<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K ANNUAL REPORT
Pursuant to Section 13 of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1994 Commission File No. 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
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
5875 Landerbrook Drive
Mayfield Heights, Ohio 44124-4017
----------------------------------- ---------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (216) 449-9600
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH
EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
----------------------------------- ---------------------------------
Class A Common Stock, New York Stock Exchange
Par Value $1.00 Per Share
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Class B Common Stock, Par Value $1.00 Per Share
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
requirement for the past 90 days.
YES X NO
----- -----
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Aggregate market value of Class A Common Stock and Class B Common Stock held by
non-affiliates as of February 28, 1995:
$306,939,372
Number of shares of Class A Common Stock outstanding at February 28, 1995:
7,244,500
Number of shares of Class B Common Stock outstanding at February 28, 1995:
1,719,694
DOCUMENTS INCORPORATED BY REFERENCE
(a) The Company's Proxy Statement for its 1995 annual meeting of
stockholders, incorporated herein by reference in Part III.
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PART I
------
ITEM 1. BUSINESS
-----------------
General
-------
NACCO Industries, Inc. ("NACCO" or the "Company") is a holding company
which owns four principal operating subsidiaries:
(a) NACCO MATERIALS HANDLING GROUP. The Company owns approximately 97%
of the outstanding capital stock of Hyster-Yale Materials Handling, Inc.
("Hyster-Yale"), which is the parent company of NACCO Materials Handling Group,
Inc. (For convenience of reference NACCO Materials Handling Group, Inc. and
Hyster-Yale hereinafter referred to as "NMHG"). NMHG markets two full lines of
forklift trucks and related service parts under the Hyster(R) and Yale(R) brand
names. NMHG accounted for 63% and 49% of NACCO's revenues and operating
profits, respectively, in 1994.
(b) HAMILTON BEACH/PROCTOR-SILEX. The Company owns 80% of Hamilton
Beach/Proctor-Silex, Inc. ("Hamilton Beach/Proctor-Silex"), one of the nation's
leading manufacturers and marketers of small electric appliances. Hamilton
Beach/Proctor-Silex accounted for 20% and 19% of NACCO's revenues and operating
profits, respectively, in 1994.
(c) NORTH AMERICAN COAL. The Company's wholly owned subsidiary, The
North American Coal Corporation, and its affiliated coal companies
(collectively, "North American Coal"), mine and market lignite for use
primarily as fuel for power generation by electric utilities. North American
Coal accounted for 13% and 36% of NACCO's revenues and operating profits,
respectively, in 1994.
(d) KITCHEN COLLECTION. The Company's wholly owned subsidiary, The
Kitchen Collection, Inc. ("Kitchen Collection"), is a national specialty
retailer of kitchenware, small electric appliances and related accessories.
Kitchen Collection accounted for 3% and 4% of NACCO's revenues and operating
profits, respectively, in 1994.
Additional information relating to financial and operating data on a
segment basis (including NACCO, which reduced operating profits by 8% in 1994)
is set forth in Management's Discussion and Analysis of Results of Operations
and Financial Condition on pages 24 through 53 contained in Part II hereof and
in Note P to the Consolidated Financial Statements on pages F-24 through F-27
contained in Part IV hereof.
NACCO was incorporated as a Delaware corporation in 1986 in connection
with the formation of a holding company structure for a predecessor corporation
organized in 1913.
Significant Events
------------------
In August 1994, NACCO and NMHG's two minority stockholders made pro
rata cash capital contributions to NMHG aggregating $25.0 million. This cash
contribution, along with internally generated funds and borrowings, enabled
NMHG to call approximately $48.0 million face value of subordinated debentures
at a price of 105.
In December 1994, NMHG called an additional $24.0 million face value
of subordinated debentures at a price of 105 using internally generated funds
and borrowings. At December 31, 1994, there remained outstanding subordinated
debentures having a face value of approximately $78.5 million.
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On February 28, 1995, NMHG entered into a new long-term credit
agreement to replace its existing bank agreement and to refinance the majority
of its existing long-term debt. The new agreement provided the company with an
unsecured $350.0 million revolving credit facility to replace its current
senior credit facility. The new credit facility has a five-year maturity with
extension options and performance-based pricing comparable to its current
senior credit facility which provides the company with reduced interest rates
upon achievement of certain financial performance targets. With the new credit
facility in place, the company has the ability to call the remaining $78.5
million outstanding subordinated debentures in 1995. In anticipation of the
call, an extraordinary charge of $3.4 million will be recorded by NMHG in the
first quarter of 1995 to write-off unamortized debt issuance costs and
anticipated premiums.
Effective February 28, 1995, George C. Nebel resigned as President and
Chief Executive Officer of Hamilton Beach/Proctor-Silex. While the search for
Mr. Nebel's replacement is underway, Hamilton Beach/Proctor-Silex will be
managed by Alfred M. Rankin, Jr., Chairman, President and CEO of the Company, as
nonexecutive chairman of the Hamilton Beach/Proctor-Silex Board of Directors,
with daily operations being overseen by an executive committee comprised of key
Hamilton Beach/Proctor-Silex executives from various disciplines.
Business Segment Information
----------------------------
A. NACCO Materials Handling Group
------------------------------
NMHG is one of the leading worldwide designers, manufacturers and
marketers of forklift trucks which comprise the largest segment of the
materials handling equipment industry. NMHG accounted for 53% and 42% of
NACCO's assets and liabilities, respectively, as of December 31, 1994, while
its operations accounted for 63% and 49% of NACCO's revenues and operating
profits, respectively, in 1994.
The Industry
------------
Forklift trucks are used in both manufacturing and warehousing
environments. The materials handling industry, especially in industrialized
nations, is generally a mature industry, which has historically been cyclical.
Fluctuations in the rate of orders for forklift trucks reflect the capital
investment decisions of the customers, which in turn depend upon the general
level of economic activity in the various industries served by such customers.
In the most recent business cycle the North American market for forklift
trucks reached its lowest level in 1991 and has increased each year since then
to a record level in 1994. The European and Japanese markets generally had
been in decline since 1990; they both showed some recovery in 1994. During
this business cycle, however, the total worldwide lift-truck market was
relatively stable.
Company Operations
------------------
NMHG maintains product differentiation between Hyster(R) and Yale(R)
brands of forklift trucks and distributes its products through separate
worldwide dealer networks. Nevertheless, opportunities have been identified
and addressed to improve the company's results by integrating overlapping
operations and taking advantage of economies of scale in design, manufacturing
and purchasing. NMHG provides all design, manufacturing and administrative
functions. Products are marketed and sold through two separate dealer networks
which retain the Hyster and Yale identities. In Japan, NMHG has a 50% owned
joint venture with Sumitomo Heavy Industries Ltd. named Sumitomo-Yale Company
Limited ("S-Y"). S-Y performs certain design activities and produces lift
trucks and components which it markets in Japan and which are exported for sale
by NMHG and its affiliates in the U.S. and Europe.
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Product Lines
-------------
NMHG manufactures a wide range of forklift trucks under both the
Hyster(R) and Yale(R) brand names. The principal categories of forklift trucks
include electric rider, electric narrow-aisle and electric motorized hand
forklift trucks primarily for indoor use, and internal combustion engine
("ICE") forklift trucks for indoor or outdoor use. Forklift truck sales
accounted for approximately 82%, 80%, and 79% of NMHG's net sales in 1994,
1993, and 1992, respectively.
NMHG also derives significant revenues from the sale of service parts
for its products. Profit margins on service parts are greater than those on
forklift trucks. The large population of Hyster(R) and Yale(R) forklift trucks
now in service provides a market for service parts. In addition to parts for
its own forklift trucks, NMHG has a program (termed UNISOURCE(TM) in North
America and MULTIQUIP(TM) in Europe) designed to supply Hyster dealers with
replacement parts for most competing brands of forklift trucks. NMHG has a
similar program (termed PREMIER(TM)) for its Yale dealers in the Americas and
Europe. Accordingly, NMHG dealers can offer their mixed fleet customers a "one
stop" supply source. Certain of these parts are manufactured by and purchased
from third party component makers. NMHG also manufactures some of these parts
through reverse-engineering of its competitors' parts. Service parts accounted
for approximately 18%, 20%, and 21% of NMHG net sales in 1994, 1993, and 1992,
respectively.
Competition
-----------
The forklift truck industry is highly competitive. The worldwide
competitive structure of the industry is fragmented by product line and
country. The principal methods of competition among forklift truck
manufacturers are product performance, price, service and distribution
networks. The forklift truck industry competes with alternative methods of
materials handling, including conveyor systems, automated guided vehicle
systems and hand labor. Global competition is also affected by a number of
other factors, including currency fluctuations, variations in labor costs and
effective tax rates, and the costs related to compliance with applicable
regulations, including export restraints, antidumping provisions and
environmental regulations.
Although there is no official source for information on the subject,
NACCO believes that NMHG is one of the top three manufacturers of forklift
trucks in the world.
NMHG's position is strongest in North America, where it believes it is
the leader in unit sales of electric rider and ICE forklift trucks and has a
significant share of unit sales of electric narrow-aisle and electric motorized
hand forklift trucks. Although the European market is fragmented and
competitive positions vary from country to country, NMHG believes that it has a
significant share of unit sales of electric rider and ICE forklift trucks in
Western Europe. Although NMHG's current market share in Asia-Pacific,
including Japan, is lower than in other geographic areas it has been targeted
for additional market share growth.
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Trade Restrictions
------------------
A. United States
-------------
Since June 1988, Japanese-built ICE forklift trucks imported into the
U.S., with lifting capacities between 2,000 and 15,000 pounds, including
finished and unfinished forklift trucks, chassis, frames, and frames assembled
with one or more component parts, have been subject to an antidumping duty
order. Antidumping duty rates in effect through 1994 range from 4.48% to
56.81% depending on manufacturer or importer. The antidumping duty rate
applicable to imports from S-Y is 51.33%, and is likely to continue unchanged
for the foreseeable future, unless S-Y and NMHG decide to participate in
proceedings to have it reduced. NMHG does not currently import for sale in the
United States any forklift trucks or components subject to the antidumping duty
order. This antidumping duty order will remain in effect until the Japanese
manufacturers and importers satisfy the U.S. Department of Commerce
("Commerce") that they have not individually sold merchandise subject to the
order in the United States below foreign market value for at least three
consecutive years, or unless Commerce or the U.S. International Trade
Commission finds that changed circumstances exist sufficient to warrant the
revocation of the order. The legislation implementing the Uruguay round of
GATT negotiations passed in 1994 provides that the anti-dumping order will be
reviewed for possible revocation in 2000. All of NMHG's major Japanese
competitors have either built or acquired manufacturing or assembly facilities
in the United States. The company cannot predict with any certainty if there
will be any negative effects to the company resulting from the Japanese
sourcing of their forklift products in the United States.
B. Europe
------
From 1986 through 1994, Japanese forklift truck manufacturers were
subject to informal export restraints on Japanese-manufactured electric rider,
electric narrow-aisle and ICE forklift trucks shipped to Europe. These informal
restraints are not expected to continue in 1995. Several Japanese manufacturers
have announced either that they have established, or intend to establish,
manufacturing or assembly facilities within the European Community. The
company also cannot predict with any certainty if there will be any negative
effects to NMHG resulting from the Japanese sourcing of their forklift products
in Europe.
Product Design and Development
------------------------------
NMHG spent $23.2 million, $20.7 million, and $21.9 million on product
design and development activities in 1994, 1993, and 1992, respectively. The
Hyster(R) and Yale(R) products are differentiated for the specific needs of
their respective customer bases. NMHG continues to pursue opportunities to
improve product costs by engineering new Hyster(R) and Yale(R) brand products
with component commonality.
Certain product design and development activities with respect to ICE
forklift trucks and some components are performed in Japan by S-Y. S-Y spent
approximately $4.5 million, $4.0 million, and $3.7 million on product design
and development in 1994, 1993, and 1992, respectively.
Backlog
-------
As of December 31, 1994, NMHG's backlog of unfilled orders for
forklift trucks was approximately 24,600 units, or $433 million. This compares
to the backlog as of December 31, 1993 of approximately 12,100 units, or $206
million. Management believes NMHG's backlog level is consistent with overall
increases in industry backlog levels. Backlog represents unit orders to NMHG's
manufacturing plants from independent dealerships, retail customers and
contracts with the U.S. Government. Although these
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orders are believed to be firm, such orders may be subject to cancellation or
modification.
Sources
-------
NMHG has adopted a strategy of obtaining its raw materials and
principal components on a global basis from competitively priced sources. NMHG
is dependent on a limited number of suppliers for certain of its critical
components, including diesel and gasoline engines and cast-iron counterweights
used on certain forklift trucks. There would be a material adverse effect on
NMHG if it were unable to obtain all or a significant part of such components,
or if the cost of such components was to increase significantly under
circumstances which prevented NMHG from passing on such increases to its
customers.
Distribution
------------
The Hyster(R) and Yale(R) brand products are distributed through
separate highly developed worldwide dealer networks. Each also sells directly
to certain major accounts.
In Japan, forklift truck products are distributed by S-Y. In 1991,
Yale reached a ten-year agreement with Jungheinrich Aktiengesellschaft AG
("Jungheinrich"), a German manufacturer of forklift trucks, to continue
distribution of Yale brand products in Germany and Austria and to provide to
Jungheinrich certain ICE and electric-powered products for sale in other major
European countries under the Jungheinrich brand name.
Financing of Sales
------------------
Hyster U.S. dealer and direct sales are supported by leasing and
financing services provided by Hyster Credit Company, a division of AT&T
Commercial Finance Corporation, pursuant to an operating agreement which
expires in 2000.
NMHG is a minority stockholder of Yale Financial Services, Inc., a
subsidiary of General Electric Capital Corporation, which offers Yale U.S.
dealers wholesale and retail financing and leasing services for its forklift
trucks. Such retail financing and leasing services are also available to Yale
national account customers.
Employees
---------
As of February 28, 1995, NMHG had approximately 6,000 employees.
Employees in the Danville, Illinois manufacturing and parts depot operations
are unionized, as are tool room employees located in Portland, Oregon. A new
three-year contract for the Danville union employees was signed in 1994, which
will expire in June, 1997. A new three-year contract was signed in 1994 with
the Portland tool room union which will expire in October 1997. Employees at
the facilities in Berea, Kentucky; Sulligent, Alabama; and Greenville and
Lenoir, North Carolina are not represented by unions.
In Europe, shop employees in the Craigavon, Northern Ireland facility
are unionized. Employees in the Irvine, Scotland and Nijmegen, The Netherlands
facilities are not represented by unions. The employees in Nijmegen have
organized a works council, as required by Dutch law, which performs a
consultative role on employment matters.
NMHG's management believes its current labor relations with both
union and non-union employees are generally satisfactory.
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Government Regulation
---------------------
NMHG's manufacturing facilities, in common with others in industry,
are subject to numerous laws and regulations designed to protect the
environment, particularly with respect to disposal of plant waste. NMHG's
products are also subject to various industry and governmental standards.
NMHG's management believes that such requirements have not had a material
adverse effect on its operations.
Patents, Trademarks and Licenses
--------------------------------
NMHG is not materially dependent upon patents or patent protection.
NMHG is the owner of the Hyster(R) trademark, which is currently registered in
approximately 51 countries. The Yale(R) trademark, which is used on a
perpetual royalty-free basis by NMHG in connection with the manufacture and
sale of forklift trucks and related components, is currently registered in
approximately 100 countries. NMHG's management believes that its business is
not dependent upon any individual trademark registration or license, but that
the Hyster(R) and Yale(R) trademarks are material to its business.
B. Hamilton Beach/Proctor-Silex
----------------------------
General
-------
The Company believes that Hamilton Beach/Proctor-Silex is one of the
largest broad line manufacturers and marketers of small electric appliances in
North America. Hamilton Beach/Proctor-Silex's products are marketed primarily
to retail merchants and wholesale distributors. Hamilton Beach/Proctor-Silex
accounted for 17% and 12% of NACCO's assets and liabilities, respectively, as
of December 31, 1994, while its operations accounted for 20% and 19% of NACCO's
revenues and operating profits, respectively, in 1994.
Sales and Marketing
-------------------
Hamilton Beach/Proctor-Silex manufactures and markets a wide range of
small electric appliances, including motor driven appliances such as blenders,
food processors, mixers and electric knives which are primarily marketed under
the Hamilton Beach(R) brand name, and heat generating appliances such as
toasters, irons, coffeemakers and toaster ovens which are primarily marketed
under the Proctor-Silex(R) brand name. The company markets its products
primarily in North America, but also sells in, South America, Latin America and
Europe. Sales are generated by a network of sales employees and outside sales
representatives to mass merchandisers, catalog showrooms, warehouse membership
clubs, variety store chains, department stores and other retail outlets. Sales
are also made through independent dealers and distributors. Principal
customers include Wal-Mart, Target, K-Mart, Service Merchandise, Montgomery
Ward, Caldor's, Sears, Canadian Tire and Zellers. The company also
manufactures and sells certain private label brand products to third parties
for resale. Sales promotional activities are primarily focused on cooperative
advertising.
Because of the seasonal nature of the markets for small electric
appliances, Hamilton Beach/Proctor-Silex's management believes that backlog is
not a meaningful indicator of performance nor is it a significant indicator of
annual sales. Backlog of orders as of December 31, 1994 was approximately $8.2
million. This compares with the aggregate backlog as of December 31, 1993 of
approximately $13.1 million. This backlog represents customer orders; customer
orders may be cancelled at any time prior to shipment.
Hamilton Beach/Proctor-Silex's warranty program to the consumer
consists generally of a limited warranty lasting one or two years, depending on
the product,
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for domestic electric appliances, and two years for all Canadian electric
appliances. Under these warranty programs, the company may repair or replace,
at its option, those products found to contain manufacturing defects.
Revenues and operating profit for Hamilton Beach/Proctor-Silex are
traditionally greater in the second half of the year as sales of small electric
appliances increase significantly with the fall holiday selling season.
Because of the seasonality of purchases of its products, Hamilton
Beach/Proctor-Silex incurs substantial short-term debt to finance inventories
and accounts receivable.
Product Design and Development
------------------------------
Hamilton Beach/Proctor-Silex spent $2.7 million in 1994 and 1993 and
$2.5 million in 1992 on product design and development activities.
Sources
-------
The principal raw materials used to manufacture and distribute
Hamilton Beach/Proctor-Silex's products are steel, aluminum, plastics and
packaging materials. The company's management believes that adequate quantities
of raw materials are available from various suppliers.
On November 28, 1994, the parent company of one of Hamilton
Beach/Proctor Silex's principal suppliers of molded plastic, Southern Tech
Plastics Products, Inc., entered into Chapter 11 bankruptcy proceedings.
On March 3, 1995, Hamilton Beach/Proctor-Silex entered into a
nonbinding letter of intent to purchase the stock of Southern Tech Plastics
Products, Inc. Subject to final agreement of the parties and the approval of
the United States Bankruptcy Court, it is the company's intention to close this
transaction in April and continue molding operations on its own, although there
can be no assurance that this transaction will be consummated.
Competition
-----------
The small electric appliance industry is highly competitive.
Based on publicly available information about the industry,
Hamilton Beach/Proctor-Silex's management believes it is one of the
largest producers of such appliances in North America.
As retailers generally purchase a limited selection of small electric
appliances, Hamilton Beach/Proctor-Silex competes with other suppliers for
retail shelf space and focuses its marketing efforts on retailers rather than
consumers. The company's management believes that the principal areas of
competition with respect to its products are quality, price, product design,
product features, merchandising, promotion and warranty. Hamilton
Beach/Proctor-Silex's management believes that it is competitive in all of
these areas.
Government Regulation
---------------------
Hamilton Beach/Proctor-Silex, in common with other manufacturers, is
subject to numerous Federal and state health, safety and environmental
regulations. The company's management believes that the impact of expenditures
to comply with such laws will not have a material adverse effect on Hamilton
Beach/Proctor-Silex. The company's products are subject to testing or
regulation by Underwriters' Laboratories, the Canadian Standards Association,
and various entities in foreign countries which review product design.
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Patents, Trademarks, Copyrights, and Licenses
---------------------------------------------
Hamilton Beach/Proctor-Silex holds patents and trademarks registered
in the United States and foreign countries for various products. The company's
management believes that its business is not dependent upon any individual
patent, trademark, copyright or license, but that the Hamilton Beach(R) and
Proctor-Silex(R) trademarks are material to its business.
Employees
---------
As of February 28, 1995, Hamilton Beach/Proctor-Silex's work force
consisted of approximately 3,900 employees, none of which are represented by
unions except for approximately 30 hourly employees at the Picton, Ontario
facility. The Picton, Ontario employees are represented by an employee
association which performs a consultative role.
C. North American Coal
-------------------
General
-------
North American Coal is engaged in the mining and marketing of lignite
for use primarily as fuel for power generation by electric utilities.
Substantially all of the sales by North American Coal are made through wholly
owned project mining subsidiaries pursuant to long-term, cost plus a profit per
ton contracts. The utility customers have arranged and guaranteed the
financing of the development and operation of the project mining subsidiaries.
There is no recourse to NACCO or North American Coal for the financing of these
subsidiary mines. At December 31, 1994 North American Coal's operating mines
consisted of mines where the reserves were acquired and developed by North
American Coal, except for the South Hallsville No. 1 Mine whose reserves are
owned by the customer. North American Coal also earns royalty income from the
lease of various coal and gas properties. For further information as to the
financing of the project mining subsidiaries, see Note H to the Consolidated
Financial Statements on pages F-15 through F-16 contained in Part IV hereof.
Project mining subsidiaries accounted for 24% and 29% of NACCO's assets and
liabilities, respectively, as of December 31, 1994, while their operations
accounted for 12% and 30% of the Company's revenues and operating profits,
respectively, in 1994.
Sales and Markets
-----------------
The principal customers of North American Coal are electric utilities
and a synfuels plant. In 1994, sales to one customer, which supplies coal to
four facilities, accounted for 45% of North American Coal's revenues compared
with 46% and 44% in 1993 and 1992, respectively. The distribution of sales in
the last five years has been as follows:
<TABLE>
<CAPTION>
DISTRIBUTION
-----------------------------
Total
Tons Sold Electric Synfuels
(Millions) Utilities Plant
---------- --------- -------
<S> <C> <C> <C>
1994 27.2 76% 24%
1993 26.5 75% 25%
1992 24.5 74% 26%
1991 21.7 73% 27%
1990 20.8 71% 29%
</TABLE>
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The contracts under which the project mining subsidiaries were
organized provide that under certain conditions of default the customer(s)
involved may elect to acquire the assets (subject to the liabilities) or the
capital stock of the subsidiary, for an amount effectively equal to book value.
In one case, the customer may elect to acquire the stock of the subsidiary
after a specified period of time without reference to default, in exchange for
certain payments on coal thereafter mined.
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The location, customer, sales tonnage and contract expiration date for the
mines operated by North American Coal in 1994 were as follows:
<TABLE>
<CAPTION>
1994 Sales
Mine and Customer Tonnage Contract
Mining Operation Location (Plant) (Millions) Expires
---------------- -------- -------- ---------- -------
Project Mining
Subsidiaries
------------
<S> <C> <C> <C> <C>
The Coteau Freedom (1) Dakota Coal 6.5 2007(2)
Properties Mine; Company
Company Beulah, (Great Plains
North Synfuels
Dakota Plant)
(surface)
Dakota Coal 5.1 2007
Company
(Antelope
Valley
Station)
Dakota Coal 3.1 2007
Company
(Leland Olds
Station)
Dakota Coal 1.0 1997
Company
(Stanton Station
of United Power
Association)
The Falkirk Falkirk (1) United Power 7.3 2013
Mining Mine; Association/
Company Under- Cooperative
wood, Power
North Association
Dakota (Coal Creek
(surface) Station)
The Sabine South (1) Southwestern 3.4 2007
Mining Hallsville, Electric
Company No. 1 Power Company
Mine; (Henry W. Pirkey
Halls- Power Plant)
ville,
Texas
(surface)
Other
-----
Red River Oxbow Mine; Central .8 (3) 2001
Mining Coushatta, Louisiana
Company Louisiana Electric
(Joint Venture (surface) Company (Dolet
with Phillips Hills Power Plant)
Coal Company)
<FN>
- see following page for explanation of note references.
</TABLE>
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Notes to preceding table:
-------------------------
(1) The contracts for these mines require the customer to cover
the cost of the ongoing replacement and upkeep of the plant
and equipment of the mine.
(2) Although the term of the existing coal sales agreement
terminates in 2007, the term may be extended for six (6)
additional periods of five years, or until 2037, at the option
of The Coteau Properties Company.
(3) The amount represents the total (100%) of the 1994 joint
venture tonnage.
Under terms of a lignite mining agreement entered into in 1985
with Utility Fuels, Inc. ("UFI"), a subsidiary of Houston Industries
Incorporated, North American Coal has been retained to design,
develop, construct and operate the proposed Trinity Mine in the
Malakoff-Cayuga reserves near Malakoff, Texas. The Trinity Mine was
expected to produce from 4.5 to 6.5 million tons of lignite annually.
After several delays, however, the proposed Malakoff Generating
Station was cancelled in July, 1994. North American Coal and its
wholly-owned subsidiary, North American Coal Royalty Company ("Royalty
Company"), have received certain management fees, minimum royalties
and other payments in connection with the future development of the
Trinity Mine project. In December 1992 the Lignite Lease and Sublease
Agreement under which the minimum royalties were received was amended.
The parties agreed that, in light of the delayed development of this
mining project, effective January 1, 1993 UFI was no longer obligated
to pay minimum royalties to Royalty Company. Termination of this
obligation reduces North American Coal's annual net income
approximately $2.4 million, after tax. Under the original agreement,
these minimum royalty payments would have terminated at the end of the
year 2005.
Government Regulation
---------------------
North American Coal, in common with other coal producers,
continues to be subject to Federal and state health, safety and
environmental regulations. The 1995 expenditures which will be
required for compliance with the provisions of governmental
regulations, including mined land reclamation and other air and water
pollution abatement requirements, are estimated at $1.2 million for
certain closed mines and are included in Self-Insurance Reserves and
Other in NACCO's Consolidated Financial Statements in this Annual
Report on Form 10-K. The active operations are required to make
certain additional capital expenditures to comply with such
governmental regulations, which expenditures will be recovered under
the terms of the coal sales agreements with the utility customers.
