries. No
liability for the payment of benefits under the Plan shall be
imposed upon any officer, director, employee, or stockholder of
an Employer. Nothing contained herein shall be deemed to create
a lien in favor of any Participant or Beneficiary on any assets
of any Employer. The Employers shall have no obligation to
purchase any assets that do not remain subject to the claims of
the creditors of the Employers for use in connection with the
Plan. Each Participant and Beneficiary shall have the status of
a general unsecured creditor of the Employers and shall have no
10
right to, prior claim to, or security interest in, any assets of
the Company or any Employer.
SECTION 5.2. Nonalienation. No right or interest of a
Participant or his Beneficiary under this Plan shall be
anticipated, assigned (either at law or in equity) or alienated
by the Participant or his Beneficiary, nor shall any such right
or interest be subject to attachment, garnishment, levy,
execution or other legal or equitable process or in any manner be
liable for or subject to the debts of any Participant or
Beneficiary. If any Participant or Beneficiary shall attempt to
or shall alienate, sell, transfer, assign, pledge or otherwise
encumber his benefits under the Plan or any part thereof, or if
by reason of his bankruptcy or other event happening at any time
such benefits would devolve upon anyone else or would not be
enjoyed by him, then the Company may terminate his interest in
any such benefit and hold or apply it to or for his benefit or
the benefit of his spouse, children or other person or persons in
fact dependent upon him, or any of them, in such a manner as the
Company may deem proper; provided, however, that the provisions
of this sentence shall not be applicable to the surviving Spouse
of any deceased Participant if the Company consents to such
inapplicability, which consent shall not unreasonably be
withheld.
SECTION 5.3. Employment Rights. Employment rights
shall not be enlarged or affected hereby. The Employers shall
continue to have the right to discharge a Participant, with or
without cause.
SECTION 5.4. Instruments of Adoption. Any member of
the Controlled Group that has adopted a Pension Plan may become
an Employer hereunder with the written consent of the Committee
if it executes an "Instrument of Adoption" evidencing its
adoption of the Plan and files a copy thereof with the Company.
Such Instrument of Adoption may be subject to such terms and
conditions as Committee requires or approves. An Employer who
ceases to exist or who is no longer a member of the Controlled
Group shall automatically cease being a participating Employer
hereunder.
SECTION 5.5. Administration of Plan.
(1) The Committee shall be responsible for the general
administration of the Plan and for carrying out the provisions
hereof and, for purposes of the Employee Retirement Income
Security Act of 1974, as amended, the Company shall be the plan
sponsor and the plan administrator. The Committee shall
interpret where necessary, in its reasonable and good faith
judgment, the provisions of the Plan and, except as otherwise
provided in the Plan, shall determine the rights and status of
11
Participants and Beneficiaries hereunder (including, without
limitation, the amount of any Supplemental Retirement Benefit to
which a Participant or Beneficiary may be entitled under the
Plan).
(2) Notwithstanding the foregoing, the Board of
Directors of the Company and the Company each may, from time to
time, delegate all or part of the administrative powers, duties
and authorities delegated to it under this Plan to such person or
persons, office or committee as it shall select.
SECTION 5.6. Expenses. The Employers shall pay all
expenses incurred in the administration and operation of the
Plan.
SECTION 5.7. Claims Procedure.
(1) Whenever there is denied, whether in whole or in
part, a claim for benefits under the Plan filed by any person
(herein referred to as the "Claimant"), the Committee shall
transmit a written notice of such decision to the Claimant,
within 90 days after such claim was filed (plus an additional
period of 90 days if required for processing, provided that
notice of the extension of time is given to the Claimant within
the first 90 day period), which notice shall be written in a
manner calculated to be understood by the Claimant and shall
contain the specific reasons for the denial of the claim,
specific references to the provisions of the Plan upon which the
denial is based, a description of any additional information
necessary for the Claimant to perfect the claim and an
explanation of the review procedures hereinafter set forth. If a
Claimant does not receive any such notice within 90 days after
the date of filing the claim, his claim shall be deemed to have
been denied.
(2) Within 60 days after the denial of his claim, the
Claimant or his authorized representative may request that the
claim denial be reviewed by filing with the Committee a written
request therefor. If such an appeal is so filed within such 60
day period, the Committee shall designate a named fiduciary to
conduct a full and fair review of the decision denying the
Claimant's claim for benefits. Within 60 days from the date the
request for review was filed (plus an additional period of 60
days if required for processing, provided that notice of the
extension of time is given to the Claimant within the first 60
day period), the named fiduciary shall render its written
decision on review, written in a manner calculated to be
understood by the Claimant, specifying the reasons and Plan
provisions upon which its decision was based. Such decision
shall, to the extent permitted by law, be final and binding on
all interested persons. During such review, the Claimant shall
12
be given the opportunity to review documents that are pertinent
to his claim and to submit issues and comments in writing. If
the decision on review is not furnished within such 60-day or
120-day period, as the case may be, the claim shall be deemed to
have been denied on review.