North American Coal's management believes that the Clean Air
Act Amendments, which became effective in 1990, will not have a
material adverse effect on its current operations, because
substantially all of the power generating facilities operated or
supplied by North American Coal's customers meet or exceed the
requirements of the Clean Air Act.
The Federal Energy Regulatory Commission ("FERC") issued Order
636, effective in May 1992, which requires gas pipeline companies to
separate their gas sales and gas transportation functions. As a
result of this Order, the nation's natural gas pipeline companies,
including the four which purchase gas produced by the Great Plains
Synfuels Plant (the
12
<PAGE> 13
"Synfuels Plant"), which is supplied by the company's Coteau
mining subsidiary, have much less need for gas supply under contract
and are actively seeking to restructure or terminate many supply
contracts. The four (4) pipeline companies which purchase gas from
the Synfuels Plant have reached a tentative settlement agreement with
the plant's operator, Dakota Gasification Company ("DGC"), over the
dispute regarding their gas purchase contracts. Under the settlement
agreement, the pipeline companies will pay DGC market-based prices,
plus a fixed monthly demand payment for seven years, for the gas.
FERC must approve the settlement with each of the four (4) pipeline
companies. In December 1994, FERC approved the settlement with one of
the pipeline companies. The affected customers of the four pipelines
have been unsuccessful to date in court challenges to the arrangements
although several challenges are presently pending on rehearing. Based
on regulatory and judicial consideration to date, it does not appear
that continued operation of the Synfuels Plant and Coteau's supply of
coal to the Plant will be adversely affected in the near future.
Coteau sold approximately 6.5 million tons of lignite to the Synfuels
Plant in 1994.
Competition
-----------
The coal industry competes with other sources of energy,
particularly oil, gas, hydro-electric power and nuclear power. Among
the factors that affect competition are the price and availability of
oil and natural gas, environmental considerations, the time and
expenditures required to develop new energy sources, the cost of
transportation, the cost of compliance with governmental regulation of
operations, and the impact of federal energy policies. The ability
of North American Coal to market and develop its reserves will depend
upon the interaction of these factors.
There is no official source of information on the subject, but
company management believes that North American Coal is the seventh
largest commercial coal producer in the United States.
Employees
---------
As of February 28, 1995, North American Coal had approximately
880 employees.
D. Kitchen Collection
------------------
Kitchen Collection(R) is a national specialty retailer of
kitchenware, small electric appliances and related accessories which
operated 119 retail stores as of February 28, 1995. Stores are
located primarily in factory outlet complexes that feature merchandise
of highly recognizable name-brand manufacturers. Kitchen Collection's
product mix includes a broad line of appliances from leading
manufacturers, including Hamilton Beach/Proctor-Silex appliances.
Kitchen Collection introduced a new store format in 1994,
named Hearthstone(TM). These stores carry a distinctive mix of
merchandise for the entire home, with particular emphasis on gift
items and home decor. The product mix and store design at Hearthstone
are distinctively different from the traditional Kitchen Collection
store. This market differentiation will allow the two store formats
to coexist within the same market.
13
<PAGE> 14
Kitchen Collection accounted for 1% of NACCO's assets and
liabilities as of December 31, 1994, while its operations accounted
for 3% and 4% of NACCO's revenues and operating profits, respectively,
in 1994.
Item 2. Properties
-------------------
A. NMHG
----
The following table summarizes certain information with
respect to the principal manufacturing, distribution and office
facilities owned or leased by NMHG.
<TABLE>
<CAPTION>
Location Owned Leased Function/Principal Products
-------- ----- ----- ---------------------------
<S> <C> <C> <C>
Basingstoke, England X Hyster forklift truck marketing
and sales operations for Europe,
the Middle East and Africa
Berea, Kentucky X Manufacture of forklift trucks
Craigavon, Northern X Manufacture of forklift trucks
Ireland
Danville, Illinois X Manufacture of forklift trucks,
components and service parts
Danville, Illinois X Distribution of service parts
for both Hyster and Yale
forklift trucks
Danville, Illinois X Hyster forklift truck marketing
and sales operations for the
Americas
Flemington, X Yale forklift truck marketing
New Jersey and sales operations for the
Americas and certain NMHG
engineering operations
Greenville, North X Manufacture of forklift trucks;
Carolina NMHG manufacturing and other
staff operations for the
Americas
Irvine, Scotland X Manufacture of forklift trucks
and other staff operations for
the Europe
Lenoir, North X Manufacture of component
Carolina parts for forklift trucks
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C> <C> <C>
Nijmegen, The X Manufacture of forklift
Netherlands trucks and component parts;
distribution of service parts
for forklift trucks
Portland, Oregon X Technical center for testing
of prototype equipment and
component parts
Portland, Oregon X NMHG corporate headquarters
Portland, Oregon X Manufacture of production tooling
and prototype units
Sao Paulo, Brazil X Manufacture of forklift
trucks; distribution of service
parts for forklift trucks
Sulligent, Alabama X Manufacture of component parts
for forklift trucks
Sydney, Australia X Assembly of forklift trucks;
distribution of service parts for
forklift trucks and
staff operations for Asia-
Pacific
Wolverhampton, X Yale forklift truck
England marketing and sales operations
for Europe
</TABLE>
In 1994, NMHG sold one of its facilities located in Danville, Illinois and is
currently leasing back a portion of the facility for its Hyster marketing and
sales operations.
15
<PAGE> 16
B. Hamilton Beach/Proctor-Silex
----------------------------
The following table summarizes certain information with respect to the
principal manufacturing, distribution and office facilities owned or leased by
Hamilton Beach/Proctor-Silex.
<TABLE>
<CAPTION>
Location Owned Leased Function/Principal Products
-------- ----- ------ ---------------------------
<S> <C> <C> <C>
Collierville, X Distribution center
Tennessee
El Paso, Texas X Distribution center
Glen Allen, Virginia X Corporate headquarters
Juarez, Chihuahua, X Two assembly plants
Mexico for coffeemakers,irons and
popcorn pumpers
Miami, Florida X Distribution center
Mt. Airy, North X Manufacture of toasters and
Carolina toaster ovens
Mt. Airy, North X Distribution center
Carolina
Picton, Ontario, X Distribution center
Canada
Southern Pines, X Manufacture of iron
North Carolina components; service center for
customer returns; catalog sales
center; parts distribution center
Toronto, Ontario, X Proctor-Silex, Canada sales
Canada and administration
headquarters
Washington, North X Distribution and
Carolina warranty center; manufacture of
products; plastics molding
facility
</TABLE>
Sales offices are also leased in several cities in the United States
and Canada.
C. North American Coal
-------------------
North American Coal's proven and probable coal reserves and deposits
(owned in fee or held under leases which generally remain in effect until
exhaustion of the reserves if mining is in progress) are estimated at
approximately 2.2 billion tons, approximately 81% of which are lignite deposits
in North Dakota.
Reserves are estimates of quantities of coal, made by the company's
geological and engineering staff, that are considered mineable in the future
using existing operating methods. Developed reserves are those which have been
allocated to mines which are in operation; all other reserves are classified as
16
<PAGE> 17
undeveloped. The table which follows gives detailed information as to North
American Coal's in-place reserves as of December 31, 1994 for the mines listed
under Item 1 "North American Coal" on page 11. The reserves of the South
Hallsville No. 1 Mine, which are listed on page 11, are owned and controlled by
the customer and, therefore, have not been listed in the following table.
Additional information concerning North American Coal is set forth in Item 1
"North American Coal".
<TABLE>
<CAPTION>
Reserves (Millions of Tons)
---------------------------
Average
Sulfur
Committed Average Content
Under BTUs Per Unit
Contract Uncommitted per lb. of Weight
-------- ----------- ------- ---------
Developed
---------
<S> <C> <C> <C> <C>
Freedom Mine,
North Dakota 507.5 6,767 0.8%
Falkirk Mine,
North Dakota 674.2 6,200 0.6%
Oxbow Mine,
Louisiana (1) 2.8 6.4 6,722 0.7%
------- ------
Total Developed 1,184.5 6.4
Undeveloped
-----------
North Dakota 571.2 6,428 0.7%
Texas 125.8 125.2 6,208 0.9%
Eastern 64.5 79.7 12,070 3.3%
------- -----
Total Undeveloped 190.3 776.1
------- -----
1,374.8 782.5
======= =====
<FN>
(1) These amounts represent the total (100%) of the joint venture reserves.
</TABLE>
D. Kitchen Collection
------------------
Kitchen Collection owns the building housing its corporate
headquarters, a warehouse/distribution facility and a retail store in
Chillicothe, Ohio. It leases warehouse/distribution facilities in Chillicothe,
Ohio and the remainder of its retail stores. A typical store is approximately
3,300 square feet.
17
<PAGE> 18
Item 3. Legal Proceedings
--------------------------
Neither the Company nor any of its subsidiaries is a party to any
material pending legal proceeding other than ordinary routine litigation
incidental to its respective business.
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders of the Company.
Item 4A. Executive Officers of the Registrant
----------------------------------------------
The information under this Item is furnished pursuant to Instruction 3
to Items 401(b) and 401(c) of Regulation S-K.
The table on the following pages sets forth the name, age, current
position and principal occupation and employment during the past five years of
the Company's executive officers.
18
<PAGE> 19
<TABLE>
Officers of the Company
<CAPTION>
Name Age Current Position Other Positions
---- --- ---------------- ---------------
<S> <C> <C> <C>
Alfred M. Rankin, Jr. 53 Chairman, President, and Chief Executive Officer From May 1991 to May 1994,
of NACCO (since May 1994) President and Chief Executive
Officer of NACCO. From
prior to 1990 to May 1991,
President and Chief Operating
Officer of NACCO.
Frank B. O'Brien 48 Senior Vice President - Corporate From January 1993 to
Development and Chief Financial Officer of December 1993,
NACCO (since January 1994) Senior Vice President -
Corporate Development of NACCO.
From prior to 1990 to
December 1992, see
Vice President - Corporate
Development of NACCO.
Steven M. Billick 38 Vice President and Controller From prior to 1990 to July 1991,
of NACCO (since July 1991) Partner, Deloitte & Touche
(accounting firm).
Charles A. Bittenbender 45 Vice President, General Counsel and From prior to 1990 to June 1990,
Secretary of NACCO (since July 1990) Deputy General Counsel, G.D.
Searle & Co. (research-based
manufacturer and marketer of
pharmaceutical products).
</TABLE>
19
<PAGE> 20
<TABLE>
Principal Officers of the Company's Subsidiaries
A. NMHG
----
<CAPTION>
Name Age Current Position Other Positions
---- --- ---------------- ---------------
<S> <C> <C> <C>
Reginald R. Eklund 54 President and Chief Executive From August 1993 to September
Officer of NMHG (since 1993, Vice President of Hyster and
September 1992) Yale. From September 1992 to
August 1993, President and Chief
Executive Officer of Hyster. From
prior to 1990 to September 1992,
President and Chief Operating
Officer of NMHG. From prior to
1990 to August 1993, President and
Chief Executive Officer of Yale.
Bergen I. Bull 55 Vice President, General Counsel From November 1990 to December
and Secretary of NMHG 1993, Vice President and Assistant
(since December 1993) Secretary of Yale. From prior to
1990 to December 1993, Vice
President, Corporate
Administration, General Counsel and
Secretary of Hyster.
G. Michael Decker 53 Vice President, Finance and Chief From February 1993 to December
Financial Officer of NMHG 1993, Vice President, Finance
(since February 1993) and Chief Financial Officer of
Hyster and Yale. From 1991 to
February 1993, Vice President,
Finance, Secretary and Chief
Financial Officer for Doehler
Jarvis Ltd. Partnership (casting
manufacturer). From prior to
1990 to 1991, Senior Vice
President Finance Treasurer and
Chief Financial Officer for The
Manitowoc Company, Inc.
(manufacturer serving heavy
construction, food service and
shipbuilding industries).
Julie C. Hui 38 Controller of NMHG (since From 1992 to January 1995,
January 1995) Controller, Bun Brown Corporation
(manufacturer of micro electronics
and systems products). In 1991,
Director of Accounting and Tax
of Bun Brown. From prior to 1990
to December 1990, Tax Manager
of Bun Brown.
Jeffrey C. Mattern 42 Treasurer of NMHG (since From August 1992, Treasurer of
August 1992) Hyster and Yale. From prior to 1990
to July 1992, Assistant Treasurer
for Harnischfeger Industries, Inc.
(manufacturer of papermaking
machinery, mining and materials
handling equipment).
Frank G. Muller 53 Vice President, President Americas From February 1993 to December
for NMHG (since May 1993) 1993, Vice President of Hyster and
Yale. From May 1992 to May 1993,
Vice President, Manufacturing,
Americas for NMHG. From prior to
1990 to May 1992, Vice President,
Manufacturing, Yale.
Victoria L. Rickey 42 Vice President, Managing Director, From 1993 to January 1995,
NMHG Europe (since January 1995) Senior Vice President
International Business Group, J.I.
Case (manufacturer of agricultural
and construction equipment). From
prior to 1990 to 1993, Vice
President, Agricultural Equipment
of J.I. Case.
Graham D. Tribe 52 Vice President, Managing Director, From prior to 1990 to May 1994,
NMHG Asia-Pacific Managing Director, Hyster
(since May 1994) Australia Pty. Ltd.
</TABLE>
20
<PAGE> 21
<TABLE>
Principal Officers of the Company's Subsidiaries
------------------------------------------------
B. HAMILTON BEACH/PROCTOR-SILEX
--------------------------------
<CAPTION>
Name Age Current Position Other Positions
---- --- ---------------- ---------------
<S> <C> <C> <C>
Judith B. McBee 47 Executive Vice President - From October 1990 to September
Marketing of Hamilton Beach/ 1994, Executive Vice President -
Proctor-Silex (since October 1994) Marketing/Sales of Hamilton
Beach/Proctor Silex. From January
1990 to October 1990, Executive
Vice President - Marketing/Sales
of Proctor-Silex. From prior to
1990 to January 1990, Executive
Vice President - Marketing of
Proctor-Silex.
Paul C. Smith 48 Senior Vice President - Sales of From prior to 1990 to September
Hamilton Beach/Proctor-Silex 1994, Vice President and General
(since October 1994) Manager, Consumer Markets
Division, Fuji Photo Film U.S.A.
(manufacturer of photographic
film).
Charles B. Hoyt 47 Vice President - Finance and From August 1990 to October 1990,
Chief Financial Officer of Vice President and Chief Financial
Hamilton Beach/Proctor-Silex Officer of Proctor-Silex. From
(since October 1990) prior to 1990 to August 1990,
Vice President - Finance and
Treasurer of Yale.
Ronald C. Eksten 51 Vice President, General Counsel From prior to 1990 to December
and Secretary of Hamilton Beach/ 1991, Associate General Counsel,
Proctor-Silex (since December 1991) Continental Can Company, Inc. (an
international manufacturer of
packaging products).
Michael J. Morecroft 52 Vice President, Engineering/Product From prior to 1990 to October
Development of Hamilton Beach/ 1990, Vice President, Engineering
Proctor-Silex (since October 1990) of Hamilton Beach Inc.
Jack J. Pountney 66 Vice President of Hamilton Beach/ From prior to 1990, President,
Proctor-Silex - President, Proctor-Silex Proctor-Silex Canada.
Canada (since June 1993)
James H. Taylor 37 Vice President and Treasurer of From prior to 1990 to October
Hamilton Beach/Proctor-Silex 1990, Vice President and Treasurer
(since October 1990) of Proctor-Silex.
</TABLE>
21
<PAGE> 22
<TABLE>
Principal Officers of the Company's Subsidiaries
------------------------------------------------
C. North American Coal
-----------------------
<CAPTION>
Name Age Current Position Other Positions
---- --- ---------------- ---------------
<S> <C> <C> <C>
Clifford R. Miercort 55 President of North American Coal
(since prior to 1990) and Chief
Executive Officer of North American
Coal (since April 1990)
H. Dean Jacot 52 Executive Vice President and
Chief Operating Officer of
North American Coal (since
prior to 1990)
Herschell A. Cashion 52 Senior Vice President - Business From prior to 1990 to August 1994,
Development of North American Coal Vice President - Business
(since August 1994) Development of North American Coal
Charles B. Friley 53 Vice President and Chief Financial From April 1992 to October 1994,
Officer (since February 1995) Senior Vice President of Phillips
Alaska Natural Gas Company. From
prior to 1990 to April 1992,
Vice President of Phillips 66
Natural Gas Company.
Thomas A. Koza 48 Vice President - Law and From prior to 1990 to July 1990,
Administration of North Vice President, General Counsel
American Coal; Secretary of and Secretary of NACCO.
North American Coal
(since prior to 1990)
K. Donald Grischow 47 Controller of North American
Coal and Treasurer of North
American Coal (since prior to 1990)
</TABLE>
22
<PAGE> 23
<TABLE>
Principal Officers of the Company's Subsidiaries
------------------------------------------------
D. Kitchen Collection
------------------
<CAPTION>
Name Age Current Position Other Positions
---- --- ---------------- ---------------
<S> <C> <C> <C>
Randall D. Lynch 48 President and Chief Executive Officer of Kitchen From prior to 1990 to June 1991,
Collection (since June 1991) President of Kitchen Collection.
Randolph J. Gawelek 47 Executive Vice President and Secretary of Kitchen
Collection (since prior to 1990)
</TABLE>
23
<PAGE> 24
PART II
-------
Item 5. Market for Registrant's Common Equity and Related
-------------------------------------------------------------
Stockholder Matters
-------------------
NACCO Industries, Inc. Class A common stock is traded on the
New York Stock Exchange. The ticker symbol is NC. Because of
transfer restrictions, no trading market has developed, or is
expected to develop, for the Company's Class B common stock. The
Class B common stock is convertible into Class A common stock on a
one-for-one basis. The high and low market prices for the Class A
common stock and dividends per share for both classes of stock for
the past two years are presented in the table below:
<TABLE>
<CAPTION>
1994
-----------------------------
Sales Price Cash
-----------------------------
High Low Dividend
------ -------- --------
<S> <C> <C> <C>
First quarter $58.13 - $48.38 16.5 cents
Second quarter $60.75 - $45.75 17.0 cents
Third quarter $63.00 - $52.88 17.0 cents
Fourth quarter $64.00 - $46.63 17.0 cents
</TABLE>
<TABLE>
<CAPTION>
1993
-----------------------------
Sales Price Cash
-----------------------------
High Low Dividend
------ -------- --------
<S> <C> <C> <C>
First quarter $55.00 - $44.00 16.0 cents
Second quarter $58.25 - $50.00 16.5 cents
Third quarter $52.13 - $43.63 16.5 cents
Fourth quarter $52.00 - $42.00 16.5 cents
</TABLE>
At December 31, 1994, there were approximately 900 Class
A common stockholders of record and 600 Class B common
stockholders of record.
24
<PAGE> 25
Item 6. Selected Financial Data
--------------------------------
NACCO Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------- ----------
(In thousands, except per share and employee data)
<S> <C> <C> <C> <C> <C> <C>
Total revenues $1,864,887 $1,549,371 $1,483,779 $1,369,195 $1,384,993 $1,187,570
Operating profit $ 135,096 $ 93,384 $ 101,280 $ 94,532 $ 106,484 $ 125,363
Income before
extraordinary $ 45,272 $ 11,593 $ 22,868 $ 20,038 $ 28,189 $ 55,820
charge
Extraordinary
charge, net-
of-tax (3,218) (3,292) (110,000)
---------- ---------- ---------- ---------- ---------- ----------
Net income $ 42,054 $ 8,301 $ (87,132) $ 20,038 $ 28,189 $ 55,820
(loss)
Total assets $1,694,322 $1,642,493 $1,684,889 $1,629,663 $1,767,098 $1,724,767
Notes payable $ 286,717 $ 357,788 $ 459,906 $ 442,279 $ 533,692 $ 605,874
Stockholders $ 279,391 $ 235,626 $ 238,316 $ 350,188 $ 353,293 $ 303,986
equity
Total employees 11,086 10,879 10,497 9,858 11,111 10,725
Per share of
stock:
Income before
extraordinary $ 5.06 $ 1.30 $ 2.57 $ 2.26 $ 3.18 $ 6.29
charge
Extraordinary
charge, net-
of-tax (0.36) (0.37) (12.37)
---------- ---------- ---------- ---------- ---------- ----------
Net income $ 4.70 $ 0.93 $ (9.80) $ 2.26 $ 3.18 $ 6.29
(loss)
Cash dividends $ .675 $ .655 $ .635 $ .615 $ .595 $ .575
Market value $ 48.38 $ 51.50 $ 51.75 $ 47.50 $ 30.25 $ 55.50
Stockholders
equity $ 31.21 $ 26.35 $ 26.67 $ 39.43 $ 39.79 $ 34.25
Average shares
outstanding 8,948 8,938 8,891 8,878 8,877 8,874
</TABLE>
25
<PAGE> 26
Item 7. Management's Discussion and Analysis of Financial
------------------------------------------------------------
Condition and Results of Operations
-----------------------------------
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
FINANCIAL SUMMARY
Income before extraordinary charge for 1994 was $45.3 million,
or $5.06 per share, compared with income before extraordinary
charge of $11.6 million, or $1.30 per share, in 1993.
Extraordinary charges of $3.2 million and $3.3 million, net-of-tax,
or $0.36 per share and $0.37 per share, were recognized in 1994 and
1993, respectively, resulting in net income of $42.1 million, or
$4.70 per share in 1994 and $8.3 million or $0.93 per share in
1993. These extraordinary charges relate to the retirement of
portions of NACCO Materials Handling Group's Hyster-Yale 12 3/8%
subordinated debentures and are discussed in more detail in Note B
to the consolidated financial statements on page F-10 and in this
discussion and analysis on page 38.
Income before extraordinary charge for 1992 was $22.9
million, or $2.57 per share. In 1992, an extraordinary charge of
$110.0 million, or $12.37 per share, was recognized as a result of
the Coal Industry Retiree Health Benefit Act of 1992. The 1992
extraordinary charge is discussed in more detail in Note B to
the consolidated financial statements on page F-10 and in this
discussion and analysis on page 53.
SEGMENT INFORMATION
NACCO Industries, Inc. ("NACCO," the parent company) has 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"). These four subsidiaries function in distinct
business environments, and the results of operations and financial
condition are best discussed at the subsidiary level. Results by
segment as reported in the financial statements are summarized in
Note P to the consolidated financial statements on page F-24 of
this annual report.
26
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
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
sales tons. Net income of these project mines, however, is not
significantly affected by changes in such operating costs.
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.
North American Coal s results 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.
Tons sold by North American Coal's four operating mines were
as follows for the year ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Coteau Properties 15.7 14.9 13.7
Falkirk Mining 7.3 7.6 7.4
Sabine Mining 3.4 3.5 2.8
Red River Mining .8 .5 .6
-- -- --
27.2 26.5 24.5
==== ==== ====
</TABLE>
Revenues, income before taxes, provision for taxes and net
income were as follows for the year ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Revenues
Coteau $113.5 $106.5 $93.1
Falkirk 61.3 59.5 54.8
Sabine 51.8 50.4 43.4
Red River 13.9 10.0 10.6
---- ---- ----
240.5 226.4 201.9
Royalties and other 9.7 6.9 10.0
--- --- ----
$250.2 $233.3 $211.9
====== ====== ======
</TABLE>
27
<PAGE> 28
<TABLE>
<S> <C> <C> <C>
Income before taxes
Coteau $10.5 $11.1 $10.2
Falkirk 9.8 9.8 9.1
Sabine 3.3 3.3 2.6
Red River 2.3 1.1 1.4
--- --- ---
Total from operating mines 25.9 25.3 23.3
Royalty and other income, net 10.5 7.7 9.6
Headquarters expense (6.0) (5.2) (4.9)
---- ---- ----
30.4 27.8 28.0
Provision for taxes 9.4 10.4 7.9
--- ---- ---
Net income $21.0 $17.4 $ 20.1
===== ===== =====
</TABLE>
28
<PAGE> 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
FINANCIAL REVIEW - Continued
NORTH AMERICAN COAL
1994 Compared with 1993
The following schedule details the components of the
changes in revenues, income before taxes and net income for 1994
compared with 1993:
<TABLE>
<CAPTION>
Income Net
Revenues Before Taxes Income
-------- ------------ ------
<S> <C> <C> <C>
1993 $233.3 $27.8 $17.4
Coteau
Tonnage volume 4.9 .6 .4
Mix of tons sold (.5) (.5) (.3)
Agreed profit per ton (.9) (.9) (.6)
Pass-through costs 3.4
Falkirk
Tonnage volume (2.4) (.4) (.3)
Agreed profit per ton .3 .3 .2
Pass-through costs 3.7
Sabine
Tonnage volume (1.4) (.1) (.1)
Agreed profit per ton .1 .1
Pass-through costs 2.8
Red River
Tonnage volume 6.6 1.6 1.0
Mix of tons sold (1.6) (1.6) (1.0)
Average selling price (1.1) (1.1) (.7)
Operating costs 3.4 2.2
Other income (expense) (1.2) (.8)
------ ------ ------
Variances from operating mines 13.9 .2 --
Royalties and other income, net 3.0 3.2 2.1
Headquarters expense (.8) (.5)
Differences between effective and
statutory tax rates 2.0
------ ------ ------
1994 $250.2 $30.4 $21.0
====== ===== =====
</TABLE>
29
<PAGE> 30
Increases in customer demand due to higher customer fuel
requirements resulted in increased tonnage volume at Coteau and Red
River. In 1993, Falkirk's customer purchased additional tonnage for
purposes of increasing the stockpile at the generating station
which resulted in unfavorable tonnage volume in 1994 compared with
1993. At Red River, tons sold in excess of amounts specified in
the contract yield a lower price, resulting in an unfavorable sales
mix in 1994.
The increased tonnage at Red River resulted in volume
efficiencies that favorably impacted operating costs. The increase
in royalties and other income in 1994 is from royalties received
relating to former coal properties, which royalties were not
received in 1993.
30
<PAGE> 31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NORTH AMERICAN COAL - Continued
FINANCIAL REVIEW - Continued
1993 Compared with 1992
The following schedule details the components of the changes
in revenues, income before taxes and net income for 1993 compared
with 1992:
<TABLE>
<CAPTION>
Income Net
Revenues Before Taxes Income
-------- ------------ ------
<S> <C> <C> <C>
1992 $ 211.9 $28.0 $20.1
Coteau
Tonnage volume 8.2 .9 .6
Mix of tons sold (.3) (.3) (.2)
Agreed profit per ton .2 .2 .1
Pass-through costs 5.4
Falkirk
Tonnage volume 1.3 .2 .1
Agreed profit per ton .4 .4 .3
Pass-through costs 3.0
Sabine
Tonnage volume 9.3 .6 .4
Agreed profit per ton .1 .1 .1
Pass-through costs (2.5)
Red River
Tonnage volume (1.8) (.5) (.3)
Mix of tons sold .1 .1 .1
Average selling price 1.1 1.1 .7
Operating costs (1.2) (.8)
Other income (expense) .3 .1
------- ---- -----
Variances from operating mines 24.5 1.9 1.2
Royalties and other income, net (3.1) (1.8) (1.1)
Headquarters expense (.3) (.2)
Differences between effective and
statutory tax rates (2.6)
-------- ----- -----
1993 $ 233.3 $27.8 $17.4
======== ===== =====
</TABLE>
31
<PAGE> 32
The increase in revenues due to pass-through costs at Coteau
primarily related to increased interest expense of $5.8 million.
The loss of the minimum royalty payments (see "Other" which
follows) related to Royalty Company reduced revenues and operating
profit by approximately $3.6 million.
OTHER INCOME AND EXPENSE
Below is a detail of other income (expense) for the year
ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Interest income
Project mining subsidiaries $ .8 $ .5 $ .5
Other mining operations 2.2 1.6 1.6
--- --- ---
$ 3.0 $ 2.1 $ 2.1
====== ===== =====
Interest expense
Project mining subsidiaries $(18.6) (18.5) (13.2)
Other mining operations (1.3) (.8) (1.0)
---- --- ----
$(19.9) $(19.3) $(14.2)
====== ====== ======
Other-net
Project mining subsidiaries $ .4 $ .2 $ 1.1
Other mining operations (1.5) (.2) (2.5)
---- --- ----
$ (1.1) $ --- $ (1.4)
====== ====== =======
</TABLE>
PROVISION FOR INCOME TAXES
North American Coal's effective tax rate for 1994, 1993
and 1992 was 31.1 percent, 37.9 percent and 28.7 percent,
respectively. In the third quarter of 1993, North American
Coal recognized additional tax expense to reflect the impact on
their deferred tax balances of the one percent increase in the
statutory tax rate. This adjustment increased North American
Coal's effective tax rate in 1993 relative to 1994 and 1992.
OTHER
In December 1992, North American Coal Royalty Company
("Royalty Company"), a wholly owned subsidiary of North American
Coal, and a public utility company agreed to amend an existing
Lignite Lease and Sublease Agreement. The parties agreed, in light
of the delayed development of the mining project to which such
leases were assigned, the utility was no longer obligated to pay
Royalty Company minimum royalties beginning January 1, 1993. These
royalties amounted to approximately $3.6 million per year and
termination of these payments reduced North American Coal's annual
net income approximately $2.4 million, after tax, beginning in
1993.
32
<PAGE> 33
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NORTH AMERICAN COAL - Continued
FINANCIAL REVIEW - Continued
1995 OUTLOOK
North American Coal's existing mines are expected to produce
about the same number of total tons in 1995 as in 1994, as customer
requirements appear level with the previous year. Several events
have, however, occurred during 1994 which will provide for future
growth at North American Coal. In the company's first venture
outside of coal, a mining services contract was signed in December
1994 with White Rock Quarries near Miami, Florida, which produces
limestone. North American Coal has contracted to provide mining
services on the limestone reserves owned by White Rock. The
project will begin generating revenues in 1996. In June 1994,
Coteau amended the coal sales agreement with its customer, which
gives Coteau the option to extend its contract for up to an
additional 30 years, through 2037. This contract amendment was
signed in exchange for reduced profits of approximately $1.0
million per year for ten years beginning in 1994. North American
Coal is continuing its contract negotiations relating to a contract
mining agreement for the Salt River Project in western New Mexico,
and is continuing to look for other growth opportunities.
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 $35.0 million of its
revolving credit facility available at December 31, 1994.
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.
Expenditures for property, plant and equipment by the project
mining subsidiaries were $11.7 million in 1994 and $23.0 million
in 1993, and are anticipated to be approximately $15.0 million in
1995. These expenditures relate to the development and improvement
of the project mining subsidiaries' mines and are financed by the
utility customers.
33
<PAGE> 34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NACCO MATERIALS HANDLING GROUP
NACCO Materials Handling Group, 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 year
ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Revenues
Americas $ 828.1 $645.4 $ 579.0
Europe, Africa and Middle East 289.7 220.5 251.5
Asia - Pacific 61.1 42.3 35.4
---- ---- ----
$1,178.9 $ 908.2 $ 865.9
======== ======= ========
Operating profit
Americas $ 45.5 $ 40.3 $14.9
Europe, Africa and Middle East 15.1 (2.4) 28.7
Asia - Pacific 5.2 1.7 .7
--- --- --
$ 65.8 $ 39.6 $44.3
======== ====== =====
Operating profit excluding
goodwill amortization
Americas $ 53.4 $ 48.2 $22.8
Europe, Africa and Middle East 17.9 .4 31.5
Asia - Pacific 5.3 1.8 .8
--- --- --
$ 76.6 $ 50.4 $55.1
======== ====== =====
Net income (loss) before
extraordinary charge $ 18.7 $ (5.1) $ 1.3
Extraordinary charge (3.2) (3.3)
---- ---- ----
Net income (loss) $ 15.5 $ (8.4) $ 1.3
======== ====== =====
</TABLE>
34
<PAGE> 35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NACCO MATERIALS HANDLING GROUP--Continued
FINANCIAL REVIEW--Continued
1994 Compared With 1993
The following schedule details the components of the changes
in revenues, operating profit and net income (loss) for 1994
compared with 1993:
<TABLE>
<CAPTION>
Net
Operating Income
Revenues Profit (Loss)
-------- ------------- -------
<S> <C> <C> <C>
1993 $ 908.2 $39.6 $(8.4)
Increase (decrease) in 1994 from:
Unit volume 211.7 40.8 26.5
Sales mix 8.1 (.8) (.5)
Average sales price 14.7 14.7 9.6
Service parts 27.2 11.1 7.2
Foreign currency 9.0 (4.2) (2.7)
Manufacturing cost 3.5 2.3
Other operating expense (38.9) (25.2)
Other income and expense 7.1
Differences between effective and
statutory tax rates (.5)
Extraordinary item .1
-------- ----- -----
1994 $1,178.9 $65.8 $15.5
======== ===== =====
</TABLE>
Record market size in North America and higher market shares
in both the Americas and Europe resulted in record lift truck unit
volume of 55,751 units at NMHG in 1994. Unit shipments were up
approximately 25 percent and 30 percent in the Americas and in
Europe, respectively. NMHG initiated modest price increases during
the middle of 1994 which were accepted in the marketplace,
favorably affecting operating results. The strong economy in North
America and new marketing programs and new dealers in Europe
improved the worldwide service parts business. During 1994, a
weaker U.S. dollar caused translated revenues to be higher compared
with 1993, while operating profit was adversely affected by the
strong Japanese yen which increased the cost of products sourced
from Japan.
The improvement in manufacturing cost is due to the favorable
effect of increased manufacturing throughput partially offset by
plant ramp-ups and vendor parts shortages which caused labor
inefficiencies. Other operating expense increased in 1994 compared
with 1993 due to higher costs associated with strategic marketing
and product development programs, increased incentive-based payroll
costs and additional warranty expenditures related to new products
and increased volumes. The investments in strategic programs are
expected to plateau in the next two years.
35
<PAGE> 36
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NACCO MATERIALS HANDLING GROUP--Continued
FINANCIAL REVIEW--Continued
1993 COMPARED WITH 1992
The following schedule details the components of the changes
in revenues, operating profit and net income (loss) for 1993
compared with 1992:
<TABLE>
<CAPTION>
Net
Operating Income
Revenues Profit (Loss)
-------- ------------- -------
<S> <C> <C> <C>
1992 $865.9 $44.3 $1.3
Increase (decrease) in 1993 from:
Unit volume 49.8 7.1 4.7
Sales mix 15.1 1.2 .8
Average sales price 8.2 8.2 5.4
Service parts 6.4 6.6 4.4
Foreign currency (37.2) (16.3) (10.8)
Manufacturing cost (10.8) (7.1)
Other operating expense (.7) (.5)
Other income and expense (1.0)
Differences between effective and
statutory tax rates (1.8)
Change in statutory tax rate (.5)
Extraordinary item (3.3)
------ ----- -----
1993 $908.2 $39.6 $(8.4)
====== ===== =====
</TABLE>
Improved economic conditions in North America, partially
offset by continued weakness in most of Europe and Japan, resulted
in increased unit volume in 1993. While continued discounting
prevented significant price improvements in 1993 in the forklift
industry, pricing in North America and Europe was favorable when
compared with 1992. Although sales mix changes to higher-priced
products in both North America and Europe during 1993 had a
favorable impact on revenues, the impact on operating profit was
not proportionate because mix shifted to lower-margin products.
NMHG also realized improved global market share in 1993.
Service parts business continued to recover in North America
with higher volumes and sales of higher-margin service parts
resulting in a favorable impact on revenues and operating profit
during 1993. Higher revenues from the North American service parts
business were partially offset by weak European markets. Favorable
mix, however, reduced the impact of lower European volume on
operating profit from the service parts business in 1993.
36
<PAGE> 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NACCO MATERIALS HANDLING GROUP--Continued
FINANCIAL REVIEW--Continued
1993 Compared With 1992--Continued
Manufacturing costs were higher in 1993 compared with 1992
primarily as a result of start-up costs associated with new product
introductions and unfavorable fixed manufacturing cost variances
due to the lower level of production volume in Europe. A weaker
British pound sterling in 1993 compared with 1992 resulted in lower
translated sales and profits in Europe. In addition, a stronger
Japanese yen in 1993 adversely affected operating profit because it
increased the cost of products and parts sourced from Japan.
OTHER INCOME AND EXPENSE
Below is a detail of other income (expense) for the year
ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------ ----- -------
<S> <C> <C> <C>
Interest income $ .8 $ .8 $ 1.5
Interest expense (33.7) (40.4) (44.2)
Other-net 2.9 (1.7) 2.9
--- ---- ---
$(30.0) $(41.3) $ (39.8)
======= ====== =====
</TABLE>
The decrease in interest income in 1993 compared with 1992 is
due primarily to lower levels of excess cash available for
investment.
The debt restructurings and equity infusions in 1994 and 1993
reduced outstanding debt and lowered overall effective interest
rates resulting in reduced interest expense in 1994 compared with
1993, and in 1993 compared with 1992 (see the "Extraordinary
Charge" discussion which follows).
Other-net consists primarily of equity in the earnings of the
Sumitomo-Yale 50 percent-owned joint venture ("S-Y"), gains and
losses on the sale of assets and grant income. In 1994, other-net
included income of $0.5 million from S-Y compared with a loss of
$3.9 million in 1993. The improved results at S-Y in 1994 are due
to elevated sales volumes to NMHG and manufacturing cost
reductions. The significant loss at S-Y in 1993 was caused by the
increase in the value of the Japanese yen compared with other
global currencies and the depressed European and Japanese markets.
During, 1994 NMHG received $3.2 million of employment grant income
related to additional hiring at the Craigavon, Northern Ireland,
facility. During the second quarter of 1993, NMHG sold its former
manufacturing site in Wednesfield, England, for $3.3 million,
resulting in a net pretax gain of $2.1 million. During 1992, NMHG
experienced sizable foreign currency exchange gains due to the
decrease in the value of the British pound sterling compared with
other currencies which have not been repeated.
37
<PAGE> 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NACCO MATERIALS HANDLING GROUP--Continued
FINANCIAL REVIEW--Continued
PROVISION FOR INCOME TAXES
NMHG's effective tax rate for 1994 was 47.7 percent. For
1993, the effective tax rate was not meaningful because expenses
not deductible for tax purposes, primarily amortization of
goodwill, resulted in a tax provision in 1993 despite a loss before
income taxes. The higher level of pretax income in 1994 reduced
the effect of these non-deductible expenses and resulted in an
effective tax rate that is closer to the statutory tax rate. Also
in 1993, NMHG began providing for U.S. taxes on foreign earnings
taxed at overall lower rates in anticipation of future
repatriations.
In 1992 the effective tax rate was 70.7 percent. The high
effective tax rate in 1992 was due to the low level of pretax
income in that year relative to the expenses not deductible for tax
purposes.
EXTRAORDINARY CHARGE
The extraordinary charges of $3.2 million and $3.3 million,
net of $2.0 million in tax benefits, were recognized in the second
quarters of 1994 and 1993, respectively. These charges represent
the write-off of premiums and unamortized debt issuance costs
associated with the retirement of approximately $70.0 million and
$50.0 million face value of NACCO Materials Handling Group s
Hyster-Yale 12 3/8% subordinated debentures. These retirements
were achieved using internally generated funds of NMHG and equity
infusions from existing stockholders. Refer to Note G, Revolving
Credit Agreements and Notes Payable, for additional information.
BACKLOG
NMHG's backlog of orders at December 31, 1994, was
approximately 24,600 forklift truck units, compared with 12,100
units at December 31, 1993 and 1992. The increased order demand in
1994 and, to a lesser degree, vendor part shortages have extended
delivery lead times and resulted in expanded backlog in 1994.
Management believes that the NMHG backlog level is consistent with
overall increases in industry backlog levels.
38
<PAGE> 39
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NACCO MATERIALS HANDLING GROUP--Continued
1995 OUTLOOK
The forklift truck industry has historically been cyclical.
The economic conditions in the various markets in which the
industry customers operate affect demand. Based on external
economic forecasts and recent factory order levels, management
expects economic activity in North America to continue to be strong
in 1995. Europe has begun to recover from its recent recession and
an expanded European market is anticipated in 1995. Many markets in
the Asia-Pacific will continue to grow. The Japanese market is
expected to show signs of improvement in 1995. Overall, NMHG
anticipates increased shipments in 1995 compared with 1994.
NMHG will introduce several new products in 1995 and will
continue its efforts to increase worldwide market shares.
Management is focused on alleviating manufacturing bottlenecks to
improve the output of its plants and reduce delivery lead times.
While NMHG does source certain product from Japan, management does
not expect the recent earthquake, which did not damage S-Y's
manufacturing facility, to have a material adverse affect on the
company's supply of manufacturing materials. In addition, the
recent floods in The Netherlands did not damage NMHG's facility in
Nijmegen or seriously interrupt the plant s supply lines.
LIQUIDITY AND CAPITAL RESOURCES
In connection with the 1994 retirement of subordinated
debentures, NMHG further amended its existing senior bank credit
agreement during the second quarter of 1994 to permit the
accelerated use of $25.0 million to retire additional debentures.
These funds were used to call additional debentures in December
1994.
NMHG had available $67.0 million of its $100.0 million
revolving credit facility at December 31, 1994. On February
28,1995, the company entered into a new long-term credit agreement
to replace its existing 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 current senior credit facility. The
new credit facility has a five-year maturity with extension options
and performance-based pricing comparable to its current senior
credit facility which provides the company with reduced interest
rates upon achievement of certain financial performance targets.
With the new credit agreement in place, the company has the ability
to call the remaining $78.5 million outstanding Hyster-Yale 12 3/8%
subordinated debentures in 1995. In anticipation of the call, an
extraordinary charge of $3.4 million will be recorded in the first
quarter of 1995 to write-off unamortized debt issuance costs and
anticipated premiums. The company believes it can adequately meet
all of its current and long-term commitments and operating needs
from operating cash flow and funds available under credit
agreements.
39
<PAGE> 40
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NACCO MATERIALS HANDLING GROUP--Continued
LIQUIDITY AND CAPITAL RESOURCES--Continued
Expenditures for property, plant and equipment were $25.9
million in 1994 and $20.2 million in 1993, and are anticipated to
be approximately $40.0 million in 1995. These expenditures relate
to investments in productive capacity because of the increased unit
volumes, and new product development. NMHG is investing to improve
production volumes at all of its plants and has undertaken
expansion of its Craigavon, Northern Ireland, and Irvine, Scotland,
production facilities. Capital for these expenditures has been and
is expected to be provided primarily by internally generated funds
and government assistance grants.
During 1993, NMHG repatriated $18.3 million of earnings from
certain foreign subsidiaries, which were used in operations. Taxes
associated with these earnings were previously provided for
financial reporting purposes. Future repatriations of foreign
earnings may be affected by changes in currency exchange rates and
foreign and U.S. tax rates.
NMHG s capital expenditures in 1994, 1993 and 1992 of $25.9
million, $20.2 million and $24.3 million, respectively, are
outpacing depreciation expense of $19.8 million in 1994, $18.9
million in 1993 and $19.1 million in 1992.
NMHG s capital structure has improved with substantially less
debt and is as follows for the year ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Debt $ 260.1 $ 326.6 $ 406.6
Stockholders equity 305.9 257.1 215.4
------- ------- -------
Total capitalization $ 566.0 $ 583.7 $ 622.0
======= ======= ========
Debt to total capitalization 46% 56% 65%
======= ======= ========
</TABLE>
40
<PAGE> 41
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
HAMILTON BEACH PROCTOR-SILEX
Hamilton Beach/Proctor-Silex, 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 Hamilton Beach/Proctor-Silex
were as follows for the year ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- ------
<S> <C> <C> <C>
Revenues $377.5 $356.3 $358.6
Operating profit $ 25.3 $ 11.8 $ 19.3
Operating profit excluding
goodwill amortization $ 28.1 $ 14.7 $ 22.3
Net income (loss) $ 10.2 $ (1.0) $ 5.4
</TABLE>
1994 COMPARED WITH 1993
The following schedule details the components of the changes
in revenues, operating profit and net income (loss) for 1994
compared with 1993:
<TABLE>
<CAPTION>
Net
Operating Income
Revenues Profit (Loss)
-------- ---------- --------
<S> <C> <C> <C>
1993 $356.3 $ 11.8 $ (1.0)
Increase (decrease) in 1994 from:
Unit volume 17.1 4.2 2.8
Sales mix 1.9 .5 .3
Average sales price 4.2 4.2 2.8
Foreign currency translation (2.0) (2.0) (1.3)
Manufacturing cost 8.5 5.6
Other operating expense (1.9) (1.3)
Other income and expense 2.7
Differences between effective and
statutory tax rates (.4)
------ ------ ------
1994 $377.5 $ 25.3 $ 10.2
====== ====== ======
</TABLE>
41
<PAGE> 42
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
HAMILTON BEACH/PROCTOR-SILEX--Continued
FINANCIAL REVIEW--Continued
1994 COMPARED WITH 1993--CONTINUED
During 1994, Hamilton Beach/Proctor-Silex experienced
increased volumes in blenders, mixers, coffeemakers and food
processors sold domestically and in most products sold in Canada.
The increased volumes in these product lines were tempered somewhat
by decreased steam grill and toaster sales domestically and lower
toaster oven sales both domestically and in Canada. Contributing
to the positive sales mix were increased sales of high-end
toasters, irons and toaster ovens offset by a shift to lower-priced
blender models. Hamilton Beach/Proctor-Silex's improvements in
pricing occurred in both the domestic and Canadian markets across
most core heat and motor-driven product lines.
The successful completion of its manufacturing consolidation
programs, level loading of its factories and reduced transportation
costs favorably affected operating results at Hamilton Beach/
Proctor-Silex by reducing manufacturing costs. Level loading
maintains consistent production and staffing levels throughout the
year, contributing favorably to manufacturing efficiencies by
maintaining a more highly trained and experienced work force.
Other operating expenses were unfavorable in 1994 compared with
1993 primarily due to higher selling and incentive compensation
costs.
1993 COMPARED WITH 1992
The following schedule details the components of the changes
in revenues, operating profit and net income (loss) for 1993
compared with 1992:
<TABLE>
<CAPTION>
Net
Operating Income
Revenues Profit (Loss)
-------- --------- --------
<S> <C> <C> <C>
1992 358.6 19.3 $ 5.4
Increase (decrease) in 1993 from:
Unit volume 14.3 3.8 2.4
Sales mix (10.2) (2.6) (1.7)
Average sales price (3.5) (3.5) (2.3)
Foreign currency translation (2.9) (2.9) (1.9)
Manufacturing cost (1.1) (.7)
Other operating expense (1.2) (.8)
Other income and expense (2.1)
Differences between effective and
statutory tax rates .5
Change in statutory tax rate .2
-------- ------- -------
1993 $ 356.3 $ 11.8 $ (1.0)
======== ======= =======
</TABLE>
42
<PAGE> 43
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
HAMILTON BEACH/PROCTOR-SILEX--Continued
FINANCIAL REVIEW--Continued
1993 COMPARED WITH 1992--Continued
The higher volume in 1993 was primarily the result of
increased unit sales of coffeemakers, blenders, steam grills, food
processors, toaster ovens and commercial roasters. A significant
decrease in unit sales of juice extractors offset the increases in
other product lines. The adverse sales mix in 1993 was the result
of reduced juice extractor sales, which yielded improved margins in
1992, and a shift away from sales of full-size irons. In addition,
the increased volume in blenders, food processors, toaster ovens
and coffeemakers was primarily in opening price-point models.
Foreign currency translation negatively influenced operating
results in 1993 due to the drop in the value of the Canadian dollar
in relation to the U.S. dollar. The increase in other operating
expense in 1993 was primarily the result of higher marketing and
selling costs.
43
<PAGE> 44
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
HAMILTON BEACH/PROCTOR-SILEX--Continued
FINANCIAL REVIEW--Continued
Other Income and Expense
Below is a detail of other income (expense) for the year
ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ -------
<S> <C> <C> <C>
Interest expense $(7.5) $ (7.7) $ (8.6)
Other-net (.3) (4.1)
------ ------ -------
$(7.8) $(11.8) $ (8.6)
======= ====== =======
</TABLE>
The reduced interest expense in 1994 compared with 1993 is
due to lower average interest rates partially offset by higher
average borrowings. The reduction in interest expense in 1993
compared with 1992 was due to lower levels of borrowings.
The decrease in other-net in 1994 compared with 1993 resulted
primarily from the settlement of certain litigation during 1993.
PROVISION FOR INCOME TAXES
Hamilton Beach/Proctor-Silex's effective tax rate for 1994
was 41.7 percent. The effective tax rate was not meaningful in
1993 and was 50.0 percent in 1992.
Expenses not deductible for tax purposes, which include
amortization of goodwill and other purchase price adjustments
associated with the Hamilton Beach and Proctor-Silex acquisitions,
were approximately level in 1994, 1993 and 1992. These
non-deductible expenses resulted in a tax provision in 1993 despite
break-even pretax earnings. Due to higher levels of pretax income
in 1994 and 1992, relative to 1993, these non-deductible expenses
had a smaller impact on the effective tax rate in 1994 and 1992.
44
<PAGE> 45
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
HAMILTON BEACH/PROCTOR-SILEX--Continued
FINANCIAL REVIEW--Continued
1995 OUTLOOK
Hamilton Beach/Proctor-Silex expects total industry unit
shipments to be slightly higher in 1995 compared with 1994 in most
core product lines. Management of Hamilton Beach<>Proctor-Silex
expects increases in market share in its core products during 1995
as a result of new and redesigned products introduced during 1994
that should better meet consumer demand and increase product
placements.
LIQUIDITY AND CAPITAL RESOURCES
Hamilton Beach/Proctor-Silex's credit agreement, as modified
in May 1994, provides for a revolving credit facility ("Facility")
that permits advances up to $135.0 million. At December 31, 1994,
Hamilton Beach/Proctor-Silex had $57.0 million available under
this Facility. The expiration date of this Facility (which
currently is May 1997) may be extended, on an annual basis,
beginning in 1995 for one additional year upon the mutual consent
of Hamilton Beach/Proctor-Silex and the bank group. In conjunction
with this modification, Hamilton Beach/Proctor-Silex repaid the
outstanding balance of its term note of $28.1 million in May 1994.
At December 31, 1994, Hamilton Beach/Proctor-Silex also had $0.4
million available under a separate facility.
The Facility, which is secured by substantially all assets of
Hamilton Beach/Proctor-Silex, allows borrowings to be made at
either LIBOR or lender's prime rate plus a margin. At the date of
modification the stated interest rate became LIBOR plus 1.00
percent compared with a stated interest rate at March 31 of LIBOR
plus 1.75 percent. In addition, this modification allows Hamilton
Beach/Proctor-Silex to pay dividends, under certain conditions, to
its stockholders. The borrowing rates can be reduced to as low as
LIBOR plus 0.50 percent based upon achievement of predetermined
interest coverage ratios. On July 15, 1994, Hamilton Beach/
Proctor-Silex paid a $15.0 million dividend to its stockholders.
Expenditures for property, plant and equipment were $13.4
million in 1994 and $12.2 million in 1993, and are anticipated to
be approximately $12.8 million in 1995. The primary focus of these
expenditures is to increase manufacturing efficiency and to acquire
tooling for new and existing products. Capital for these
expenditures has been and is expected to be provided primarily by
internally generated funds and short-term borrowings.
Hamilton Beach/Proctor-Silex's capital expenditures in 1994,
1993 and 1992 of $13.4 million, $12.2 million and $10.8 million,
respectively, are outpacing depreciation expense of $11.5 million
in 1994, $10.9 million in 1993 and $9.8 million in 1992.
Hamilton Beach/Proctor-Silex's capital structure continues to
be near its 35 percent target and is as follows for the year ended
December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- --------
<S> <C> <C> <C>
Debt $ 82.6 $ 86.5 $ 83.0
Stockholders equity 130.4 138.6 141.8
------- ------- --------
Total capitalization $ 213.0 $ 225.1 $ 224.8
======= ======= ========
Debt to total capitalization 39% 38% 37%
======= ======= ========
</TABLE>
45
<PAGE> 46
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
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 generated in the
fourth quarter during the fall holiday selling season.
FINANCIAL REVIEW
The results of operations for Kitchen Collection were
as follows for the year ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- ---------
<S> <C> <C> <C>
Number of stores 119 104 86
Revenues $63.9 $53.7 $45.5
Operating profit $ 5.4 $ 4.8 $ 4.4
Net income $ 3.1 $ 2.7 $ 2.4
</TABLE>
1994 COMPARED WITH 1993
The following schedule details the components of the changes
in revenues, operating profit and net income for 1994 compared with
1993:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
-------- --------- ------
<S> <C> <C> <C>
1993 $53.7 $4.8 $2.7
Increase (decrease) in 1994 from:
Stores opened in 1994 5.5 .6 .4
Stores opened in 1993 4.4 .4 .3
Comparable stores .3 (.2) (.1)
Other (.2) (.2)
-------- --------- ------
1994 $63.9 $5.4 $3.1
===== ==== ====
</TABLE>
The opening of 37 new stores in 1994 and 1993 contributed
favorably to current year results. While gross profit showed a
slight improvement in 1994 compared with 1993, operating profit as
a percent of sales declined somewhat due primarily to store rent
escalations and increased costs for renovations at comparable
stores.