SECTION 5.8. Effect on other Benefits. Benefits
payable to or with respect to a Participant under a Pension Plan
or any other Employer sponsored (qualified or nonqualified) plan,
if any, are in addition to those provided under this Plan, except
as specifically provided in such other plans.
SECTION 5.9. Payment to Guardian. If a benefit
payable hereunder is payable to a minor, to a person declared
incompetent or to a person incapable of handling the disposition
of his property, the Company may direct payment of such benefit
to the guardian, legal representative or person having the care
and custody of such minor, incompetent or person. The Company
may require such proof of incompetency, minority, incapacity or
guardianship as it may deem appropriate prior to distribution of
the benefit. Such distribution shall completely discharge the
Employers from all liability with respect to such benefit.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1. Amendment. The Committee does hereby
reserve the right to amend, at any time, any or all of the
provisions of the Plan for all Employers, without the consent of
any other Employer or any Participant, Beneficiary or any other
person. Any such amendment shall be expressed in an instrument
executed by an officer of the Company and shall become effective
as of the date designated in such instrument or, if no such date
is specified, on the date of its execution.
SECTION 6.2. Termination.
(1) The Committee does hereby reserve the right to
terminate the Plan at any time for any or all Employers, without
the consent of any other Employer or of any Participant,
Beneficiary or any other person. Such termination shall be
expressed in an instrument executed by an officer of the Company
and shall become effective as of the date designated in such
instrument, or if no date is specified, on the date of its
execution. Any other Employer which shall have adopted the Plan
may, with the written consent of the Committee, elect separately
to withdraw from the Plan and such withdrawal shall constitute a
termination of the Plan as to it, but it shall continue to be an
Employer for the purposes hereof as to Participants or
Beneficiaries to whom it owes obligations hereunder. Any such
13
withdrawal and termination shall be expressed in an instrument
executed by an officer of the terminating Employer and shall
become effective as of the date designated in such instrument or,
if no date is specified, on the date of its execution.
Notwithstanding the foregoing, if an Employer ceases to exist or
is no longer a member of the Controlled Group, such action shall
automatically constitute a termination of the Plan as to such
Employer.
(2) Upon any termination of the Plan, each affected
Participant's Supplemental Pension Benefit shall be determined
and distributed to him (or his Beneficiary) as otherwise provided
in Article III.
SECTION 6.3. Effect of Amendment and Termination.
(1) No amendment or termination of the Plan shall,
without the consent of the Participant (or, in the case of his
death, his Beneficiary), adversely affect the amount of the
vested Supplemental Retirement Benefit under the Plan of any
Participant or Beneficiary as such Benefit exists on the date of
such amendment or termination.
(2) Notwithstanding any provision of the Plan to the
contrary, in the event of a termination of the Plan, the Company,
in its sole and absolute discretion, shall have the right to
change the time and/or manner of distribution of Supplemental
Retirement Benefits, including, without limitation, by providing
for the payment of a single lump sum payment to each Executive or
Beneficiary then entitled to a Supplemental Retirement Benefit in
an amount equal to the Actuarial Equivalent of such Benefit.
Such lump sum amount shall be calculated by using an interest
rate equal to the Applicable Interest Rate in effect on January 1
of the Plan Year in which the distribution is made.
IN WITNESS WHEREOF, the Company has executed this
Supplemental Retirement Benefit Plan this 25th day of
October, 1994.
THE NORTH AMERICAN COAL CORPORATION
By: Thomas A. Koza
Title: Vice President-Law
and Administration
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1993
<PERIOD-END> SEP-30-1994
<CASH> 33,520
<SECURITIES> 0
<RECEIVABLES> 223,180
<ALLOWANCES> 0
<INVENTORY> 324,779
<CURRENT-ASSETS> 615,304
<PP&E> 485,558
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,721,463
<CURRENT-LIABILITIES> 520,210
<BONDS> 0
<COMMON> 8,951
0
0
<OTHER-SE> 250,023
<TOTAL-LIABILITY-AND-EQUITY> 1,721,463
<SALES> 1,291,642
<TOTAL-REVENUES> 1,300,458
<CGS> 1,034,630
<TOTAL-COSTS> 1,211,997
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,701
<INCOME-PRETAX> 43,611
<INCOME-TAX> 19,699
<INCOME-CONTINUING> 22,975
<DISCONTINUED> 0
<EXTRAORDINARY> 3,218
<CHANGES> 0
<NET-INCOME> 19,757
<EPS-PRIMARY> 2.21
<EPS-DILUTED> 2.21
</TABLE>