46
<PAGE> 47
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
THE KITCHEN COLLECTION--Continued
FINANCIAL REVIEW--Continued
1993 Compared With 1992
The following schedule details the components of the changes
in revenues, operating profit and net income for 1993 compared with
1992:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
-------- --------- ------
<S> <C> <C> <C>
1992 $ 45.5 $ 4.4 $ 2.4
Increase (decrease) in 1993 from:
Stores opened in 1993 4.8 .5 .3
Stores opened in 1992 4.4 .6 .4
Comparable stores (1.0) (.4) (.3)
Other (.3) (.1)
-------- ------- ------
1993 $ 53.7 $ 4.8 $ 2.7
======= ======= ======
</TABLE>
Kitchen Collection experienced mixed results during 1993.
The net addition of 18 new stores during 1993 and a full year's
operations of stores opened during 1992 resulted in increases to
revenues and operating profits. Results at comparable stores were
lower in 1993 compared with 1992 as the economic recovery did not
impact specialty retailers. The use of markdowns on selected
products to increase customer traffic and competitive pricing
pressures on specific product lines negatively affected operating
profit in 1993.
OTHER INCOME AND EXPENSE
Interest expense was $0.3 million, $0.1 million and $0.2
million in 1994, 1993 and 1992, respectively.
47
<PAGE> 48
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
THE KITCHEN COLLECTION--Continued
FINANCIAL REVIEW--Continued
PROVISION FOR INCOME TAXES
Kitchen Collection's effective tax rate was 40.0 percent,
40.6 percent and 41.6 percent in 1994, 1993 and 1992, respectively.
LIQUIDITY AND CAPITAL RESOURCES
In May, 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 December 31, 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 15,
1999, and January 15, 2000. This modification also reduced Kitchen
Collection's stated interest rate to LIBOR plus 0.75 percent from
LIBOR plus 1.50 percent and allows for increased levels of
dividends. During 1994, Kitchen Collection paid dividends of $5.6
million to NACCO.
Expenditures for property, plant and equipment were $1.0
million in 1994 and $1.1 million in 1993, and are anticipated to be
approximately $1.9 million in 1995. These expenditures are
primarily for new store openings and improvements to existing
facilities and are funded internally. At December 31, 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.
Kitchen Collection's capital structure approaches its 35
percent target and is as follows for the year ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Debt $ 5.0 $ 2.4 $ 2.9
Stockholder's equity 10.1 12.6 11.6
---- ---- ----
Total capitalization $ 15.1 $ 15.0 $ 14.5
==== ==== ====
Debt to total capitalization 33% 16% 20%
==== ==== ====
</TABLE>
48
<PAGE> 49
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NACCO AND OTHER
FINANCIAL REVIEW
1994 COMPARED WITH 1993
The following schedule details the components of the changes
in operating loss and net loss for 1994 compared with 1993:
<TABLE>
<CAPTION>
Operating Net
Loss Loss
---- ----
<S> <C> <C>
1993 $(7.9) $(5.4)
Administrative and general expenses
Payroll-related (2.3) (1.6)
Outside service and other .3 .2
Interest income (.5)
Interest expense (.8)
Other-net (.4)
Consolidating tax adjustments 2.4
----- ----
1994 $(9.9) $(6.1)
===== =====
</TABLE>
While the level of parent company personnel remained steady
in 1994 compared with 1993, payroll-related expenses increased in
1994 due to higher incentive-based compensation, profit sharing and
medical expenses.
49
<PAGE> 50
1993 COMPARED WITH 1992
The following schedule details the components of the changes
in operating loss and net loss for 1993 compared with 1992:
<TABLE>
<CAPTION>
Operating Net
Loss Loss
------- ------
<S> <C> <C>
1992 $ (8.2) $ (6.1)
Administrative and general expenses
Payroll-related .2 .2
Outside service and other .1 .1
Interest income .4
Interest expense (.3)
Other-net .5
Differences between effective and
statutory tax rates (.2)
------- ------
1993 $ (7.9) $ (5.4)
======= ======
</TABLE>
INTEREST RATE PROTECTION
NMHG, Hamilton Beach/Proctor-Silex, North American Coal and
Kitchen Collection have entered into interest rate swap agreements
and/or purchased interest rate caps for portions of their floating
rate debt. These interest rate swaps and caps provide protection
against significant increases in interest rates. The Company
evaluates its exposure to floating rate debt on an ongoing basis.
50
<PAGE> 51
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NACCO AND OTHER--Continued
ENVIRONMENTAL MATTERS
The Company's manufacturing operations, like those of other
companies engaged in similar businesses, involve the use, disposal
and cleanup of substances regulated under environmental protection
laws. The Company's North American Coal subsidiary is affected by
the regulations of agencies under which it operates, particularly
the federal Office of Surface Mining, the United States
Environmental Protection Agency and associated state regulatory
authorities. In addition, North American Coal is attentive to any
changes which may arise due to proposed legislation concerning the
Clean Air Act Amendments of 1990, reauthorization of the Resource
Conservation and Recovery Act, the Clean Water Act, the Endangered
Species Act and other regulatory actions.
Compliance with these increasingly stringent standards
results in higher expenditures for both capital improvements and
operating costs. The Company's policies stress environmental
responsibility and compliance with these regulations. Based on
current information, management does not expect compliance with
these regulations to have a material adverse effect on its
financial condition or results of operations.
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 NMHG debt agreement includes loan covenants which
prohibit the payment of dividends to NACCO. The debt agreements
at Hamilton Beach/Proctor-Silex and Kitchen Collection 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 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.
51
<PAGE> 52
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
(Tabular Amounts in Millions, Except Per Share, Store and
Percentage Data)
NACCO AND OTHER--Continued
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 when its sales contract expired due
to the exhaustion of its economically recoverable coal reserves.
Bellaire's results have been adjusted to remove certain royalty and
other payments that are now more appropriately classified with
North American Coal's results.
The results of operations were as follows for the year ended
December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Revenues $ .6 $ 3.0 $ 6.0
Operating loss $ (.1) $ (.1) $ (.1)
Other income, net $ 1.5 $ 1.1 $ 1.6
Income before extraordinary charge $ .8 $ 2.6 $ .9
Extraordinary charge, net-of-tax (110.0)
------ ------ -------
Net income (loss) $ .8 $ 2.6 $(109.1)
====== ====== =======
</TABLE>
During the third quarter of 1993, Bellaire recognized a
non-recurring tax benefit of $2.3 million to reflect the impact of
the one percent increase in the statutory tax rate on its deferred
tax asset. This tax benefit increased Bellaire s income in 1993
relative to 1994 and 1992.
52
<PAGE> 53
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued
NACCO AND OTHER--Continued
BELLAIRE CORPORATION--Continued
The Coal Industry Retiree Health Benefit Act of 1992
requires Bellaire to incur additional costs for retiree medical
expenses of certain United Mine Worker retirees. A charge of
$110.0 million (net of $56.7 million of tax benefits) was
recognized in 1992 to reflect the estimated future payments related
to this legislation. Annual cash payments required by this
legislation are expected to be in the range of $2.0 million to $4.0
million per year after tax. These payments could continue as long
as 40 to 50 years, or as long as there are eligible participants.
Payments in 1994 amounted to $4.6 million before-tax and included
payments for 1994 and 1993. Management expects taxable earnings to
continue to be sufficient to realize the full amount of the related
deferred tax asset.
The condensed balance sheets for Bellaire were as
follows at December 31:
<TABLE>
<CAPTION>
1994 1993
----- -----
<S> <C> <C>
Net current assets $ 13.1 $ 10.9
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 (155.0) (159.3)
Other liabilities (24.0) (21.2)
------- -------
Deficit $(101.3) $(102.1)
======= =======
</TABLE>
The assets and liabilities of Bellaire represent the
net assets of former mining operations, including Indian Head. The
Obligation to United Mine Workers of America Combined Benefit Fund
relates to the previously discussed extraordinary charge. The
deferred taxes relate to the Obligation to United Mine Workers of
America Combined Benefit Fund. The other liabilities are
obligations related to other former mining operations.
The annual cash payments related to Bellaire's
obligations, net of internally generated funds, are funded by NACCO
and amounted to $4.7 million before-tax during 1994 and are
anticipated to be approximately $3.9 million before-tax in 1995.
EFFECTS OF INFLATION
The Company believes that inflation has not materially
affected its results of operations in 1994 and does not expect
inflation to be a significant item in 1995.
53
<PAGE> 54
Item 8. Financial Statements and Supplementary Data
--------------------------------------------------------
The information required by this Item 8 is set forth at pages F-2
through F-42 of the Financial Statements and Supplementary Data
contained in Part IV hereof.
Item 9. Changes in and Disagreements with Accountants on
--------------------------------------------------------
Accounting and Financial Disclosure
-----------------------------------
Not Applicable.
54
<PAGE> 55
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
------------------------------------------------------------
Information with respect to Directors of the Company is set
forth in the 1995 Proxy Statement under the heading "Business to be
Transacted -- 1. Election of Directors," which information is
incorporated herein by reference. Information regarding the
executive officers of the Company is included as Item 4A of Part I
as permitted by Instruction 3 to Item 401(b) of Regulation S-K.
Item 11. Executive Compensation
--------------------------------
Information with respect to executive compensation is set
forth in the 1995 Proxy Statement under the headings "Business to
be Transacted -- 1. Election of Directors -- Compensation of
Directors," and "Compensation of Executive Officers," which
information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
-------------------------------------------------------------
Management
----------
Information with respect to security ownership of certain
beneficial owners and management is set forth in the 1995 Proxy
Statement under the heading "Business to be Transacted -- 1.
Election of Directors -- Beneficial Ownership of Class A Common and
Class B Common," which information is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
--------------------------------------------------------
Information with respect to certain relationships and related
transactions is set forth in the 1995 Proxy Statement under the
heading "Business to be Transacted -- 1. Election of Directors --
Compensation Committee Interlocks and Insider Participation," which
information is incorporated herein by reference.
55
<PAGE> 56
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports
--------------------------------------------------------------
on Form 8-K
-----------
(a) (1) and (2) The response to Item 14(a)(1) and (2) is
set forth beginning at page F-1 of this Annual Report on Form 10-K.
(a) (3) Listing of Exhibits -- See the exhibit index
beginning at page X-1 of this Annual Report on Form 10-K.
(b) The Company has not filed any current reports on Form
8-K during the fourth quarter of 1994.
(c) The response to Item 14(c) is set forth beginning at
page X-1 of this Annual Report on Form 10-K.
(d) Financial Statement Schedules -- The response to Item
14(d) is set forth beginning at page F-32 of this Annual Report on
Form 10-K.
56
<PAGE> 57
SIGNATURES
----------
Pursuant to the requirements of Section 13 of the
Securities Exchange Act of 1934, the Company has duly caused this
Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
NACCO Industries, Inc.
By: Frank B. O'Brien
-----------------------------------
Frank B. O'Brien
Senior Vice President - Corporate
Development and Chief Financial
Officer
(Principal Financial Officer)
Date: March 31, 1995
57
<PAGE> 58
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities
and on the dates indicated.
<TABLE>
<S> <C> <C>
* Alfred M. Rankin, Jr. Chairman, President and March 31, 1995
----------------------- Chief Executive Officer
Alfred M. Rankin, Jr. (Principal Executive
Officer), Director
Frank B. O'Brien Senior Vice President - March 31, 1995
----------------------- Corporate Development
Frank B. O'Brien and Chief Financial
Officer (Principal
Financial Officer)
Steven M. Billick Vice President and March 31, 1995
----------------------- Controller (Principal
Steven M. Billick Accounting Officer)
* Owsley Brown II Director March 31, 1995
----------------------
Owsley Brown II
* John J. Dwyer Director March 31, 1995
----------------------
John J. Dwyer
* Robert M. Gates Director March 31, 1995
----------------------
Robert M. Gates
* E. Bradley Jones Director March 31, 1995
----------------------
E. Bradley Jones
* Dennis W. LaBarre Director March 31, 1995
----------------------
Dennis W. LaBarre
* John C. Sawhill Director March 31, 1995
----------------------
John C. Sawhill
* Britton T. Taplin Director March 31, 1995
----------------------
Britton T. Taplin
* Frank E. Taplin, Jr. Director March 31, 1995
----------------------
Frank E. Taplin, Jr.
</TABLE>
58
<PAGE> 59
*Frank B. O'Brien, by signing his name hereto, does hereby sign
this Annual Report on Form 10-K on behalf of each of the above
named and designated officers and directors of the Company pursuant
to a Power of Attorney executed by such persons and filed with the
Securities and Exchange Commission.
Frank B. O'Brien March 31, 1995
-------------------------------------
Frank B. O'Brien, Attorney-in-Fact
59
<PAGE> 60
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) AND (2), AND ITEM 14(d)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1994
NACCO INDUSTRIES, INC.
MAYFIELD HEIGHTS, OHIO
F-1
<PAGE> 61
Form 10-K
ITEM 14(a)(1) AND (2)
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of NACCO
Industries, Inc. and Subsidiaries are included in Item 8:
Report of Independent Public Accountants-Year ended December
31, 1994, 1993 and 1992
Consolidated statements of income-Year ended December 31,
1994, 1993 and 1992.
Consolidated balance sheets-December 31, 1994 and December
31, 1993.
Consolidated statements of cash flows-Year ended December 31,
1994, 1993 and 1992.
Consolidated statements of stockholders' equity-Year ended
December 31, 1994, 1993 and 1992.
Notes to consolidated financial statements.
NACCO Industries, Inc. Report of Management.
The following consolidated financial statement schedules of NACCO
Industries, Inc. and Subsidiaries are included in Item 14(d):
Schedule I Condensed Financial Information of the
Parent
Schedule II Valuation and qualifying accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable,
and therefore have been omitted.
F-2
<PAGE> 62
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of NACCO Industries, Inc.:
We have audited the accompanying consolidated balance sheets of
NACCO Industries, Inc. and Subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years
in the period ended December 31, 1994. These financial
statements and the schedules referred to below are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedules
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of NACCO Industries, Inc. and Subsidiaries as of December 31, 1994
and 1993, and the results of their operations and their cash flows
for each of the three years in the period ended December 31,
1994, in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedules listed
in Item 14(a)(1) and (2) and Item 14(d) of Form 10-K are the
responsibility of the Company's management and are presented
for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial
statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Cleveland, Ohio
February 28, 1995
F-3
<PAGE> 63
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
Year Ended December 31
-------------------------------------
1994 1993 1992
-------------------------------------
(In thousands, except per share data)
<S> <C> <C> <C>
Net sales $1,853,479 $1,538,805 $1,470,005
Other operating income 11,408 10,566 13,774
---------- ---------- ----------
TOTAL REVENUES 1,864,887 1,549,371 1,483,779
Cost of sales 1,487,447 1,244,051 1,171,231
---------- ---------- ----------
GROSS PROFIT 377,440 305,320 312,548
Selling, administrative and
general expenses 228,619 198,149 197,393
Amortization of goodwill 13,725 13,787 13,875
---------- ---------- ----------
OPERATING PROFIT 135,096 93,384 101,280
Other income (expense)
Interest income 1,615 1,880 3,294
Interest expense (60,400) (65,930) (66,032)
Other - net 2,185 (4,670) 1,787
---------- ---------- ----------
(56,600) (68,720) (60,951)
---------- ---------- ----------
Income Before Income Taxes, Minority Interest and
Extraordinary Charge 78,496 24,664 40,329
Provision for income taxes 30,730 13,511 16,346
---------- ---------- ----------
Income Before Minority Interest
and Extraordinary Charge 47,766 11,153 23,983
Minority interest (2,494) 440 (1,115)
---------- ---------- ----------
Income Before Extraordinary Charge 45,272 11,593 22,868
Extraordinary charge, net-of-tax (3,218) (3,292) (110,000)
---------- ---------- ----------
Net Income (Loss) $ 42,054 $ 8,301 $ (87,132)
========== ========== ==========
Per Share:
Income Before Extraordinary Charge $ 5.06 $ 1.30 $ 2.57
Extraordinary charge, net-of-tax (.36) (.37) (12.37)
---------- ---------- ----------
Net Income (Loss) $ 4.70 $ .93 $ (9.80)
========= ========= ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
F-4
<PAGE> 64
CONSOLIDATED BALANCE SHEETS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
December 31
-----------------------------
1994 1993
-----------------------------
(In thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 19,541 $ 29,149
Accounts receivable, net 236,215 200,112
Inventories 298,987 238,168
Prepaid expenses and other 31,893 37,373
-------- ---------
586,636 504,802
OTHER ASSETS 41,341 45,438
PROPERTY, PLANT AND EQUIPMENT, NET 485,314 496,213
DEFERRED CHARGES
Goodwill, net 471,574 487,963
Deferred costs and other 69,257 64,663
Deferred income taxes 40,200 43,414
-------- ---------
581,031 596,040
-------- ---------
TOTAL ASSETS $ 1,694,322 $ 1,642,493
========= =========
</TABLE>
F-5
<PAGE> 65
CONSOLIDATED BALANCE SHEETS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
December 31
-----------------------------
1994 1993
-----------------------------
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 226,892 $ 148,397
Revolving credit agreements 30,760 35,178
Current maturities of long-term obligations 63,509 55,016
Income taxes 18,662 27,198
Accrued payroll 28,018 19,750
Other current liabilities 113,597 111,916
----------- -----------
481,438 397,455
NOTES PAYABLE - not guaranteed by
the parent company 286,717 357,788
OBLIGATIONS OF PROJECT MINING SUBSIDIARIES
not guaranteed by the parent company or
its North American Coal subsidiary 331,876 338,504
OBLIGATION TO UNITED MINE WORKERS
OF AMERICA COMBINED BENEFIT FUND 154,959 159,276
SELF-INSURANCE RESERVES AND OTHER 119,399 112,589
MINORITY INTEREST 40,542 41,255
STOCKHOLDERS' EQUITY
Common stock:
Class A, par value $1 per share, 7,228,739
shares outstanding (1993 - 7,177,075
shares outstanding) 7,229 7,177
Class B, par value $1 per share, convertible
into Class A on a one-for-one basis,
1,722,981 shares outstanding
(1993 - 1,763,503 shares outstanding) 1,723 1,764
Capital in excess of par value 2,788 2,548
Retained income 262,226 226,212
Foreign currency translation adjustment
and other 5,425 (2,075)
----------- -----------
279,391 235,626
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $ 1,694,322 $ 1,642,493
=========== ===========
<FN>
See notes to consolidated financial statements.
</TABLE>
F-6
<PAGE> 66
CONSOLIDATED STATEMENTS OF CASH FLOWS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------
1994 1993 1992
------------------------------------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ 42,054 $ 8,301 $ (87,132)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Extraordinary charge, net-of-tax 1,022 2,007 110,000
Depreciation, depletion and amortization 80,154 78,063 72,509
Deferred income taxes 3,985 5,176 6,159
Currency exchange (gain) loss 103 (5,691)
Other non-cash items (6,165) (8,047) (15,185)
Working capital changes:
Accounts receivable (31,180) (22,926) 943
Inventories (54,791) 8,505 (19,214)
Other current assets (5,353) (2,213) 2,902
Accounts payable and other liabilities 68,054 3,341 (18,323)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 97,780 72,310 46,968
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (52,564) (57,661) (74,354)
Proceeds from the sale of businesses 21,229
Proceeds from the sale of other assets 11,144 27,600 1,707
Notes receivable 1,412 4,664 1,431
-------- -------- --------
NET CASH USED BY INVESTING ACTIVITIES (40,008) (25,397) (49,987)
FINANCING ACTIVITIES
Additions to long-term obligations
and revolving credit 122,055 31,373 93,106
Reductions of long-term obligations
and revolving credit (192,679) (84,533) (114,294)
Additions to obligations of project mining 53,768 51,517 45,535
subsidiaries
Reductions of obligations of project mining (67,658) (60,083) (54,809)
subsidiaries
Additions to (reductions of) advances
from customers 2,626 (7,208) 26,107
Financing of other short-term obligations 11,884 16,172
Cash dividends paid (6,040) (5,854) (5,645)
Capital grants 1,622 3,741 2,020
Other - net 3,596 4,746 (3,825)
-------- -------- --------
NET CASH USED BY FINANCING ACTIVITIES (70,826) (50,129) (11,805)
Effect of exchange rate changes on cash 3,446 (1,482) (3,615)
-------- -------- --------
CASH AND CASH EQUIVALENTS
Decrease for the year (9,608) (4,698) (18,439)
Balance at the beginning of the year 29,149 33,847 52,286
-------- -------- --------
BALANCE AT THE END OF THE YEAR $ 19,541 $ 29,149 $ 33,847
======== ======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
F-7
<PAGE> 67
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<CAPTION>
Year Ended December 31
------------------------------------
1994 1993 1992
---------- --------- ----------
(In thousands)
<S> <C> <C> <C>
CLASS A COMMON STOCK
Beginning balance $ 7,177 $ 7,113 $ 7,040
Conversion of Class B shares to
Class A shares 43 60 26
Sale of treasury shares under
stock option and
compensation plans 11 4 56
Purchase of treasury shares (2) (9)
--------- -------- --------
7,229 7,177 7,113
CLASS B COMMON STOCK
Beginning balance 1,764 1,823 1,842
Conversion of Class B shares to
Class A shares (43) (60) (26)
Sale of shares under stock
option plans 2 1 7
--------- -------- --------
1,723 1,764 1,823
CAPITAL IN EXCESS OF PAR VALUE
Beginning balance 2,548 2,342 774
Sale of shares under stock
option and compensation plans 348 206 1,912
Purchase of treasury shares (108) (344)
--------- -------- --------
2,788 2,548 2,342
RETAINED INCOME
Beginning balance 226,212 223,765 316,542
Net income (loss) 42,054 8,301 (87,132)
Cash dividends on Class A and Class B
common stock:
1994 $.675 per share (6,040)
1993 $.655 per share (5,854)
1992 $.635 per share (5,645)
--------- -------- --------
262,226 226,212 223,765
FOREIGN CURRENCY TRANSLATION
ADJUSTMENT AND OTHER
Beginning balance (2,075) 3,273 23,990
Foreign currency translation adjustment and other 7,500 (5,348) (20,717)
--------- -------- --------
5,425 (2,075) 3,273
--------- -------- --------
TOTAL STOCKHOLDERS' EQUITY $ 279,391 $ 235,626 $ 238,316
========= ========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
F-8
<PAGE> 68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
(Tabular Dollars in Millions, Except Per Share and Percentage Data)
NOTE A--ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include the accounts of NACCO Industries, Inc.
("NACCO," the parent company) and its majority owned subsidiaries
(NACCO Industries, Inc. and Subsidiaries - the "Company").
Intercompany accounts and transactions are eliminated.
CASH AND CASH EQUIVALENTS: Cash and cash equivalents include
cash in banks and highly liquid investments with original
maturities of three months or less.
INVENTORIES: Inventories are stated at the lower of cost or
market. Cost is determined under the last-in, first-out (LIFO)
method for manufacturing inventories in the United States and
under the first-in, first-out (FIFO) method with respect to all
other inventories.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are
recorded at cost. Depreciation, depletion and amortization are
provided in amounts sufficient to amortize the cost of the assets
(including assets recorded under capital leases) over their
estimated useful lives using the straight- line method. The
units-of-production method is used to amortize certain
coal-related assets based on estimated recoverable tonnages.
GOODWILL: Goodwill represents the excess purchase price paid
over the fair value of the net assets acquired. The amortization
of goodwill is determined on a straight-line basis over a 40-year
period. Management regularly evaluates its accounting for
goodwill considering such factors as historical and future
profitability and believes that the asset is realizable and the
amortization period remains appropriate.
DEFERRED FINANCING COSTS: Amortization of the costs related to
manufacturing assets is calculated utilizing the interest method
over the term of the related indebtedness. The costs incurred
related to the coal assets are amortized utilizing the
units-of-production method. Amortization of these costs is
included in interest expense on the Company's consolidated
statements of income.
PRODUCT DEVELOPMENT COSTS: Expenses associated with the
development of new products and changes to existing products are
charged to expense as incurred. These costs amounted to $25.9
million, $23.4 million and $24.4 million in 1994, 1993 and 1992,
respectively.
COMMON STOCK: The Class A common stock has one vote per share
and the Class B common stock has 10 votes per share. The total
number of authorized shares of Class A common stock and Class B
common stock at December 31, 1994, was 25,000,000 shares and
6,756,176 shares, respectively. Treasury shares of Class A stock
totalling 832,122 and 840,564 at December 31, 1994 and 1993,
respectively, have been deducted from shares outstanding.
FOREIGN CURRENCY: The financial statements of the Company's
foreign operations are translated into U.S. dollars at year-end
exchange rates for assets and liabilities, and at weighted
average exchange rates during the year for revenues and expenses.
The effect of changes in foreign exchange rates applied to these
foreign financial statements is included as a separate component
of stockholders' equity.
F-9
<PAGE> 69
NOTE A--ACCOUNTING POLICIES--Continued
FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS:
The fair values of financial instruments have been determined
through information obtained from quoted market sources and
management estimates. The Company does not hold or issue
financial instruments or derivative financial instruments for
trading purposes.
The Company enters into forward foreign exchange contracts
with terms of one-to-twelve months. These contracts hedge
certain foreign currency denominated receivables and payables and
foreign currency commitments. Gains and losses on these
contracts are deferred and recognized as part of the cost of the
underlying transaction being hedged.
The Company also enters into interest rate swap agreements
with terms ranging from six months to five years. The
differential between the floating interest rate and fixed
interest rate which is to be paid or received is recognized in
interest expense as the floating interest rate changes over the
life of the agreement.
EARNINGS PER SHARE: The calculation of net income per share is
based on the weighted average number of shares outstanding during
each period.
RECLASSIFICATIONS: Certain amounts in the prior periods'
consolidated financial statements have been reclassified to
conform to the current period's presentation.
NOTE B--EXTRAORDINARY CHARGE
1994 AND 1993
The extraordinary charges of $3.2 million and $3.3 million,
net of $2.0 million in tax benefits, were recognized in the
second quarters of 1994 and 1993, respectively. These charges
represent the write-off of premiums and unamortized debt issuance
costs associated with the retirement of approximately $70.0
million and $50.0 million face value of NACCO Materials Handling
Group s Hyster-Yale 12 3/8% subordinated debentures. These
retirements were achieved using internally generated funds of
NMHG and equity infusions from existing stockholders.
1992
The Coal Industry Retiree Health Benefit Act of 1992 requires
Bellaire, a wholly-owned non-operating subsidiary of NACCO, to
incur additional costs for retiree medical expenses of certain
United Mine Worker retirees. A charge of $110.0 million (net of
$56.7 million of tax benefits) was recognized in 1992 to reflect
the estimated future payments related to this legislation.
Annual cash payments required by this legislation are expected to
be in the range of $2.0 million to $4.0 million per year after
tax. These payments could continue as long as 40 to 50 years, or
as long as there are eligible participants. Payments in 1994
amounted to $4.6 million and included payments for 1994 and 1993.
Management expects taxable earnings to continue to be sufficient
to realize the full amount of the related deferred tax asset.
NOTE C--ACCOUNTS RECEIVABLE
Allowances for doubtful accounts, returns, discounts and
adjustments of $10.6 million and $11.1 million at December 31,
1994 and 1993, respectively, were deducted from accounts
receivable.
F-10
<PAGE> 70
NOTE D--INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
December 31
----------------------
1994 1993
----------------------
<S> <C> <C>
Manufacturing inventories:
Finished goods and service parts
NACCO Materials Handling Group $ 82.3 $ 81.6
Hamilton Beach<>Proctor-Silex 32.8 36.0
------- -------
115.1 117.6
------- -------
Raw materials and work in process
NACCO Materials Handling Group 137.9 80.3
Hamilton Beach<>Proctor-Silex 15.9 15.3
------- -------
153.8 95.6
------- -------
LIFO reserve
NACCO Materials Handling Group (11.4) (10.6)
Hamilton Beach<>Proctor-Silex (.1) .4
------- -------
(11.5) (10.2)
------- -------
Total manufacturing inventories 257.4 203.0
North American Coal:
Coal 8.4 7.6
Mining supplies 18.8 16.2
Retail inventories-Kitchen Collection 14.4 11.4
------ ------
$299.0 $238.2
====== ======
</TABLE>
The cost of manufacturing inventories has been determined by
the LIFO method for 69% of such inventories at December 31, 1994
and 1993.
F-11
<PAGE> 71
NOTE E--PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment includes the following:
<TABLE>
<CAPTION>
December 31
---------------------
1994 1993
---------------------
<S> <C> <C>
Coal lands and real estate
NACCO Materials Handling Group $ 6.0 $ 5.4
Hamilton Beach<>Proctor-Silex .8 .7
North American Coal 14.8 15.2
Project mining subsidiaries (Note H) 54.0 52.7
Kitchen Collection .1 .1
NACCO and Bellaire .9 .9
------ -------
76.6 75.0
Plant and equipment
NACCO Materials Handling Group 208.4 185.5
Hamilton Beach<>Proctor-Silex 105.5 94.2
North American Coal 15.2 15.2
Project mining subsidiaries (Note H) 409.3 403.0
Kitchen Collection 6.0 5.1
NACCO and Bellaire 4.1 4.2
------ -------
748.5 707.2
------ -------
825.1 782.2
Less allowances for depreciation, depletion
and amortization 339.8 286.0
------ -------
$ 485.3 $ 496.2
======== ========
</TABLE>
Total depreciation, depletion and amortization expense on
property, plant and equipment was $63.2 million, $60.1 million
and $53.6 million during 1994, 1993 and 1992, respectively.
Proven and probable coal reserves approximated 2.2 billion
tons at December 31, 1994 and 1993.
NOTE F--DEFERRED CHARGES
Accumulated amortization of goodwill, patents and trademarks
was $80.5 million and $66.4 million at December 31, 1994 and 1993,
respectively. Total amortization expense of these items was
$14.1 million, $14.3 million and $14.4 million during 1994, 1993
and 1992, respectively.
Total amortization expense of deferred financing costs was
$3.0 million, $3.7 million and $4.0 million during 1994, 1993
and 1992, respectively.
F-12
<PAGE> 72
NOTE G--REVOLVING CREDIT AGREEMENTS AND NOTES PAYABLE
NACCO has not guaranteed the long-term debt or any borrowings
of its subsidiaries.
REVOLVING CREDIT AGREEMENTS
NACCO Materials Handling Group
NMHG's credit agreement, as amended, provides for a term note
and a revolving credit facility. The revolving credit facility
permits advances and secured letters of credit to NMHG from time
to time, up to an aggregate principal amount of $100.0 million.
The following summarizes the revolving credit facility:
<TABLE>
<S> <C>
Amount of revolver $100.0
Amount available at December 31, 1994 $ 67.0
Interest rate at December 31, 1994 8.5%
Average interest rate during 1994 7.5%
Commitment fee at December 31, 1994 0.3%
Expiration date 1997
</TABLE>
In connection with the 1994 retirement of subordinated
debentures, NMHG further amended its existing senior bank credit
agreement during the second quarter of 1994 to permit the
accelerated use of $25.0 million to retire additional debentures.
These funds were used to call additional debentures in December
1994.
On February 28, 1995, the company entered into a new
long-term credit agreement to replace its existing 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 current senior
credit facility. The new credit facility has a five year
maturity with extension options and performance based pricing
comparable to its current senior credit facility, which provides
the company with reduced interest rates upon achievement of
certain financial performance targets. With the new credit
agreement in place, the company has the ability to call the
remaining $78.5 million outstanding Hyster-Yale 12 3/8%
subordinated debentures in 1995. In anticipation of the call, an
extraordinary charge of $3.4 million will be recorded in the
first quarter of 1995 to write-off unamortized debt issuance
costs and anticipated premiums.
HAMILTON BEACH PROCTOR-SILEX
Hamilton Beach Proctor-Silex's credit agreement, as modified
in May 1994, provides for a revolving credit facility (Facility)
that permits advances up to $135.0 million. The following
summarizes this Facility:
<TABLE>
<S> <C>
Amount of revolver $135.0
Amount available at December 31, 1994 $ 57.0
Interest rate at December 31, 1994 6.9%
Average interest rate during 1994 6.4%
Facility fee 0.4%
Current expiration date 1997
</TABLE>
At December 31, 1994, Hamilton Beach Proctor-Silex had $78.0
million outstanding under this Facility, $70.0 million of which
is classified as long- term because it is not expected to be
repaid during 1995. The expiration date of this Facility (which
currently is May 1997) may be extended, on an annual basis,
beginning in 1995 for one additional year upon the mutual consent
of Hamilton Beach Proctor-Silex and the bank group. In
conjunction with this modification, Hamilton Beach Proctor-Silex
repaid the outstanding balance of its term note of $28.1 million
in May 1994. At December 31, 1994, Hamilton Beach Proctor-Silex
also had $0.4 million available under a separate facility.
F-13
<PAGE> 73
NOTE G--REVOLVING CREDIT AGREEMENTS AND NOTES PAYABLE--Continued
REVOLVING CREDIT AGREEMENTS--Continued
The Facility, which is secured by substantially all assets of
Hamilton Beach Proctor-Silex, allows borrowings to be made at
either LIBOR, or lender's prime rate plus a margin. At the date
of modification, the stated interest rate became LIBOR plus
1.00%, compared with a stated interest rate at March 31 of LIBOR
plus 1.75%. In addition, this modification allows Hamilton Beach
Proctor-Silex to pay dividends, under certain conditions, to its
stockholders. The borrowing rates can be reduced to as low as
LIBOR plus 0.50% based upon achievement of predetermined interest
coverage ratios. On July 15, 1994, Hamilton Beach Proctor-Silex
paid a $15.0 million dividend to its stockholders.
NORTH AMERICAN COAL
North American Coal has in place a revolving credit facility
summarized as follows:
<TABLE>
<S> <C>
Amount of revolver $50.0
Amount available at December 31, 1994 $35.0
Interest rate at December 31, 1994 6.6%
Average interest rate during 1994 5.7%
Total commitment and facility fee 0.3%
Current expiration date 1997
</TABLE>
The expiration date of this facility may be extended one
additional year, on an annual basis, upon the mutual consent of
North American Coal and the bank group.
NOTES PAYABLE
Subsidiary notes payable, less current maturities, consist of
the following:
<TABLE>
<CAPTION>
December 31
-----------------------
1994 1993
-----------------------
<S> <C> <C>
NACCO MATERIALS HANDLING GROUP
Term note with an interest rate of
6.0% at year-end (average interest rate of
6.3% during 1994) payable
1995 to 1997 and secured by all assets $ 95.3 $ 139.3
12.375% senior subordinated
debentures payable in 1999
with a mandatory sinking fund
payment on August 1, 1998
of $78.5 million 78.5 149.8
Long-term portion of revolving credit facility 33.0
Other 4.6 1.3
------- -------
Total NMHG 211.4 290.4
HAMILTON BEACH PROCTOR-SILEX
Long-term portion of revolving credit facility 70.0 37.0
Term note 28.1
------- -------
Total Hamilton Beach<>Proctor-Silex 70.0 65.1
KITCHEN COLLECTION
Term note with an interest rate of 7.6%
at year-end (average interest
rate of 7.2% during 1994)
payable 1999 to 2000 5.0 1.9
NORTH AMERICAN COAL .3 .4
------- -------
$ 286.7 $ 357.8
======= =======
</TABLE>
F-14
<PAGE> 74
NOTE G--REVOLVING CREDIT AGREEMENTS AND NOTES PAYABLE--Continued
NOTES PAYABLE--Continued
The senior subordinated debentures are callable by NMHG prior
to maturity at redemption prices (expressed as percentages of the
principal amount) as follows: during the 12-month period
beginning August 1, 1994; - 105.0 %; 1995 - 102.5%.
The maturities of the subsidiary notes payable for the next
five years, including current maturities, are as follows:
<TABLE>
<S> <C>
1995 $ 47.4
1996 46.5
1997 85.0
1998 80.1
1999 2.6
Thereafter 2.5
------
$264.1
======
</TABLE>
Interest paid was $44.0 million, $48.4 million and $54.4
million during 1994, 1993 and 1992, respectively.
The credit agreements for NMHG, Hamilton Beach Proctor-Silex,
North American Coal and Kitchen Collection contain certain
covenants and restrictions. Covenants require, among other
things, maintenance of certain minimum amounts of net worth and
certain specified ratios of working capital, debt to equity,
interest coverage and fixed charge coverage. These ratios are
calculated at the subsidiary level. Restrictions include limits
on capital expenditures and dividends. At December 31, 1994, the
subsidiaries were in compliance with all the covenants in their
debt agreements.
NOTE H--OBLIGATIONS OF PROJECT MINING SUBSIDIARIES
North American Coal's project mining subsidiaries have entered
into long-term contracts with various utility customers to
provide lignite at a sales price based on cost plus a profit per
ton. The utility customers have arranged and guaranteed the
financing for the development and operation of these subsidiary
mines. The obligations of these project mining subsidiaries
included in the Company's consolidated balance sheets do not
affect the short- or long-term liquidity of the company and are
without recourse to NACCO or its North American Coal subsidiary.
Obligations of project mining subsidiaries, less current
maturities, consist of the following at December 31:
<TABLE>
<CAPTION>
1994 1993
------------------------
<S> <C> <C>
Capitalized lease obligations $ 140.1 $ 145.1
Non-interest-bearing advances from customers 136.0 133.4
Promissory notes with interest rates ranging
from 4.4% to 10.9% during 1994 55.7 60.0
------- ---------
$ 331.8 $ 338.5
======= ==========
</TABLE>
The annual maturities of the promissory notes are: 1995 -
$6.5 million; 1996 - $4.3 million; 1997 - $1.8 million; 1998 -
$3.1 million; 1999 - $3.1 million; thereafter - $43.4 million.
Advances from customers are used to develop, operate and provide
for the ongoing working capital needs of certain project mining
subsidiaries.
F-15
<PAGE> 75
NOTE H--OBLIGATIONS OF PROJECT MINING SUBSIDIARIES Continued
Interest paid was $17.7 million, $17.5 million and $13.2
million during 1994, 1993 and 1992 respectively. Interest
expense is included as part of the cost of coal which is passed
through to the utility customers.
The project mining subsidiaries' lease obligations for mining
equipment have the following future minimum lease payments at
December 31, 1994:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
-------- ---------
<S> <C> <C>
1995 $ 20.7 $ .4
1996 19.6 .3
1997 18.8 .3
1998 18.0 .2
1999 17.7
Subsequent to 1999 150.3
------ ------
Total minimum lease payments 245.1 $ 1.2
=======
Amounts representing interest (95.4)
------
Present value of net minimum
lease payments 149.7
Current maturities (9.6)
------
$140.1
======
</TABLE>
Interest expense and amortization in excess of annual lease
payments are deferred and recognized in years when annual lease
payments exceed interest expense and amortization.
Project mining assets recorded under capital leases are
included with property, plant and equipment and consist of the
following at December 31:
<TABLE>
<CAPTION>
1994 1993
----------------------
<S> <C> <C>
Plant and equipment $ 188.1 $ 187.0
Less accumulated amortization 71.6 63.7
--------- --------
$ 116.5 $ 123.3
========= ========
</TABLE>
During 1994, 1993 and 1992, the project mining subsidiaries
incurred capital lease obligations of $5.2 million, $22.4
million and $12.0 million, respectively, in connection with lease
agreements to acquire plant and equipment.
Rental expense for all of the project mines' operating leases
amounted to $0.2 million during 1994,1993 and 1992.
The above obligations are secured by substantially all owned
assets of the respective project mining subsidiary and the
assignment of all rights under its coal sales agreement.
F-16
<PAGE> 76
NOTE I--LEASE COMMITMENTS
Future minimum operating lease payments, excluding project
mining subsidiaries, at December 31, 1994, are as follows:
<TABLE>
<S> <C>
1995 $ 14.2
1996 12.8
1997 10.9
1998 9.0
1999 6.9
Thereafter 9.6
-----------
$ 63.4
===========
</TABLE>
Rental expense for all operating leases, excluding project
mining subsidiaries, amounted to $16.9 million, $15.3 million and
$13.7 million during 1994, 1993 and 1992, respectively.
NOTE J--FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS
A financial instrument is cash or a contract that imposes an
obligation to deliver, or conveys a right to receive, cash or
another financial instrument. The fair value of financial
instruments, except for NMHG's Hyster-Yale 12 3/8% subordinated
debentures, approximated carrying values at December 31, 1994.
The fair value of the subordinated debentures was $82.5 million
at December 31,1994, compared with the carrying value of $78.5
million.
Interest Rate Derivatives
The Company's operating subsidiaries enter into interest rate
swap agreements. The use of these allows these subsidiaries to
enter into long-term credit agreements that have
performance-based, floating rates of interest and then swap them
into fixed rates, as opposed to entering into higher cost
fixed-rate credit arrangements. These agreements are with major
commercial banks; therefore, the risk of credit loss from
nonperformance by the banks is minimal. The following table
summarizes the notional amounts and related rates (including
applicable margins) on interest rate swap agreements outstanding
at December 31, 1994:
<TABLE>
<CAPTION>
Notional Fixed Rate
Amount Paid
-------- ------------
<S> <C> <C>
NMHG $185.0 6.0%
Hamilton Beach<>Proctor-Silex $ 60.0 6.9%
North American Coal $ 14.0 6.6%
Kitchen Collection $ 5.0 7.6%
</TABLE>
F-17
<PAGE> 77
NOTE J--FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL
INSTRUMENTS--Continued
FOREIGN CURRENCY DERIVATIVES
NMHG and Hamilton Beach<>Proctor-Silex enter into forward
foreign exchange contracts for purposes of hedging their exposure
to foreign currency exchange rate fluctuations. These contracts
are with major financial institutions. Therefore, the risk of
credit loss from non-performance by these institutions is
minimal. These contracts hedge primarily firm commitments and,
to a lesser degree, forecasted commitments relating to cash flows
associated with sales and purchases denominated in foreign
currencies. The table below summarizes foreign exchange contracts
outstanding as of December 31, 1994:
<TABLE>
<CAPTION>
Deferred
Contract Gain
Amount (Loss)
-------- --------
<S> <C> <C>
NMHG $ 190.9 $ (.5)
Hamilton Beach<>Proctor-Silex $ 1.0 --
</TABLE>
NOTE K--CONTINGENCIES
Various legal proceedings and claims have been or may be
asserted against NACCO and certain subsidiaries relating to the
conduct of its business including product liability and
environmental claims. These proceedings are incidental to
their ordinary course of business. Management believes that it
has meritorious defenses and will vigorously defend itself in
these actions. Any costs that management estimates will be paid
in these claims are accrued when the liability is considered
probable and the amount can be reasonably estimated.
Although the ultimate disposition of these proceedings is not
presently determinable, management believes, after consultation
with its General Counsel, the likelihood that material costs
will be incurred in excess of accruals already recognized
is remote.
NMHG is subject to recourse or repurchase obligations under
various financing arrangements for certain independently owned
retail dealerships at December 31, 1994. Also, certain dealer
loans are guaranteed by NMHG. When NMHG is the guarantor of the
principal amount financed, a security interest is usually
maintained in certain assets of parties for whom NMHG is
guaranteeing debt. Total amounts subject to recourse or repurchase
obligation at December 31, 1994, were $91.0 million. Losses
anticipated under the terms of the recourse or repurchase
obligations are not significant and have been provided for
financial reporting purposes.
NOTE L--STOCK OPTIONS
The 1975 and 1981 stock option plans as amended provide for the
granting to officers and other key employees options to purchase
Class A and Class B common stock of the Company at a price not less
than the market value of such stock at the date of grant. Options
become exercisable over a four-year period and expire 10 years from
the date of the grant. At December 31, 1994, all stock options
outstanding were exercisable. There were options for 80,701 Class
A shares at December 31, 1994 and 1993, respectively, and 80,100
Class B shares at December 31, 1994 and 1993, respectively,
available for grant under these plans. The Company does not,
however, intend to issue any additional stock options. At December
31, 1994, there were options relating to Class A shares for 5,800
shares with an option price of $32.00 that were granted on January
12, 1989, and 25,000 shares at an option price of $35.56 granted on
March 1, 1989.
F-18
<PAGE> 78
NOTE M--OTHER - NET
Items included in other-net for the year ended December 31 are
as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---------------------------------------
<S> <C> <C> <C>
Equity in earnings (losses) of
unconsolidated subsidiaries $ 1.0 $ (3.9) $ (.6)
Litigation settlement (3.5)
Gain (loss) on sale of assets (.1) 2.3 .2
Currency transaction gains (losses) (.8) .1 5.6
Miscellaneous 2.1 .3 (3.4)
--------- --------- ---------
$ 2.2 $ (4.7) $ 1.8
========= ========== =========
</TABLE>
NOTE N--INCOME TAXES
The components of income before income taxes on a legal entity
basis for the year ended December 31 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---------------------------------------
<S> <C> <C> <C>
Domestic $ 57.1 $ 18.3 $ 4.9
Foreign 21.4 6.4 35.4
--------- --------- ---------
Income before income taxes
and extraordinary charge $ 78.5 $ 24.7 $ 40.3
========== ========== ==========
</TABLE>
Domestic income before income taxes has been reduced by all of
the amortization of goodwill and deferred financing costs, and
substantially all interest expense.
Provision for income taxes consists of the following for the
year ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------------
<S> <C> <C> <C>
Current tax expense:
Federal $ 24.3 $ 8.4 $ 3.9
State 3.0 2.7 1.3
Foreign 7.8 4.4 6.8
-------- --------- ----------
Total current 35.1 15.5 12.0
-------- --------- ----------
Deferred tax expense (benefit):
Federal (1.1) 3.6 2.8
State (.1) (1.2) .6
Foreign (3.2) (4.4) .9
-------- --------- ----------
Total deferred (4.4) (2.0) 4.3
-------- --------- ----------
Provision for income taxes $ 30.7 $ 13.5 $ 16.3
======== ========= ==========
</TABLE>
F-19
<PAGE> 79
NOTE N--INCOME TAXES--Continued
The Company made income tax payments of $29.0 million, $16.3
million and $30.8 million during 1994, 1993 and 1992,
respectively. During the same period, income tax refunds totaled
$1.2 million, $5.1 million and $5.3 million, respectively.
At December 31, 1994, the Company had cumulative undistributed
earnings at its foreign subsidiaries of $93.1 million. It is the
Company's intention to reinvest $39.0 million of these
undistributed earnings of its foreign subsidiaries and thereby
indefinitely postpone their remittance. There has been no
provision made for taxes, nor is it practicable to estimate the
amount of taxes on the undistributed earnings which are
reinvested indefinitely. The remaining undistributed earnings of
$54.1 million can be remitted without a material charge to
earnings.
Upon remittance of earnings, certain foreign countries impose
withholding taxes that are then available, subject to certain
limitations, for use as credits against the Company's U.S. tax
liability. The amount of withholding tax that would be payable
upon remittance of the entire amount of undistributed earnings
would approximate $5.7 million.
A reconciliation of federal statutory and effective income tax
for the year ended December 31 follows:
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------------
<S> <C> <C> <C>
Income before taxes $ 78.5 $ 24.7 $ 40.3
========= ========= =========
Statutory taxes at 35% in 1994 and 1993
and 34% in 1992 $ 27.5 $ 8.6 $ 13.7
Amortization of excess purchase price 5.1 4.8 4.7
State income taxes 1.8 1.0 1.8
Differences between foreign
and statutory tax rates .4 .1 (3.6)
Percentage depletion (1.6) (1.6) (2.4)
Export benefits (1.0) (.8) (.3)
Earnings reported net of taxes (.4) 1.1 (.1)
Other-net (1.1) .3 2.5
--------- --------- ---------
Provision for income taxes $ 30.7 $ 13.5 $ 16.3
========= ========= =========
Effective rate 39.15% 54.78% 40.53%
========= ========= =========
</TABLE>
F-20
<PAGE> 80
NOTE N--INCOME TAXES--Continued
A summary of the components of the net deferred tax asset
(liability) in the Company's consolidated balance sheets at
December 31 resulting from differences in the book and tax basis
of assets and liabilities follows:
<TABLE>
<CAPTION>
Current Non-Current
-------------------------- ---------------------------
Domestic Foreign Domestic Foreign
-------- ------- -------- -------
1994
----
<S> <C> <C> <C> <C>
Inventories $ (20.0) $ 1.0
Accrued expenses and reserves 10.9 4.9 $ 24.0
Employee benefits 1.8 15.9 $ (2.6)
Net operating loss carryforwards 1.8 .8 3.3
Reserve for Obligation to
United Mine Workers of
America Combined Benefit Fund 56.2
Depreciation and depletion (40.3) (5.4)
Unrepatriated earnings (8.9)
Other (1.1) (10.0) .1
-------- -------- -------- -------
$ (5.5) $ 5.6 $ 40.2 $ (7.9)
======== ======== ======== ========
1993
----
Inventories $ (26.1) $ 1.4
Accrued expenses and reserves 13.8 .2 $ 24.6
Employee benefits 1.7 12.4 $ (2.3)
Net operating loss carryforwards 2.2 6.1 4.8
Reserve for Obligation to
United Mine Workers of
America Combined Benefit Fund 56.4
Depreciation and depletion (40.3) (5.4)
Unrepatriated earnings (4.9)
Other 2.0 (.4) (9.6) (.1)
-------- -------- -------- -------
$ (6.4) $ 7.3 $ 43.4 $ (7.8)
======== ======== ======== ========
</TABLE>
The Company and certain of its subsidiaries are currently
under examination for federal and various state income tax
returns. The Company has not been informed of any material
assessment resulting from these examinations and will vigorously
contest any material assessment. Management believes that any
potential adjustment would not materially affect future earnings.
F-21
<PAGE> 81
NOTE O--RETIREMENT BENEFIT PLANS
Defined Benefit Plans
The Company maintains various defined benefit pension plans
covering its employees. These plans provide benefits based on
years of service and average compensation during certain periods.
The Company's policy is to make contributions to fund these plans
within the range allowed by the applicable regulations.
Contributions to the various plans were $6.9 million in 1994 and
$5.2 million in 1993 and 1992. Plan assets consist primarily of
publicly traded stocks, investment contracts and government and
corporate bonds.
Set forth below is a detail of consolidated worldwide net
periodic pension expense and the assumptions used in accounting
for the United States defined benefit plans for the year ended
December 31. The United Kingdom plans used assumptions that are
consistent with, but not identical to, those used by the United
States plans.
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------------------
<S> <C> <C> <C>
Service cost $ 6.6 $ 6.3 $ 6.6
Interest cost on projected
benefit obligation 9.4 9.0 9.1
Actual loss (gain) on plan assets 1.1 (8.2) (2.1)
Curtailment gain (.4)
Net amortization and deferral
of actuarial (gains) losses (9.5) .1 (6.4)
------------- ----------- -----------
Net periodic pension expense $ 7.6 $ 6.8 $ 7.2
============ =========== ===========
Assumptions:
Weighted average discount rates 8.5% 7.5% 8.0-8.3%
Rate of increase in compensation
levels 5.0 -5.5% 4.0-6.0% 4.5-6.8%
Expected long-term rate of return
on assets 9.0% 9.0% 9.0%
</TABLE>
F-22
<PAGE> 82
NOTE O--RETIREMENT BENEFIT PLANS--Continued
The following sets forth the funded status of the defined
benefit plans and amounts recognized in the consolidated balance
sheets at December 31:
<TABLE>
<CAPTION>
Partially Funded Fully Funded
Plans Plans
-------------------------------------
1994 1993 1994 1993
-------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested accumulated benefit obligation $ 66.9 $ 69.1 $ 23.0 $ 21.9
Nonvested accumulated benefit obligation 4.6 5.2 .2 .2
-------- ------- ------- ------
Total accumulated benefit obligation 71.5 74.3 23.2 22.1
Value of future salary projections 19.9 22.8 2.4 2.2
-------- ------- ------- ------
Total projected benefit obligation 91.4 97.1 25.6 24.3
Fair value of plan assets 71.8 71.9 29.4 28.8
-------- ------- ------- ------
Plan assets in excess of (less than)
projected benefit obligation (19.6) (25.2) 3.8 4.5
Amounts available to (reduce) increase
future pension expense:
Unamortized balance of the initial
transition amount (2.5) (1.4) (.6) (.6)
Unamortized cumulative actuarial loss (gain) (2.0) 4.1 1.6 1.0
Unamortized prior service cost 3.8 3.6 1.3 1.3
Adjustment for minimum pension liability (7.8) (7.9)
--------- ------- ------- ------
Pension asset (liability) recognized in
consolidated balance sheet $ (28.1) $ (26.8) $ 6.1 $ 6.2
========= ======= ======= ======
</TABLE>
F-23
<PAGE> 83
NOTE O--RETIREMENT BENEFIT PLANS--Continued
DEFINED CONTRIBUTION PLANS
NACCO and its subsidiaries have defined contribution plans for
substantially all employees. For NACCO and certain subsidiaries,
employee contributions are matched by the Company based on plan
provisions. In addition, NACCO and certain other subsidiaries
have profit sharing plans whereby the subsidiary's contribution
is determined annually based on its operating results. Total
contributions to these plans were $5.9 million in 1994, $5.5
million in 1993 and $4.6 million in 1992.
RETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFIT PLANS
NACCO and certain of its subsidiaries have retirement health
care and life insurance benefit plans. These plans provide
benefits to pensioners and their survivors if they reach
certain age and service requirements while working for NACCO
or its subsidiaries. The amounts of expenses and liabilities
related to these plans are not material.
NOTE P--BUSINESS SEGMENTS
The Company has four operating subsidiaries. NMHG
designs, manufactures and markets forklift trucks and related
service parts under the Hyster(R) and Yale(R) brand names.
Hamilton Beach-Proctor-Silex is a leading manufacturer of small
electric appliances. North American Coal mines and markets
lignite for use primarily as fuel in power generation by electric
utilities. Kitchen Collection is a national specialty retailer of
kitchenware and small electric appliances.
Sales between subsidiaries, which are minimal, are eliminated
in consolidation. Information relating to the Company's
operations at the subsidiary level is presented below. The
results for North American Coal and Bellaire have been adjusted
to reflect the reclassification of certain royalty and other
payments previously classified with Bellaire that are more
appropriately classified with North American Coal.
F-24
<PAGE> 84
NOTE P--BUSINESS SEGMENTS--Continued
<TABLE>
<CAPTION>
1994 1993 1992
----------------------------------------
<S> <C> <C> <C>
REVENUES
NACCO Materials Handling Group $ 1,178.9 $ 908.2 $ 865.9
Hamilton Beach-Proctor-Silex 377.5 356.3 358.6
North American Coal 250.2 233.3 211.9
Kitchen Collection 63.9 53.7 45.5
Bellaire .6 3.0 6.0
Eliminations (6.2) (5.1) (4.1)
----------- ----------- -----------
$ 1,864.9 $ 1,549.4 $ 1,483.8
=========== =========== ===========
AMORTIZATION OF GOODWILL
NACCO Materials Handling Group $ 10.8 $ 10.8 $ 10.8
Hamilton Beach-Proctor-Silex 2.8 2.9 3.0
Kitchen Collection .1 .1 .1
----------- ----------- -----------
$ 13.7 $ 13.8 $ 13.9
=========== =========== ===========
OPERATING PROFIT
NACCO Materials Handling Group $ 65.8 $ 39.6 $ 44.3
Hamilton Beach-Proctor-Silex 25.3 11.8 19.3
North American Coal 48.6 45.2 41.6
Kitchen Collection 5.4 4.8 4.4
Bellaire (.1) (.1) (.1)
NACCO (9.9) (7.9) (8.2)
----------- ----------- -----------
$ 135.1 $ 93.4 $ 101.3
=========== =========== ===========
OPERATING PROFIT EXCLUDING GOODWILL AMORTIZATION
NACCO Materials Handling Group $ 76.6 $ 50.4 $ 55.1
Hamilton Beach-Proctor-Silex 28.1 14.7 22.3
North American Coal 48.6 45.2 41.6
Kitchen Collection 5.5 4.9 4.5
Bellaire (.1) (.1) (.1)
NACCO (9.9) (7.9) (8.2)
----------- ----------- -----------
$ 148.8 $ 107.2 $ 115.2
=========== =========== ===========
INTEREST INCOME
NACCO Materials Handling Group $ .8 $ .8 $ 1.5
North American Coal 3.0 2.1 2.1
Bellaire 1.3 1.0 1.5
NACCO 1.1 1.9 1.2
Eliminations (4.6) (3.9) (3.0)
----------- ----------- -----------
$ 1.6 $ 1.9 $ 3.3
=========== =========== ===========
INTEREST EXPENSE
NACCO Materials Handling Group $ (33.7) $ (40.4) $ (44.2)
Hamilton Beach-Proctor-Silex (7.5) (7.7) (8.6)
North American Coal (1.3) (.8) (1.0)
Kitchen Collection (.3) (.1) (.2)
NACCO (3.6) (2.3) (1.8)
Eliminations 4.6 3.9 3.0
----------- ----------- -----------
(41.8) (47.4) (52.8)
Project Mining Subsidiaries (18.6) (18.5) (13.2)
----------- ----------- -----------
$ (60.4) $ (65.9) $ (66.0)
=========== =========== ===========
OTHER-NET, INCOME (EXPENSE)
NACCO Materials Handling Group $ 2.9 $ (1.7) $ 2.9
Hamilton Beach-Proctor-Silex (.3) (4.1)
North American Coal (1.1) (1.4)
Bellaire .2 .1 .1
NACCO .5 1.0 .2
----------- ----------- -----------
$ 2.2 $ (4.7) $ 1.8
=========== =========== ===========
</TABLE>
F-25
<PAGE> 85
NOTE P--BUSINESS SEGMENTS--Continued
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------------------
<S> <C> <C> <C>
NET INCOME (LOSS)
Before Extraordinary Charge
NACCO Materials Handling Group $ 18.7 $ (5.1) $ 1.3
Hamilton Beach Proctor-Silex 10.2 (1.0) 5.4
North American Coal 21.0 17.4 20.1
Kitchen Collection 3.1 2.7 2.4
Bellaire .8 2.6 .9
NACCO (6.1) (5.4) (6.1)
Minority interest (2.4) .4 (1.1)
----------- ---------- -----------
45.3 11.6 22.9
Extraordinary charge, net-of-tax (3.2) (3.3) (110.0)
----------- ---------- -----------
Net Income (Loss) $ 42.1 $ 8.3 $ (87.1)
=========== ========== ===========
TOTAL ASSETS
NACCO Materials Handling Group $ 906.2 $ 833.0 $ 854.3
Hamilton Beach Proctor-Silex 289.6 300.3 296.8
North American Coal 49.0 44.8 40.5
Kitchen Collection 26.0 23.3 19.9
Bellaire 87.1 93.6 95.5
NACCO 26.6 22.8 34.6
------------ ---------- -----------
1,384.5 1,317.8 1,341.6
Project mining subsidiaries 412.3 416.7 410.7
------------ ---------- -----------
1,796.8 1,734.5 1,752.3
Consolidating eliminations (102.5) (92.0) (67.4)
------------ ---------- -----------
$ 1,694.3 $ 1,642.5 $ 1,684.9
============ ========== ===========
DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE
NACCO Materials Handling Group $ 32.2 $ 31.7 $ 32.1
Hamilton Beach Proctor-Silex 15.5 15.3 15.3
North American Coal 1.6 1.5 1.5
Kitchen Collection .9 .8 .8
Bellaire .2
NACCO .1 .3 .4
----------- --------- -----------
50.3 49.6 50.3
Project mining subsidiaries 29.9 28.5 22.2
----------- --------- -----------
$ 80.2 $ 78.1 $ 72.5
=========== ========= ===========
CAPITAL EXPENDITURES
NACCO Materials Handling Group $ 25.9 $ 20.2 $ 24.3
Hamilton Beach Proctor-Silex 13.4 12.2 10.8
North American Coal .4 1.0 1.1
Kitchen Collection 1.0 1.1 .6
NACCO .2 .2 .2
----------- --------- ----------
40.9 34.7 37.0
Project mining subsidiaries 11.7 23.0 37.4
----------- --------- ----------
$ 52.6 $ 57.7 $ 74.4
=========== ========= ==========
</TABLE>
F-26
<PAGE> 86
NOTE P--BUSINESS SEGMENTS--Continued
DATA BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
Europe,
Africa and Asia-
Americas Middle East Pacific Eliminations Consolidated
-------- ----------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
1994
----
Sales to unaffiliated
customers $1,509.4 $ 294.4 $ 61.1 $ 1,864.9
Transfer between
geographic areas 49.2 130.6 $ (179.8)
--------- -------- -------- --------- ----------
Total revenues $1,558.6 $ 425.0 $ 61.1 $ (179.8) $ 1,864.9
======== ======== ======== ========= ==========
Operating profit $ 114.5 $ 15.4 $ 5.2 $ ---- $ 135.1
======== ======== ======== ========= ==========
Total assets $1,371.1 $ 309.6 $ 24.0 $ (10.4) $ 1,694.3
======== ======== ======== ========= ==========
1993
----
Sales to unaffiliated
customers $1,284.8 $ 222.2 $ 42.4 $ 1,549.4
Transfer between
geographic areas 31.5 81.2 $ (112.7)
-------- -------- -------- --------- ----------
Total revenues $1,316.3 $ 303.4 $ 42.4 $ (112.7) $ 1,549.4
======== ======== ======== ========= ==========
Operating profit $ 94.1 $ (2.4) $ 1.7 $ ---- $ 93.4
======== ======== ======== ========= ==========
Total assets $1,381.5 $ 274.8 $ 19.6 $ (33.4) $ 1,642.5
======== ======== ======== ========= ==========
1992
----
Sales to unaffiliated
customers $1,196.9 $ 251.5 $ 35.4 $ 1,483.8
Transfer between
geographic areas 32.1 89.2 $ (121.3)
-------- -------- -------- --------- ----------
Total revenues $1,229.0 $ 340.7 $ 35.4 $ (121.3) $ 1,483.8
======== ======== ======== ========= ==========
Operating profit $ 72.5 $ 28.7 $ .8 $ (.7) $ 101.3
======== ======== ======== ========= ==========
Total assets $1,384.4 $ 283.7 $ 18.3 $ (1.5) $ 1,684.9
======== ======== ======== ========= ==========
</TABLE>
NACCO parent company expense reduced Americas operating profit
by $9.9 million, $7.9 million and $8.2 million in 1994, 1993 and
1992, respectively. The Asia-Pacific category above does not
include the operating results or assets of NMHG's 50% owned
Japanese joint venture, Sumitomo-Yale, as it is accounted for
using the equity method.
F-27
<PAGE> 87
NOTE Q--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
A summary of the unaudited quarterly results of operations for
the year ended December 31 is as follows:
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
1994
----
TOTAL REVENUES
NACCO Materials Handling Group $ 245.3 $ 290.4 $ 289.7 $ 353.5
Hamilton Beach-Proctor-Silex 68.6 76.1 106.9 125.9
North American Coal(1) 59.3 58.8 68.3 63.8
Kitchen Collection 10.7 12.4 17.2 23.6
Bellaire(1) .1 .2 .2 .1
Eliminations (.8) (1.0) (2.0) (2.4)
-------- -------- -------- --------
383.2 436.9 480.3 564.5
GROSS PROFIT 77.8 90.8 97.2 111.6
OPERATING PROFIT
NACCO Materials Handling Group 11.1 19.8 14.5 20.4
Hamilton Beach-Proctor-Silex (.4) 3.5 9.6 12.6
North American Coal(1) 12.0 11.6 12.1 12.9
Kitchen Collection (.2) .2 1.6 3.8
Bellaire(1) (.1) (.1) .1
NACCO (2.2) (2.2) (2.4) (3.1)
-------- -------- -------- --------
20.3 32.8 35.3 46.7
-------- -------- -------- --------
INCOME BEFORE EXTRAORDINARY
CHARGE 2.8 9.2 11.0 22.3
Extraordinary charge, net-of-tax (3.2)
-------- -------- -------- --------
NET INCOME $ 2.8 $ 6.0 $ 11.0 $ 22.3
======== ======== ======== ========
PER SHARE AMOUNTS:
INCOME BEFORE EXTRAORDINARY
CHARGE $ .31 $ 1.03 $ 1.23 $ 2.49
Extraordinary charge, net-of-tax (.36)
--------- --------- -------- --------
NET INCOME $ .31 $ .67 $ 1.23 $ 2.49
========= ========= ======== ========
</TABLE>
F-28
<PAGE> 88
NOTE Q--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)--Continued
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
1993
----
TOTAL REVENUES
NACCO Materials Handling Group $ 214.7 $ 228.7 $ 217.5 $ 247.3
Hamilton Beach Proctor-Silex 65.8 65.9 107.7 116.9
North American Coal(1) 54.0 54.0 63.4 61.9
Kitchen Collection 9.1 10.1 14.2 20.3
Bellaire(1) 1.0 1.0 .8 .2
Eliminations (.8) (.9) (1.9) (1.5)
--------- --------- --------- ---------
343.8 358.8 401.7 445.1
GROSS PROFIT 67.9 69.2 76.7 91.5
OPERATING PROFIT
NACCO Materials Handling Group 9.6 7.9 6.0 16.1
Hamilton Beach Proctor-Silex (2.7) (1.8) 7.3 9.0
North American Coal(1) 11.2 9.7 12.1 12.2
Kitchen Collection (.1) .2 1.4 3.3
Bellaire(1) (.1)
NACCO (2.1) (2.2) (2.0) (1.6)
--------- --------- --------- ---------
15.9 13.7 24.8 39.0
--------- --------- --------- ---------
INCOME BEFORE EXTRAORDINARY
CHARGE 0.0 (.2) 2.0 9.8
Extraordinary charge, net-of-tax (3.3)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 0.0 $ (3.5) $ 2.0 $ 9.8
========= ========= ========= =========
PER SHARE AMOUNTS:
INCOME (LOSS) BEFORE
EXTRAORDINARY CHARGE $ .00 $ (.02) $ .23 $ 1.09
Extraordinary charge, net-of-tax (.37)
--------- --------- --------- ---------
NET INCOME (LOSS) $ .00 $ (.39) $ .23 $ 1.09
========= ========= ========= =========
<FN>
(1) The information for the first three quarters of 1994 and all quarters of
1993 have been adjusted from amounts previously reported. These
adjustments relate to the reclassification of certain royalty and other
payments previously classified with Bellaire that are more appropriately
classified with North American Coal.
</TABLE>
F-29
<PAGE> 89
NOTE R--PARENT COMPANY CONDENSED BALANCE SHEETS
The condensed balance sheets of NACCO, the parent company, at
December 31 are as follows:
<TABLE>
<CAPTION>
1994 1993
-----------------------
<S> <C> <C>
Current assets (including current
intercompany amounts) $ 13.0 $ 7.8
Other assets 1.8 1.5
Investment in and advances from subsidiaries, net
Investments
NACCO Materials Handling Group 300.7 257.2
Hamilton Beach Proctor-Silex 104.7 111.3
North American Coal 15.1 37.2
Kitchen Collection 10.1 12.6
Bellaire (101.3) (102.1)
---------- ----------
329.3 316.2
Advances from subsidiaries (45.1) (67.8)
---------- ----------
284.2 248.4
Property, plant and equipment, net 1.2 1.3
Deferred income taxes 1.7
---------- ----------
Total Assets $ 301.9 $ 259.0
========== ==========
Current liabilities (including
current intercompany amounts) $ 18.9 $ 12.1
Deferred income and other 3.6 4.7
Deferred income taxes 6.6
Stockholders' equity 279.4 235.6
---------- ----------
Total Liabilities and Stockholders' Equity $ 301.9 $ 259.0
========== ==========
</TABLE>
The credit agreement at NMHG prohibits the transfer
of assets to NACCO. The credit agreements at Hamilton Beach
Proctor-Silex and Kitchen Collection allow the transfer of assets
to NACCO under certain circumstances. The amount of NACCO s
investment in NMHG, Hamilton Beach Proctor-Silex and Kitchen
Collection that was restricted at December 31, 1994, totals
approximately $400.8 million. The revised credit agreement at
NMHG, see Note G--"Revolving Credit Agreements and Notes Payable"
will allow the transfer of $25.0 million to NACCO. There are no
restrictions on the transfer of assets from North American Coal
and its dividends and advances are the primary source of cash
for NACCO.
F-30
<PAGE> 90
NACCO INDUSTRIES, INC. REPORT OF MANAGEMENT
To the Stockholders of NACCO Industries, Inc.:
The management of NACCO Industries, Inc. is responsible for the
preparation, content and integrity of the financial statements and
related information contained within this report. The accompanying
financial statements have been prepared in accordance with generally
accepted accounting principles and include amounts that are based on
informed judgments and estimates.
The Company's code of conduct, communicated throughout the
organization, requires adherence to high ethical standards in the
conduct of the Company s business.
NACCO Industries, Inc. and each of its subsidiaries maintain a
system of internal controls designed to provide reasonable assurance
as to the protection of assets and the integrity of the financial
statements. These systems are augmented by the selection of qualified
financial management personnel. In addition, an internal audit
function periodically assesses the internal controls.
Arthur Andersen LLP, independent certified public accountants,
audits NACCO Industries, Inc. and its subsidiaries' financial
statements. Its audits are conducted in accordance with generally
accepted auditing standards and provide an objective and independent
assessment that helps ensure fair presentation of the Company s
operating results and financial position. The independent accountants
have access to all financial records and related data of the Company,
as well as to the minutes of stockholders' and directors' meetings.
The Audit Committee of the Board of Directors, composed of
independent directors, meets regularly with the independent auditors
and internal auditors to review the scope of their audit reports and
to discuss any action to be taken. The independent auditors and the
internal auditors have free and direct access to the Audit Committee.
The Audit Committee also reviews the financial reporting process and
accounting policies of NACCO Industries, Inc. and each of its
subsidiaries.
<TABLE>
<S> <C> <C>
Alfred M. Rankin, Jr. Frank B. O'Brien Steven M. Billick
--------------------- ---------------- -----------------
Alfred M. Rankin, Jr. Frank B. O'Brien Steven M. Billick
Chairman, President Senior Vice President-- Vice President and Controller
and Chief Executive Officer Corporate Development
and Chief Financial Officer
</TABLE>
F-31
<PAGE> 91
<TABLE>
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF THE PARENT
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PARENT COMPANY CONDENSED BALANCE SHEETS
<CAPTION>
December 31
------------------------
1994 1993
----- ----
(In thousands)
<S> <C> <C>
Current assets $ 279 $ 554
Net amounts receivable from subsidiaries 12,755 7,191
Other assets 1,753 1,544
Investment in and advances from
subsidiaries, net
Investments
NMHG 300,672 257,244
Hamilton Beach<>Proctor-Silex 104,694 111,251
North American Coal 15,125 37,150
Kitchen Collection 10,141 12,625
Bellaire Corporation (101,329) (102,125)
-------- --------
329,303 316,145
Advances from subsidiaries (45,061) (67,793)
-------- --------
284,242 248,352
Property, plant and equipment, net 1,198 1,323
Deferred income taxes 1,699
-------- --------
Total Assets $301,926 $258,964
======== ========
Current liabilities $ 18,942 $ 12,037
Deferred income and other 3,593 4,719
Deferred income taxes 6,582
Stockholders' equity 279,391 235,626
-------- --------
Total Liabilities and Stockholders' Equity $301,926 $258,964
======== ========
<FN>
See notes to parent company financial statements.
</TABLE>
F-32
<PAGE> 92
<TABLE>
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF THE PARENT
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PARENT COMPANY STATEMENTS OF INCOME
<CAPTION>
Year Ended
December 31
-------------------------------------
1994 1993 1992
------- ------- --------
(In thousands)
<S> <C> <C> <C>
Income (expense):
Intercompany interest income $ 1,068 $ 1,841 $ 1,283
Intercompany interest expense (3,510) (2,101) (1,676)
Other - net 464 829 60
------- ------- --------
(1,978) 569 (333)
Administrative and general expenses 9,903 7,831 8,200
------- ------- --------
Loss before income taxes (11,881) (7,262) (8,533)
Income tax benefit (5,825) (1,748) (2,456)
------- ------- --------
Net loss before equity in earnings of
subsidiaries and extraordinary charge (6,056) (5,514) (6,077)
Equity in earnings of subsidiaries before
extraordinary charge 51,328 17,107 28,945
Extraordinary charge, net-of-tax (3,218) (3,292) (110,000)
------- ------- --------
Net income (loss) $42,054 $ 8,301 $(87,132)
======= ======= ========
<FN>
See notes to parent company financial statements.
</TABLE>
F-33
<PAGE> 93
<TABLE>
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF THE PARENT
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PARENT COMPANY STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended
December 31
---------------------------------
1994 1993 1992
-------- --------- --------
(In thousands)
<S> <C> <C> <C>
Operating activities
Net income (loss) $ 42,054 $ 8,301 $(87,132)
Equity in earnings of subsidiaries (51,328) (17,107) (28,945)
Extraordinary charge, net-of-tax 3,218 3,292 110,000
-------- --------- --------
Parent company only net loss (6,056) (5,514) (6,077)
Deferred income taxes (4,866) 6,908 (2,834)
Income taxes net of intercompany tax
payments (3,442) (3,954) 1,964
Working capital changes 983 775 (1,469)
Changes in current intercompany amounts 69 49 1,106
Items of income or expense not requiring
cash outlays (577) 299 530
-------- --------- --------
Net cash used by operating activities (13,889) (1,437) (6,780)
Investing Activities
Capital contributions to subsidiaries
NMHG (24,273) (52,235)
Dividends and advances, net, received
from subsidiaries 40,009 45,883 33,165
Purchases of Hyster-Yale 12 3/8%
debentures (11,832) (22,061)
Reduction of investment in Hyster-Yale
12 3/8% debentures 3,946 25,529
Expenditures for equipment (85) (147) (246)
-------- --------- --------
Net cash provided by investing activities 19,597 7,198 10,858
Financing Activities
Cash dividends (6,040) (5,854) (5,645)
Treasury stock sales under stock option
and directors' compensation plans - net 251 212 1,622
Other - net 38 (75) (55)
-------- --------- --------
Net cash used by financing activities (5,751) (5,717) (4,078)
-------- --------- --------
Cash and cash equivalents
Increase (decrease) for the period (43) 44 -
Balance at the beginning of the period 47 3 3
-------- --------- --------
Balance at the end of the period $ 4 $ 47 $ 3
======== ========= ========
<FN>
See notes to parent company financial statements.
</TABLE>
F-34
<PAGE> 94
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF THE PARENT
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
For The Year Ended December 31, 1994, 1993 and 1992
The notes to consolidated financial statements, included elsewhere in this Form
10-K, are hereby incorporated by reference into these notes to parent company
financial statements.
NOTE A - LONG-TERM OBLIGATIONS AND GUARANTEES
NACCO Industries, Inc. ("NACCO", the parent company) is a holding
company which owns four operating subsidiaries. It is NACCO's policy
not to guarantee the debt of such subsidiaries.
NOTE B - CASH DIVIDENDS AND ADVANCES TO NACCO
Dividends received from the subsidiaries were $62.7 million in 1994 and
$23.3 million in 1993 and 1992.
NOTE C - CAPITAL CONTRIBUTIONS TO SUBSIDIARIES
The 1993 capital contribution to NMHG of $52.2 million includes the
$26.7 million of cash contributed by NACCO to NMHG in 1993. In
addition, NACCO contributed previously purchased Hyster-Yale 12 3/8%
debentures with a cost to NACCO of $25.5 million (face value of $23.7
million) to NMHG in 1993.
NOTE D - UNRESTRICTED CASH
The amount of unrestricted cash available to NACCO, included in
Investment in and advances from subsidiaries, net was $8.8 million at
December 31, 1994.
F-35
<PAGE> 95
<TABLE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
YEARS ENDED DECEMBER 31, 1994, 1993 and 1992
<CAPTION>
----------------------------------------------------------------------------------------------------------
COL A. COL B. COL C COL D. COL E.
----------------------------------------------------------------------------------------------------------
Balance Additions
at Charged Charged to (D)
Beginning to Other Balance at
Description of Costs and Accounts-- Deductions End of
Period Expenses Describe -Describe Period
----------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C>
1994
Reserves deducted from
asset accounts:
Allowance for doubtful
accounts $5,731 $1,240 $39(C) $2,538 (A) $4,472
Allowance for
discounts,
adjustments and
returns $5,397 $17,878 $17,107 (B) $6,168
1993
Reserves deducted from
asset accounts:
Allowance for doubtful
accounts $5,302 $1,056 $595 (A)
$32 (C) $5,731
Allowance for
discounts,
adjustments and
returns $7,097 $16,596 $18,296 (B) $5,397
1992
Reserves deducted from
asset accounts:
Allowance for doubtful
accounts $5,307 $845 $789 (A)
$61 (C) $5,302
Allowance for
discounts,
adjustments and
returns $6,860 $22,454 $22,217 (B) $7,097
<FN>
Note A - Accounts receivable balances written off, net of recoveries.
Note B - Payments.
Note C - Subsidiary's foreign currency translation adjustments and other.
Note D- Balances which are not requiredto be presented andthose which are immaterial have been omitted.
</TABLE>
F-36
<PAGE> 96
EXHIBIT INDEX
(3) Articles of Incorporation and By-laws.
(i) Restated Certificate of Incorporation of the Company is
incorporated by reference to Exhibit 3(i) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, Commission File Number 1-9172.
(ii) Restated By-laws of the Company are incorporated by
reference to Exhibit 3(ii) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992,
Commission File Number 1-9172.
(4) Instruments defining the rights of security holders,
including indentures.
(i) The Company by this filing agrees, upon request, to file
with the Securities and Exchange Commission the instruments
defining the rights of holders of Long-Term debt of the
Company and its subsidiaries where the total amount of
securities authorized thereunder does not exceed 10% of the
total assets of the Company and its subsidiaries on a
consolidated basis.
(ii) The Mortgage and Security Agreement, dated April 8,
1976, between The Falkirk Mining Company (as Mortgagor) and
Cooperative Power Association and United Power Association
(collectively as Mortgagee) is incorporated by reference to
Exhibit 4(ii) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, Commission File
Number 1-9172.
(iii) Indenture, dated as of August 3, 1989, between the
Company and United Trust Company of New York, Trustee, with
respect to the 12-3/8% Senior Subordinated Debentures due
August 1, 1999 (the form of which Debenture is included in
such Indenture) is incorporated herein by reference to
Exhibit 4(ii) of the Hyster-Yale Materials Handling, Inc.
("Hyster-Yale") Annual Report on Form 10-K for the fiscal
year ended December 31, 1989, Commission File Number
33-28812.
(iv) Stockholders' Agreement, dated as of March 15, 1990,
among the signatories thereto, the Company and Ameritrust
Company National Association, as depository, is
incorporated herein by reference to Exhibit 2 to the
Schedule 13D filed on March 29, 1990 with respect to the
Class B Common Stock, par value $1.00 per share, of NACCO
Industries, Inc.
(v) Amendment to Stockholders' Agreement, dated as of April 6,
1990, among the signatories thereto, the
X-1
<PAGE> 97
Company and Ameritrust Company National Association, as
depository, is incorporated herein by reference to Exhibit 4
to the Amendment No. 1 of the Schedule 13D filed on April 11,
1990 with respect to the Class B Common Stock, par value $1.00
per share. of NACCO Industries, Inc.
(vi) Amendment to Stockholders' Agreement, dated as of April
6, 1990, among the signatories thereto, the Company and
Ameritrust Company National Association, as depository, is
incorporated herein by reference to Exhibit 5 to the
Amendment No. 1 of the Schedule 13D filed on April 11, 1990
with respect to the Class B Common Stock, par value $1.00
per share, of NACCO Industries, Inc.
(vii) Amendment to Stockholders' Agreement, dated as of
November 17, 1990, among the signatories thereto, the
Company and Ameritrust Company National Association, as
depository, is incorporated herein by reference to the
Amendment No. 2 of the Schedule 13D filed on March 18, 1991
with respect to the Class B Common Stock, par value $1.00 per
share, of NACCO Industries, Inc.
(10) Material contracts.
*(i) The NACCO Industries, Inc. 1975 Stock Option Plan (as
amended and restated as of July 17, 1986) is incorporated
herein by reference to Exhibit 10(i) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1991, Commission File Number 1-9172.
*(ii) Form of Incentive Stock Option Agreement for incentive
stock options granted before 1987 under The NACCO
Industries, Inc. 1975 Stock Option Plan (as amended and
restated as of July 17, 1986) is incorporated herein by
reference to Exhibit 10(ii) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991,
Commission File Number 1-9172.
*(iii) Form of Incentive Stock Option Agreement for
incentive stock options granted after 1986 under The NACCO
Industries, Inc. 1975 Stock Option Plan (as amended and
restated as of July 17, 1986) is incorporated herein by
reference to Exhibit 10(iii) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991,
Commission File Number 1-9172.
X-2
<PAGE> 98
*(iv) Form of Non-Qualified Stock Option Agreement under The
NACCO Industries, Inc., 1975 Stock Option Plan (as amended
and restated as of July 17, 1986) is incorporated herein by
reference to Exhibit 10(iv) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991,
Commission File Number 1-9172.
*(v) The NACCO Industries, Inc. 1981 Stock Option Plan (as
amended and restated as of July 17, 1986) is incorporated
herein by reference to Exhibit 10(v) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1991, Commission File Number 1-9172.
*(vi) Form of Non-Qualified Stock Option Agreement under The
NACCO Industries, Inc. 1981 Stock Option Plan (as amended
and restated as of July 17, 1986) is incorporated herein by
reference to Exhibit 10(vi) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991,
Commission File Number 1-9172.
*(vii) Form of Incentive Stock Option Agreement for
incentive stock options granted before 1987 under The NACCO
Industries, Inc. 1981 Stock Option Plan (as amended and
restated as of July 17, 1986) is incorporated herein by
reference to Exhibit 10(vii) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991,
Commission File Number 1-9172.
*(viii) Form of Incentive Stock Option Agreement for
incentive stock options granted after 1986 under The NACCO
Industries, Inc. 1981 Stock Option Plan (as amended and
restated as of July 17, 1986) is incorporated herein by
reference to Exhibit 10(viii) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1991,
Commission File Number 1-9172.
*(ix) The Retirement Benefit Plan for Alfred M. Rankin, Jr.,
effective as of January 1, 1994 is attached hereto as
Exhibit 10 (ix).
*(x) Amendment No. 1 to the Retirement Benefit Plan for
Alfred M. Rankin, Jr., dated as of March 15, 1995, is
attached hereto as Exhibit 10 (x).
*(xi) The North American Coal Corporation Deferred
Compensation Plan for Management Employees (formerly known
as the NACCO Industries, Inc. Deferred Compensation Plan for
Management Employees) dated
X-3
<PAGE> 99
December 1, 1989, is incorporated herein by reference to Exhibit
10(xiii) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, Commission File
Number 1-9172.
*(xii) Instrument of Merger by and between North American
Coal, Hamilton Beach/Proctor-Silex and NACCO Materials
Handling Group, Inc., effective as of December 31, 1994,
relating to certain defined benefit plans, is attached
hereto as Exhibit 10(xii).
*(xiii) Amendment No. 3 to the NACCO Materials Handling
Group, Inc. Cash Balance Plan, effective as of December 31,
1994, is incorporated herein by reference to Exhibit 10(ciii) to
the Hyster-Yale Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, Commission File Number 33-
28812.
*(xiv) Form of the North American Coal Annual Incentive Plan
is attached hereto as Exhibit 10(xiv).
(xv) Agreement of Merger, dated as of January 20, 1988,
among NACCO Industries, Inc., Housewares Holding Company,
WE-PS Merger, Inc. and WearEver-ProctorSilex, Inc., is
incorporated herein by reference to pages 8 through 97 of
Exhibit 2 to the Company's Current Report on Form 8-K, dated
February 1, 1988, Commission File Number 1-9172.
(xvi) Shareholders Agreement, dated January 20, 1988, among
NACCO Industries, Inc. and the shareholders named therein is
incorporated herein by reference to pages 98 through 108 of
Exhibit 2 to the Company's Current Report on Form 8-K, dated
February 1, 1988, Commission File Number 1-9172.
*(xvii) Amendment No. 1 to the NACCO Industries, Inc.
Deferred Compensation Plan for Management Employees, dated
January 1, 1993, is incorporated by reference to Exhibit
10(xvii) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, Commission File Number
1-9172.
*(xviii) Amendment No. 1 to the Hyster-Yale Long-Term
Incentive Compensation Plan, effective as of January 1,
1994, is incorporated herein by reference to Exhibit
10(lxxxviii) to the Hyster-Yale Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, Commission File
Number 33-28812.
(xix) Agreement and Plan of Merger, dated as of April 7,
1989, among NACCO Industries, Inc., Yale Materials
X-4
<PAGE> 100
Handling Corporation, Acquisition I, Esco Corporation, Hyster
Company and Newesco, is incorporated herein by reference to
Exhibit 2.1 to Hyster-Yale Materials Handling, Inc.'s
Registration Statement on Form S-1 filed May 17, 1989
(Registration Statement Number 33-28812).
(xx) Agreement and Plan of Merger, dated as of April 7,
1989, among NACCO Industries, Inc., Yale Materials Handling
Corporation, Acquisition II, Hyster Company and Newesco, is
incorporated herein by reference to Exhibit 2.2 to
Hyster-Yale Materials Handling, Inc.'s Registration
Statement on Form S-1 filed May 17, 1989 (Registration
Statement Number 33-28812).
*(xxi) Amendment No. 2 to the NACCO Materials Handling
Group, Inc. Unfunded Benefit Plan (As Amended and Restated
Effective October 1, 1994), effective as of January 1, 1995,
is incorporated by reference to Exhibit 10(cvii) to Hyster-
Yale Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, Commission File Number 33-28812.
*(xxii) Instrument of Adoption and Merger for NACCO
Industries, Inc. for the NACCO Materials Handling Group,
Inc. Unfunded Benefit Plan (As Amended and Restated
Effective October 1, 1994) dated December 30, 1994, is
attached here to as Exhibit 10(xxii).
*(xxiii) Instrument of Withdrawal and Transfer of Liabilities
from The North American Coal Corporation Deferred
Compensation Plan for Management Employees, effective as of
December 31, 1994, is attached hereto as Exhibit 10(xxiii).
*(xxiv) Amendment No. 4 to the NACCO Materials Handling
Group, Inc. Profit Sharing Plan, dated as of November 30,
1994, is incorporated herein by reference to Exhibit 10(ci)
to the Hyster-Yale Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, Commission File Number 33-
28812.
*(xxv) The Hamilton Beach/Proctor-Silex, Inc. Unfunded
Benefit Plan (As Amended and Restated Effective as of
January 1, 1995), is attached hereto as Exhibit 10(xxv).
*(xxvi) Amendment No. 3 to the Hamilton Beach/Proctor-Silex,
Inc. Profit Sharing Retirement Plan, dated as of December
31, 1994, is attached hereto as Exhibit 10(xxvi).
X-5
<PAGE> 101
*(xxvii) Amendment No. 6 to The North American Coal
Corporation Salaried Employees Pension Plan (As Amended and
Restated as of January 1, 1989), effective December 31,
1994, is attached hereto as Exhibit 10(xxvii).
*(xxviii) Instrument of Merger, Amendment and Transfer of
Sponsorship of Benefit Plans, effective as of August 31,
1994, is attached hereto as Exhibit 10(xxviii).
*(xxix) Amendment No. 1 to The Hamilton Beach/Proctor-Silex,
Inc. Unfunded Benefit Plan (As Amended and Restated
Effective January 1, 1995), effective as of January 1, 1995,
is attached hereto as Exhibit 10(xxix).
*(xxx) Amendment No. 3 to The North American Coal Corporation
Deferred Compensation Plan for Management Employees,
effective as of January 1, 1995, is attached hereto as
Exhibit 10(xxx).
*(xxxi) Amendment No. 4 to The North American Coal
Corporation Deferred Compensation Plan for Management
Employees, effective April 1, 1995, is attached hereto as
Exhibit 10(xxxi).
*(xxxii) Amendment No. 5A to The North American Coal
Corporation Salaried Employees Pension Plan, dated March 15,
1995, is attached hereto as Exhibit 10(xxxii).
*(xxxiiii) Amendment No. 2A to The Hamilton Beach/Proctor-
Silex, Inc. Profit Sharing Retirement Plan, dated as of
March 15, 1995, is attached hereto as Exhibit 10(xxxiii).
*(xxxiv) Amendment No. 3 to The North American Coal
Corporation Retirement Savings Plan (As Amended and Restated
Effective as of January 1, 1993), dated as of November 30,
1994, is attached as Exhibit 10(xxxiv).
*(xxxv) Amendment No. 5 to the NACCO Materials Handling
Group, Inc. Profit Sharing Plan, dated March 15, 1995,
is incorporated herein by reference to Exhibit 10(cii)
to the Hyster-Yale Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, Commission File
Number 33-28812.
*(xxxvi) Amendment No. 2A to the NACCO Materials Handling
Group, Inc. Cash Balance Plans,dated as of March 15, 1995, is
incorporated herei by referene to Exhibit 10(cx) to the
Hyster-Yale Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, Commission File Number 33-28812.
X-6
<PAGE> 102
(xxxvii)-(xlvii) Intentionally Left Blank
(xlviii) Reorganization and Merger Agreement, dated as of
October 11, 1990, among Housewares Holding Company, HB-PS
Holding Company, Inc., Proctor-Silex, Inc., Precis [521]
Ltd., Glen Electric, Ltd. and Hamilton Beach, Inc. is
incorporated herein by reference to Exhibit 10(lv) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172. The
Company by this filing agrees, upon request, to file with
the Securities and Exchange Commission any of the Exhibits
and/or Schedules to the Reorganization and Merger Agreement.
(xlix) Shareholders Agreement, dated as of October 11, 1990,
among Housewares Holding Company, HB-PS Holding Company,
Inc., Precis [521] Ltd. and Hamilton Beach Inc. is
incorporated herein by reference to Exhibit 10(lvi) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
(l) Indemnity Agreement, dated as of October 11, 1990, among
Hamilton Beach Inc., Glen Dimplex, Precis [521] Ltd. and
Glen Electric, Ltd. is incorporated herein by reference to
Exhibit 10(lvii) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1990, Commission File
Number 1-9172.
(li) Credit Agreement, dated as of October 11, 1990, among
Hamilton Beach/Proctor-Silex, Proctor-Silex Canada Inc.
("Proctor-Silex Canada"), Proctor-Silex S.A. de C.V.
("PSM"), the Lenders party thereto, The Chase Manhattan Bank
(National Association), as United States agent for such
Lenders (the United States Agent"), and The Chase Manhattan
Bank of Canada, as Canadian agent for such Lenders (the
Canadian Agent") is incorporated herein by reference to
Exhibit 10(lviii) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1990, Commission
File Number 1-9172. The Company by this filing agrees, upon
request, to file with the Securities and Exchange Commission
any of the Exhibits and/or Schedules to the Credit
Agreement.
(lii) First Amendment to the Credit Agreement, dated as of
December 31, 1990, among Hamilton Beach/Proctor-Silex,
Proctor-Silex Canada, PSM, the Lenders party thereto, the
United States Agent, and the Canadian Agent is incorporated
herein by reference to Exhibit 10(lvix) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, Commission File Number 1-9172.
X-7
<PAGE> 103
(liii) Second Amendment to the Credit Agreement, dated as of
March 1, 1991, among Hamilton Beach/Proctor-Silex,
Proctor-Silex Canada, PSM, the Lenders party thereto, the United
States Agent and the Canadian Agent is incorporated herein by
reference to Exhibit 10(lx) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1990,
Commission File Number 1-9172.
(liv) Pledge Agreement re: 66% Pledge of PSC Stock, dated as
of October 11, 1990, between Hamilton Beach/Proctor-Silex
and The Chase Manhattan Bank (National Association) is
incorporated herein by reference to Exhibit 10(lx) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
(lv) Pledge Agreement re: 66% Pledge of PSM Stock, dated as
of October 11, 1990, between Hamilton Beach/Proctor-Silex
and The Chase Manhattan Bank (National Association) is
incorporated herein by reference to Exhibit 10(lxii) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
(lvi) Pledge Agreement re: 34% pledge of PSC Stock, dated as
of October 11, 1990, between Hamilton Beach/Proctor-Silex
and The Chase Manhattan Bank (National Association) is
incorporated herein by reference to Exhibit 10(lxiii) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
(lvii) Pledge Agreement re: 33.2% Pledge of PSM Stock, dated
as of October 11, 1990, between Hamilton Beach Proctor/Silex
and The Chase Manhattan Bank (National Association) is
incorporated herein by reference to Exhibit 10(lxiv) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
(lviii) Pledge Agreement, dated as of October 11, 1990,
between Housewares Holding Company and The Chase Manhattan
Bank (National Association) is incorporated herein by
reference to Exhibit 10(lxv) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1990,
Commission File Number 1-9172.
(lix) Pledge Agreement, dated as of October 11, 1990,
between HB-PS Holding Company, Inc. and The Chase Manhattan
Bank (National Association) is incorporated
X-8
<PAGE> 104
herein by reference to Exhibit 10(lxvi) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990,
Commission File Number 1-9172.
(lx) Security Agreement, dated as of October 11, 1990,
between Hamilton Beach/Proctor-Silex and The Chase
Manhattan Bank (National Association), as the United States
agent, is incorporated herein by reference to Exhibit
10(lxvii) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1990, Commission File
Number 1-9172.
(lxi) Collateral Assignment of Patents and Trademarks and
Security Agreement, dated as of October 11, 1990, between
Hamilton Beach/Proctor-Silex and The Chase Manhattan Bank
(National Association), as the United States agent, is
incorporated herein by reference to Exhibit 10(lxviii) to
the Company s Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
(lxii) NACCO Supplemental Agreement, dated as of October 11,
1990, between NACCO and The Chase Manhattan Bank (National
Association), as the United States agent, is incorporated
herein by reference to Exhibit 10(lxix) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, Commission File Number 1-9172.
(lxiii) Housewares Supplemental Agreement, dated as of
October 11, 1990, between Housewares Holding Company and The
Chase Manhattan Bank (National Association), as the United
States agent, is incorporated herein by reference to Exhibit
10(lxx) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, Commission File Number
1-9172.
(lxiv) Holdings Supplemental Agreement, dated as of October
11, 1990, between HB-PS Holding Company, Inc. and The Chase
Manhattan Bank (National Association), as the United States
agent, is incorporated herein by reference to Exhibit
10(lxxi) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, Commission File Number
1-9172.
(lxv) Override Agreement, dated as of October 11, 1990,
among the Company, Housewares Holding Company, Glen Dimplex,
Precis [521] Ltd., Glen Electric, Ltd. and The Chase
Manhattan Bank (National Association), as the United States
agent, is incorporated herein by reference to Exhibit
10(lxxii) to the Company's Annual Report on
X-9
<PAGE> 105
Form 10-K for the fiscal year ended December 31, 1990,
Commission File Number 1-9172.
(lxvi) General Security Agreement, dated as of October 11,
1990, by Proctor-Silex Canada to and in favor of The Chase
Manhattan Bank of Canada, as the Canadian agent, is
incorporated herein by reference to Exhibit 10(lxxiii) to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
*(lxvii) The Hamilton Beach/Proctor-Silex, Inc. Profit
Sharing Retirement Plan (as amended and restated effective
January 1, 1992) is incorporated by reference to Exhibit
10(lxvii) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992, Commission File
Number 1-9172.
*(lxviii) Form of the Hamilton Beach/Proctor-Silex, Inc.
Annual Incentive Compensation Plan is attached hereto as
Exhibit 10(lxviii).
*(lxix) Hamilton Beach/Proctor-Silex, Inc. Long-Term
Incentive Compensation Plan, effective January 1, 1993, is
incorporated by reference to Exhibit 10(lxix) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, Commission File Number 1-9172.
(lxx) Amendment to the Third Amended and Restated Operating
Agreement, dated as of January 31, 1990, between Hyster
Company and AT&T Commercial Finance Corporation is
incorporated herein by reference to Exhibit 10(xlvii) to the
Hyster-Yale Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 33-28812.
*(lxxi) The North American Coal Corporation Salaried
Employees Pension Plan (As Amended and Restated as of
January 1, 1989) is attached hereto as Exhibit 10(lxxi).
*(lxxii) Amendment No. 1 to the North American Coal
Corporation Salaried Employees Pension Plan (As Amended
and Restated as of January 1, 1989), dated as of August
6, 1993, is attached hereto as Exhibit 10(lxxii).
*(lxxiii) Amendment No. 2 to the North American Coal
Corporation Salaried Employees Pension Plan (As Amended
and Restated as of January 1, 1989), dated as of December 29,
1993, is attached hereto as Exhibit 10(lxxiii).
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<PAGE> 106
(lxxiv) Short-Term Promissory Note, dated October 19, 1990,
between the Company and Citibank, N.A. is incorporated
herein by reference to Exhibit 10(lxxxi) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, Commission File Number 1-9172.
(lxxv) Commitment, dated as of October 1, 1990, between the
Company and Morgan Guaranty Trust Company of New York is
incorporated herein by reference to Exhibit 10(lxxxii) to
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990, Commission File Number 1-9172.
(lxxvi) Promissory Grid Note between the Company and
Ameritrust Company National Association is incorporated
herein by reference to Exhibit 10(lxxxiii) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, Commission File Number 1-9172.
(lxxvii) First Amendment to the NACCO Supplemental
Agreement, dated as of March 1, 1991, between the Company
and The Chase Manhattan Bank (National Association), as the
United States agent, is incorporated herein by reference to
Exhibit 10(lxxxiv) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1990, Commission
File Number 1-9172.
(lxxviii) First Amendment to the Housewares Supplemental
Agreement, dated as of March 1, 1991, between Housewares
Holding Company and The Chase Manhattan Bank (National
Association), as the United States agent, is incorporated
herein by reference to Exhibit 10(lxxxv) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, Commission File Number 1-9172.
(lxxix) First Amendment to the Holdings Supplemental
Agreement, dated as of March 1, 1991, between HB-PS Holding
Company and The Chase Manhattan Bank (National Association),
as the United States agent, is incorporated herein by
reference to Exhibit 10(lxxxvi) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1990, Commission File Number 1-9172.
*(lxxx) The Yale Materials Handling Corporation Deferred
Incentive Compensation Plan (also known as The Yale
Materials Handling Corporation Short-Term Incentive
Compensation Deferral Plan), dated March 1, 1984, is
incorporated herein by reference to Exhibit 10(lxxi) to
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<PAGE> 107
the Hyster-Yale Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, Commission File Number 33-28812.
*(lxxxi) Hyster-Yale Materials Handling, Inc. Annual
Incentive Compensation Plan is incorporated herein by
reference to Exhibit 10(lxxxiii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1990, Commission File Number 1-9172.
*(lxxxii) Hyster-Yale Materials Handling, Inc. Long-Term
Incentive Compensation Plan, dated as of January 1, 1990, is
incorporated herein by reference to Exhibit 10(lxxxix) to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
(lxxxiii)- (lxxxv) Intentionally Left Blank
(lxxxvi) Amendment to the Third Amended and Restated
Operating Agreement, dated as of November 7, 1991, between
Hyster Company and AT&T Commercial Finance Corporation is
incorporated herein by reference to Exhibit 10(1) to the
Hyster-Yale Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, Commission File Number 33-28812.
*(lxxxvii) Agreement and Plan of Merger dated as of December
20, 1993, between Hyster Company, an Oregon corporation, and
Hyster Company, a Delaware corporation, is incorporated
herein by reference to Exhibit 10(lxxviii) to Hyster-Yale
Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, Commission File Number 33-28812.
*(lxxxviii) Agreement and Plan of Merger dated as of
December 20, 1993, between Yale Materials Handling
Corporation, a Delaware corporation, Hyster Company, a
Delaware corporation, and Hyster-Yale Materials Handling,
Inc., a Delaware corporation, is incorporated herein by
reference to Exhibit 10(lxxix) to Hyster-Yale Annual Report
on Form 10-K for the fiscal year ended December 31, 1993,
Commission File Number 33-28812.
*(lxxxix) Form of NACCO Industries, Inc. Annual Incentive
Compensation Plan is attached hereto as Exhibit 10(lxxxix).
*(xc) Amendment No. 3 to The North American Coal Corporation
Salaried Employees Pension Plan (As Amended and Restated as
of January 1, 1989), dated as of March 11, 1994, is attached
hereto as Exhibit 10(xc).
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<PAGE> 108
*(xci) The NACCO Materials Handling Group, Inc. Unfunded
Benefit Plan, Amended and Restated as of October 1, 1994, is
incorporated herein by reference to Exhibit 10(cv) of the
Hyster-Yale Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, Commission File Number 33-28812.
(xcii) Credit Agreement, dated as of September 27, 1991,
among the North American Coal Corporation, Citibank, N.A.,
Ameritrust Company National Association and Morgan Guaranty
Trust Company of New York, as agent is incorporated herein
by reference to Exhibit 10(xcii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1991, Commission File Number 1-9172.
(xciii) Assumption Agreement, made as of December 20, 1991,
between the Company and Citicorp North America, Inc., as
agent is incorporated herein by reference to Exhibit
10(xciii) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991, Commission File
Number 1-9172.
(xciv) Subordination Agreement, dated September 27, 1991,
among The North American Coal Corporation, the Company and
Morgan Guaranty Trust Company of New York, as agent, is
incorporated herein by reference to Exhibit 10(xciv) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, Commission File Number 1-9172.
(xcv)-(xcvi) Intentionally Left Blank
(xcvii) Marketing Agreement, dated as of January 1, 1992, by
and between, Yale Materials Handling Corporation and
Jungheinrich Aktiengellschaft (AG) is incorporated herein by
reference to Exhibit 10(lviii) to the Hyster-Yale Annual
Report on Form 10-K for the fiscal year ended December 31,
1991, Commission File Number 33-28812.
*(xcviii) The North American Coal Corporation Value
Appreciation Plan, as amended on March 11, 1992 is
incorporated herein by reference to Exhibit 10(xcviii) to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, Commission File Number 1-9172.
*(xcix) Amendment No. 1 to The North American Coal
Corporation Value Appreciation Plan, dated as of
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<PAGE> 109
December 14, 1994, is attached hereto as Exhibit 10(xcix).
(c)- (civ) Intentionally Left Blank
*(cv) Master Trust Agreement between NACCO Industries, Inc.
and State Street Bank and Trust Company, dated October 1,
1992, is incorporated by reference to Exhibit 10(cv) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, Commission File Number 1-9172.
*(cvi) Amendment No. 1 to the Master Trust Agreement between
NACCO Industries, Inc. and State Street Bank and Trust
Company, effective January 1, 1993, is attached hereto as
Exhibit 10(cvi).
*(cvii) The North American Coal Corporation Retirement
Savings Plan (formerly known as the NACCO Industries, Inc.
Savings Plan), effective January 1, 1993, is incorporated
by reference to Exhibit 10(cvii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1992, Commission File Number 1-9172.
(cviii)-(cix) Intentionally Left Blank
*(cx) NACCO Industries, Inc. Executive Long-Term Incentive
Compensation Plan, effective January 1, 1991, is
incorporated by reference to Exhibit 10(cx) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, Commission File Number 1-9172.
*(cxi) NACCO Industries, Inc. Non-Employee Directors' Equity
Compensation Plan, effective January 1, 1992, is
incorporated by reference to Exhibit 10(cxi) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, Commission File Number 1-9172.
(cxii)-(cxiii) Intentionally Left Blank
*(cxiv) The Hyster-Yale Profit Sharing Plan, amended and
restated as of November 11, 1992, is incorporated herein by
reference to Exhibit 10(lxii) of the Hyster-Yale Annual
Report on Form 10-K for the fiscal year ended December 31,
1992, Commission File Number 33-28812.
(cxv) Intentionally Left Blank
(cxvi) Amendment to the Third Amended and Restated Operating
Agreement, dated as of January 31, 1990, between Hyster
Company and PacifiCorp Credit, Inc. is incorporated herein
by reference to Exhibit 10(xlvi) to
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<PAGE> 110
the Hyster-Yale Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 33-28812.
*(cxvii) The Hyster-Yale Cash Balance Plan, is incorporated
herein by reference to Exhibit 10(lxv) of the Hyster-Yale
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, Commission File Number 33-28812.
(cxviii)-(cxxiii) Intentionally Left Blank
*(cxxiv) Amendment No. 1 to the Hamilton
Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan, as
restated effective January 1, 1989, is incorporated by
reference to Exhibit 10(cxxiv) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1993, Commission File Number 1-9172.
*(cxxv) The Hamilton Beach/Proctor-Silex, Inc. Employees'
Retirement Savings Plan, as amended and restated effective
January 1, 1994, is incorporated by reference to Exhibit
10(cxxv) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, Commission File Number
1-9172.
(cxxvi) Intentionally Left Blank
*(cxxix) Amendment No. 1, dated as of May 13, 1993, to the
Hyster-Yale Profit Sharing Plan (now known as the NACCO
Materials Handling Group Profit Sharing Plan) is
incorporated herein by reference to Exhibit 10 (lxxxi) of
the Hyster-Yale Annual Report on Form 10-K for the fiscal
year ended December 31, 1993, Commission File Number
33-28812.
*(cxxx) Amendment No. 2, dated effective January 1, 1994, to
the Hyster-Yale Profit Sharing Plan (now known as the NACCO
Materials Handling Group Profit Sharing Plan) is
incorporated herein by reference to Exhibit 10 (lxxxv) of
the Hyster-Yale Annual Report on Form 10-K for the fiscal
year ended December 31, 1993, Commission File Number
33-28812.
*(cxxxi) Amendment No. 1 dated as of May 27, 1993 to the
Hyster-Yale Cash Balance Plan (now known as the NACCO
Materials Handling Group Cash Balance Plan) is incorporated
herein by reference to Exhibit 10 (lxxxvi) of the
Hyster-Yale Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, Commission File Number 33-28812.
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<PAGE> 111
*(cxxxii) Amendment No. 2 effective as of December 31, 1993
to the Hyster-Yale Cash Balance Plan (now known as the NACCO
Materials Handling Group Cash Balance Plan) is incorporated
herein by reference to Exhibit 10 (lxxxvii) of the
Hyster-Yale Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, Commission File Number 33-28812.
*(cxxxiii) Amendment No. 2 effective as of December 31, 1993
to the Hyster-Yale Materials Handling, Inc. Long-Term
Incentive Compensation Plan is incorporated herein by
reference to Exhibit 10 (lxxxxiii) of the Hyster-Yale Annual
Report on Form 10-K for the fiscal year ended December 31,
1993, Commission File Number 33-28812.
*(cxxxiv) Amendment No. 1 effective as of January 1, 1994 to
The North American Coal Corporation Retirement Savings Plan
is incorporated herein by reference to Exhibit 10(cxxxiv) to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, Commission File Number 1-9172.
*(cxxxv) Amendment No. 2 effective as of January 1, 1994 to
The North American Coal Corporation Retirement Savings Plan
is incorporated herein by reference to Exhibit 10(cxxxv) to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, Commission File Number 1-9172.
*(cxxxvi) Amendment No. 1 effective as of January 1, 1994 to
the Hyster-Yale Materials Handling, Inc. Annual Incentive
Compensation Plan (now known as the NACCO Materials Handling
Group, Inc. Annual Incentive Compensation Plan) is
incorporated herein by reference to Exhibit 10(lxxxx) to the
Hyster-Yale Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, Commission File Number 33-28812.
(cxxxvii) Intentionally Left Blank
*(cxxxviii) Master Trust Agreement for Defined Benefit Plans
between NACCO Industries, Inc. and State Street Bank and
Trust Company, dated January 1, 1994 is incorporated herein
by reference to Exhibit 10(cxxxviii)to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1993, Commission File Number 1-9172.
*(cxxxix) Amendment No. 1 to the Master Trust Agreement for
the Defined Benefit Plans between NACCO Industries, Inc. and
State Street Bank and Trust Company, effective
X-16
<PAGE> 112
as of January 1, 1995, is attached hereto as Exhibit 10(cxxxix).
(cxl) Amendment No. 4 dated as of June 24, 1993 to the
Credit Agreement among Hamilton Beach/Proctor-Silex, Inc.,
Proctor-Silex Canada, Inc., Proctor-Silex S.A. deC.V., the
banks named on the signatory pages and The Chase Manhattan
Bank is incorporated herein by reference to Exhibit (cxxxx)
to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993, Commission File Number 1-9172.
(cxli) Consent and Authorization with reference made to the
Credit Agreement dated October 11, 1990, as amended among
Hamilton Beach/Proctor-Silex, Inc., Proctor-Silex Canada,
Inc., Proctor-Silex S.A. de C.V., the banks named on the
signatory pages and The Chase Manhattan Bank is incorporated
herein by reference to Exhibit (cxxxxi) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, Commission File Number 1-9172.
(cxlii) Amendment No. 5 to the Credit Agreement dated as of
December 23, 1993 among Hamilton Beach/Proctor-Silex, Inc.,
Proctor-Silex Canada, Inc., Proctor-Silex S.A. de C.V., the
banks and financial institutions listed on the signature
pages thereto, The Chase Manhattan Bank, a United States
Agent, The Chase Manhattan Bank of Canada, as Canadian Agent
is incorporated herein by reference to Exhibit 10(cxxxxii)
to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993, Commission File Number 1-9172.
(cxliii) Amendment No. 1 to the Credit Agreement dated as of
July 28, 1993 among The North American Coal Corporation and
the banks listed on the signatory pages and Morgan Trust
Company of New York, as Agent is incorporated herein by
reference to Exhibit 10(cxxxxiii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1993, Commission File Number 1-9172.
(cxliv) Amendment No. 1 to the Term Loan Agreement,
effective as of February , 1993, between The Kitchen
Collection, Inc. and Society National Bank is incorporated
herein by reference to Exhibit 10(cxxxxiv) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, Commission File Number 1-9172.
(cxlv) Amended and Restated Credit Agreement dated as of
July 30, 1993 among Citicorp North America, Inc.,
X-17
<PAGE> 113
Hyster-Yale Materials Handling, Inc., and Hyster Company is
incorporated herein by reference to Exhibit 10(lxxvi) to the
Hyster-Yale Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993, Commission File Number 33- 28812.
(cxlvi) Reaffirmation Amendment and Acknowledgment Agreement
dated July 30, 1993 among Hyster-Yale Materials Handling,
Inc., Yale Materials Handling Corporation, Hyster Company,
the Company and Citicorp North America, Inc., individually
and as Agent for the various Lenders, is incorporated herein
by reference to Exhibit 10(lxxx) to the Hyster-Yale Annual
Report on Form 10-K for the fiscal year ended December 31,
1993, Commission File Number 33-28812.
(cxlvii) Amendment No. 1 dated as of December 31, 1993 to
the Amended and Restated Credit Agreement dated as of July
30, 1993 among Hyster-Yale Materials Handling, Inc., Yale
Materials Handling Corporation, Hyster Company, the Lenders
party thereto, and Citicorp North America, Inc.,
individually and as Agent, is incorporated herein by
reference to Exhibit 10(lxxxi) to the Hyster-Yale Annual
Report on Form 10-K for the fiscal year ended December 31,
1993, Commission File Number 33-28812.
(cxlviii) Reaffirmation, Amendment and Acknowledgment
Agreement dated as of December 31, 1993 among Hyster-Yale
Materials Handling, Inc., Yale Materials Handling
Corporation, Hyster Company and Citicorp North America,
Inc., as Agent for the Lenders, is incorporated herein by
reference to Exhibit 10(lxxxii) to the Hyster-Yale Annual
Report on Form 10-K for the fiscal year ended December 31,
1993, Commission File Number 33-28812.
(cxlix) Reaffirmation, Amendment and Acknowledgment
Agreement dated as of January 1, 1994 among Hyster-Yale
Materials Handling, Inc., NACCO Materials Handling Group,
Inc. and Citicorp North America, Inc. as Agent for the
Lenders, is incorporated herein by reference to Exhibit
10(lxxxiii) to the Hyster-Yale Annual Report on Form 10-K
for the fiscal year ended December 31, 1993, Commission File
Number 33-28812.
(cl) Amended and Restated Credit Agreement, dated as of
May 10, 1994 among Hamilton Beach#Proctor-Silex, Inc.,
Proctor-Silex Canada, Inc., Proctor-Silex S.A. DE C.V.,
the banks named on the signatory pages and the Chase
Manhattan Bank is incorporated herein by reference to
as
X-18
<PAGE> 114
Exhibit 10 (cl) to the NACCO Industries, Inc. Quarterly
Report on Form 10-Q for the quarter ended June 30, 1994,
Commission File Number 1-9172.
(cli) Confirmation Agreement dated May 10, 1994 among
Hamilton Beach#Proctor-Silex, Inc., Housewares Holding
Company, Precis [521] Ltd., HB-PS Holding Company, Glen
Dimplex, Glen Electric, Ltd., the banks named on the
signatory pages, the Chase Manhattan Bank and the Chase
Manhattan Bank of Canada is incorporated herein by
reference to Exhibit 10 (cli) to the NACCO Industries,
Inc. Quarterly Report on Form 10-Q for the quarter
ended on June 30, 1994, Commission File Number 1-9172.
(clii) Term Note Agreement dated May 10, 1994 by and
between The Kitchen Collection, Inc. and Society
National Bank is incorporated herein by reference to as
Exhibit 10 (clii) to the NACCO Industries, Inc.
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994, Commission File Number 1-9172.
*(cliii) Amendment No. 2 to The North American Coal
Corporation Deferred Compensation Plan for Management
Employees, effective January 1, 1994, is incorporated
herein by reference to Exhibit 10 (cliii) to the NACCO
Industries, Inc. Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994, Commission File Number 1-
9172.
*(cliv) Amendment No. 2 to the Hamilton Beach#Proctor-
Silex, Inc. Profit Sharing Retirement Plan, effective
March 15, 1994 is incorporated herein by reference to
as Exhibit 10 (cliv) to the NACCO Industries, Inc.
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994, Commission File Number 1-9172.
(clv) Intentionally Left Blank
*(clvii) Amendment No. 3 to The North American Coal
Corporation Salaried Employees Pension Plan, effective
March 15, 1994 is incorporated herein by reference to
as Exhibit 10 (clvii) to the NACCO Industries, Inc.
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994, Commission File Number 1-9172.
*(clviii) Amendment No. 2 to the Hyster-Yale Materials
Handling, Inc. Annual Incentive Compensation Plan effective
January 1, 1994 is incorporated herein by reference to
Exhibit 10 (1xxxxiv) to the Hyster-Yale Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994, Commission
File Number 33-28812.
X-19
<PAGE> 115
*(clix) Amendment No. 3 to the Hyster-Yale Materials
Handling, Inc. Long-Term Incentive Compensation Plan
effective January 1, 1994 is incorporated herein by
reference to Exhibit 10 (lxxxxv) to the Hyster-Yale
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994, Commission File Number 33-28812.
*(clx) Amendment No. 3 to the NACCO Materials
Handling Group, Inc. Profit Sharing Plan effective
January 1, 1994 is incorporated herein by reference to
Exhibit 10 (lxxxxvi) to the Hyster-Yale Quarterly
Report on Form 10-Q for the quarter ended June 30,
1994, Commission File Number 33-28812.
(clxi) Intentionally Left Blank
*(clxii) Amendment No. 2, dated June 29, 1994, to the
Amended and Restated Credit Agreement among Hyster-Yale
Materials Handling, Inc., NACCO Materials Handling
Group, Inc., the banks listed on the signatory page and
Citicorp North America, Inc. is incorporated herein by
reference to Exhibit 10 (lxxxxviii) to the Hyster-Yale
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994, Commission File Number 33-28812.
*(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 incorporated herein by reference to Exhibit
10 (clxiii) to the NACCO Industries, Inc. Quarterly
Report on Form 10-Q for the quarter ended September 30,
1994, Commission File Number 1-9172.
*(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 incorporated herein by reference
to as Exhibit (clxiv) to the NACCO Industries, Inc,
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994, Commission File Number 1-9172.
*(clxv) The North American Coal Corporation
Supplemental Retirement Benefit Plan as amended and
restated effective September 1, 1994 is incorporated by
reference to Exhibit 10 (clxv) to the NACCO Industries,
Inc. Quarterly Report on Form 10-Q for the quarter
ended September 30, 1994, Commission File Number 1-
9172.
*(clxvi) Amendment No. 1 to The NACCO Materials
Handling Group, Inc. Unfunded Benefit Plan (As Amended
and Restated effective October 1, 1994) is incorporated
X-20
<PAGE> 116
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 330-28812.
(11) Statement re computation of per share earnings. The
computation of earnings per share is attached hereto as
Exhibit 11.
(21) Subsidiaries. A list of the subsidiaries of the Company is
attached hereto as Exhibit 21.
(23) Consents of experts and counsel.
(i) The consent of Arthur Andersen LLP, independent
accountant, is attached hereto as Exhibit 23(i).
(24) Powers of Attorney
(i) A manually signed copy of a power of attorney for Owsley
Brown II is attached hereto as Exhibit 24(i).
(ii) A manually signed copy of a power of attorney for John
J. Dwyer is attached hereto as Exhibit 24(ii).
(iii) A manually signed copy of a power of attorney for
Robert M. Gates is attached as Exhibit 24(iii)
(iv) A manually signed copy of a power of attorney for E.
Bradley Jones is attached hereto as Exhibit 24(iv).
(v) A manually signed copy of a power of attorney for Dennis
W. LaBarre is attached hereto as Exhibit 24(v).
(vi) A manually signed copy of a power of attorney for
Alfred M. Rankin, Jr. is attached hereto as Exhibit 24(vi).
(vii) A manually signed copy of a power of attorney for John
C. Sawhill is attached hereto as Exhibit 24(vii).
(viii) A manually signed copy of a power of attorney for
Britton T. Taplin is attached hereto as Exhibit 24 (viii).
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<PAGE> 117
(ix) A manually signed copy of a power of attorney for Frank
E. Taplin, Jr. is attached hereto as Exhibit 24 (ix).
(x) A manually signed copy of a power of attorney for Steven
M. Billick is attached hereto as Exhibit 24(x).
(27) Financial Data Schedule -- filed electronically for SEC
information purposes only.
(99) Other exhibits not required to otherwise be filed.**
(i) Audited Financial Statements for The North American Coal
Corporation for the fiscal year ended December 31, 1994, are
attached as Exhibit 99(i).
(ii) Audited Financial Statements for Hamilton
Beach/Proctor-Silex, Inc. for the fiscal year ended December
31, 1994, are attached as Exhibit 99(ii).
(iii) Audited Financial Statements for The Kitchen
Collection, Inc. for the fiscal year ended
December 31, 1994, are attached as Exhibit 99(iii).
(iv) Audited Financial Statements for NACCO Materials
Handling Group, Inc. for the fiscal year ended December 31,
1994, are incorporated herein by reference to Item 8, Item
14(A)(1) and (2), and Item 14(D) to the Hyster-Yale Annual
Report on Form 10-K for the fiscal year ended December 31,
1994, Commission File Number 33-28812.
______________________________
* Management contract or compensation plan or arrangement required
to be filed as an exhibit pursuant to Item 14(c) of this Annual
Report on Form 10-K.
** Audited Financial Statements of subsidiary companies are not
required disclosures and are included only for information. These
statements do not reflect certain adjustments (including
X-22
<PAGE> 118
reclassifications and eliminations) that are required by GAAP in
the preparation of NACCO Industries, Inc. and subsidiaries
consolidated financial statements included in Part IV hereof, and
should be read accordingly.
Exhibit.doc
X-23
<PAGE> 1
Exhibit 10(ix)
RETIREMENT BENEFIT PLAN
FOR ALFRED M. RANKIN, JR.
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994)
WHEREAS, NACCO Industries, Inc. (the "Employer") adopted the
Retirement Benefit Plan for Alfred M. Rankin Jr. (the "Plan") effective as of
March 1, 1989; and
WHEREAS, the Plan provided retirement benefits for Mr. Rankin
based on benefits which were provided to employees of the Employer under the
qualified pension plan known as The NACCO Industries, Inc. Pension Plan for
Salaried Employees ("Plan 006"); and
WHEREAS, effective as of December 31, 1993, benefits under
Plan 006 were frozen for all participants and Plan 006 was merged out of
existence; and
WHEREAS, effective as of December 31, 1993, benefits under the
Plan for Mr. Rankin were also frozen; and
WHEREAS, effective as of December 31, 1993, the Employer
became a participating employer under the profit sharing portion of the NACCO
Materials Handling Group, Inc. Profit Sharing Plan (the "Profit Sharing Plan");
and
WHEREAS, pursuant to the Employer's Instrument of Adoption of
the Profit Sharing Plan, Mr. Rankin is excluded from participating in the
Profit Sharing Plan; and
WHEREAS, the Employer now desires to lift the benefit freeze
under the Plan retroactive to January 1, 1994 and to provide for Mr. Rankin the
benefits which would otherwise have been made for him under the Profit Sharing
Plan if he had been eligible to participate in such Plan and such participation
was not limited by certain provisions of the Internal Revenue Code; and
WHEREAS, the Employer and Mr. Rankin desire to restructure the
benefits that accrued under the Plan prior to January 1, 1994.
NOW THEREFORE, the Employer hereby adopts and publishes this
amendment and restatement of the Plan, which shall contain the following terms
and conditions:
ARTICLE I
PREFACE
SECTION 1.1. EFFECTIVE DATE AND PLAN YEAR. The effective
date of this amendment and restatement of the Plan is January 1, 1994. The
Plan Year of the Plan is the calendar year.
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SECTION 1.2. PURPOSE OF THE PLAN. The purpose of this Plan
is to provide retirement benefits to the Participant.
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.
SECTION 1.4. 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. 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). "ACCOUNT" shall mean the record maintained in
accordance with Section 3.3 by the Employer for the Participant's Supplemental
Benefit.
SECTION 2.1 (2). "BENEFICIARY" shall mean such person or
persons (natural or otherwise) as may be designated by the Participant as his
Beneficiary under this Plan. Such a designation may be made, and may be
revoked or changed (without the consent of any previously designated
Beneficiary), only by an instrument (in form acceptable to the Employer) signed
by the Participant and filed with the Employer prior to the Participant's
death. In the absence of such a designation and at any other time when there
is no existing Beneficiary designated by the Participant to whom payment is to
be made pursuant to his designation, his Beneficiary shall be his surviving
spouse or, if none, his estate. A person designated by a Participant as his
Beneficiary who or which ceases to exist shall not be entitled to any part of
any payment thereafter to be made to the Participant's Beneficiary unless the
Participant's designation specifically provided to the contrary. 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.
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
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3
any successor(s) thereto, on the amount of the contributions which may be made
to the Profit Sharing Plan for a participant.
SECTION 2.1 (5). "COMPENSATION" shall have the same meaning as
under the Profit Sharing Plan, except that Compensation (a) shall not be
subject to the dollar limitation imposed by Code Section 401(a)(17), and (b)
shall be deemed to include cash in lieu of perquisites and the amount of
compensation deferred by the Participant under The North American Coal
Corporation Deferred Compensation Plan for Management Employees (prior to 1995)
or the NACCO Materials Handling Group, Inc., Unfunded Benefit Plan (after
1994).
SECTION 2.1 (6). "CONTROLLED GROUP" shall mean the Employer
and any other company, the employees of which, together with the employees of
the Employer, are required to be treated as if they were employed by a single
employer pursuant to Section 414 of the Code.
SECTION 2.1 (7). "EMPLOYER" shall mean NACCO Industries, Inc.
SECTION 2.1 (8). "INSOLVENT". For purposes of this Plan, the
Employer shall be considered Insolvent at such time as it (a) is unable to pay
its debts as they mature, or (b) is subject to a pending voluntary or
involuntary proceeding as a debtor under the United States Bankruptcy Code.
SECTION 2.1 (9). "PARTICIPANT" shall mean Alfred M. Rankin,
Jr.
SECTION 2.1 (10). "PLAN" shall mean this NACCO Industries,
Inc. Retirement Benefit Plan for Alfred M. Rankin, Jr., as it may be amended
from time to time.
SECTION 2.1 (11). "PROFIT SHARING PLAN" shall mean the profit
sharing portion of the NACCO Materials Handling Group, Inc. Profit Sharing
Plan, as such plan may be amended from time to time.
SECTION 2.1 (12). "SUPPLEMENTAL BENEFIT" shall mean the sum of
the Participant's Transitional Benefit and his Supplemental Profit Sharing Plan
Benefit.
SECTION 2.1 (13). "SUPPLEMENTAL PROFIT SHARING CONTRIBUTIONS"
shall mean the amounts credited to a Participant's Account pursuant to Section
3.1(b).
SECTION 2.1 (14). "SUPPLEMENTAL PROFIT SHARING PLAN BENEFIT"
shall mean the retirement benefit determined under Section 3.1.
SECTION 2.1 (15). "TRANSITIONAL BENEFIT" shall mean the
amounts credited to the Participant's Account pursuant to Section 3.2.
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SECTION 2.1 (16). "UNFORESEEABLE EMERGENCY" shall mean an
event which results (or will result) in severe financial hardship to the
Participant as a consequence of unexpected illness or accident or loss of the
Participant's property due to casualty or other similar extraordinary or
unforeseen circumstances out of the control of the Participant.
SECTION 2.1 (17). "VALUATION DATE" shall mean the last day of
each Plan Year, plus such additional date(s), if any, selected by the Employer.
ARTICLE III
-----------
SUPPLEMENTAL BENEFIT
--------------------
SECTION 3.1. AMOUNT OF SUPPLEMENTAL PROFIT SHARING BENEFIT.
(a) Effective as of January 1, 1994, the Employer shall
credit the Participant's Account with an amount (hereinafter the "Opening
Account Balance") equal to $487,961, which amount shall be substituted for and
completely replace the amount of the Participant's "Supplemental Retirement
Benefit" as of December 31, 1993 under the Plan (as such term was defined in
Section 1(e) of the Plan prior to the adoption of this amendment and
restatement).
(b) Effective as of January 1, 1994, the Employer shall also
credit the Participant's Account annually with amounts (hereinafter referred to
as the "Supplemental Profit Sharing Contributions") equal to the amounts which
would have been contributed by the Employer to the Profit Sharing Plan for such
Participant, from time to time, as profit sharing contributions if (i) the
Participant had been eligible to participate in the Profit Sharing Plan, (ii)
the Profit Sharing Plan did not contain the Code Limitations, and (iii) the
term "Compensation" (as defined in Section 2.1(5) hereof) were used for
purposes of determining the amount of profit sharing contributions under the
Plan.
(c) The Employer's obligation to credit the Participant's
Account with Supplemental Profit Sharing Contributions pursuant to this Section
shall automatically terminate on (i) the date the Participant ceases employment
with the Controlled Group, or (ii) the date the Plan is terminated pursuant to
Article VII.
SECTION 3.2. AMOUNT OF TRANSITIONAL BENEFIT. In order to
compensate the Participant for pension benefits from his prior employer that he
has foregone, the Employer shall also credit the Participant's Account with an
amount (hereinafter referred to as the "Transitional Benefits") equal to (a)
$34,900 on December 31, 1994 and (b) in each subsequent year, an amount that is
4 percent greater than the amount credited under this Section 3.2 the preceding
year. The Transitional Benefits described in the preceding sentence shall be
credited annually as of each
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December 31, commencing on December 31, 1994 and ending on the earlier of the
Participant's first termination of employment with the Controlled Group for any
reason or the termination of the Plan.
SECTION 3.3. PARTICIPANT'S ACCOUNT. The Employer shall
establish and maintain on its books an Account for the Participant which shall
contain the following entries:
(a) the Opening Account Balance, which shall be credited to
the Participant's Account as of January 1, 1994; and
(b) the Supplemental Profit Sharing Contributions which shall
be credited to the Participant's Account at the same time as actual
profit sharing contributions are credited to the accounts of the
participants in the Profit Sharing Plan;
(c) The Transitional Benefits, which shall be credited to the
Participant's Account on each December 31;
(d) Earnings, as determined under Section 3.4; and
(e) Debits for any distributions made from the Account
pursuant to Article VI.
SECTION 3.4. EARNINGS. (a) WHILE ACTIVELY EMPLOYED. At the
end of each calendar month during a calendar year while the Participant is
employed by an Employer on December 31 of such year, the Account of the
Participant shall be credited with an amount determined by multiplying the
Participant's average Account balance during such month by the blended rate
earned during such month by the Stable Asset Fund under the Profit Sharing
Plan. Notwithstanding the foregoing, in the event that the "Adjusted ROE"
determined for such calendar year exceeds the rate credited to the
Participant's Account under the preceding sentence, the Participant's Account
shall retroactively be credited with the difference between (i) the amount
determined under the preceding sentence, and (ii) the amount determined by
multiplying the Participant's average Account balance during each month of such
calendar year by the Adjusted ROE determined for such calendar year, compounded
monthly.
(b) FOLLOWING TERMINATION. After the Participant has
terminated employment with the Controlled Group, his Account shall be credited
with earnings as described in subsection (a) of this Section, as modified by
this subsection (b), until his Account has been distributed in full in
accordance with Article V. The Adjusted ROE calculation described in the
second sentence of subsection (a) shall be made during the month in which the
Participant terminates employment and shall be based on the year-to-date
Adjusted ROE for the month ending prior to the date the Participant terminated
employment, as calculated by the Employer. For any subsequent month, the
Adjusted ROE calculation described
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in the second sentence of subsection (a) shall not apply. The Stable Asset
Fund calculation described in the first sentence of subsection (a) for the
month in which the Participant receives a distribution from his Account shall
be based on the blended rate earned during the preceding month by the Stable
Asset Fund.
(c) DEFINITION OF ADJUSTED ROE. For purposes of this
Section, "Adjusted ROE" shall mean the average return on equity of the Employer
calculated by the Employer for the applicable time period, based on the
following formula:
Net Income (before extraordinary charges + Current Year
- extraordinary items relating to financings) Amortization of Goodwill
-----------------------------------------------------------------------
Weighted Average (Shareholder Equity + Accumulated Amortization of Goodwill
+ UMWA Adjustment)
Adjusted ROE shall be determined at least annually by the Employer.
ARTICLE IV
VESTING
-------
SECTION 4.1. VESTING. The Participant shall be 100% vested
in his Supplemental Benefit hereunder.
ARTICLE V
DISTRIBUTION OF SUPPLEMENTAL BENEFIT
------------------------------------
SECTION 5.1. FORM AND TIMING OF DISTRIBUTION.
(a) The Participant's Supplemental Benefit shall be
distributed to the Participant in the form of ten annual installments with each
installment being based on the value of the Participant's Account on the
Valuation Date immediately preceding the date such installment is to be paid
and being a fraction of such value in which the numerator is one and the
denominator is the total number of remaining installments to be paid. The
first annual installment payment of the Supplemental Benefit shall be made to
the Participant on the first day of the calendar year following the earlier of
the year in which the Participant terminates employment with the Controlled
Group or the year in which he attains age 70 (but not before the year in which
he attains age 65), and each subsequent installment (if any) shall be made to
the Participant as soon as practicable following the anniversary of such date.
(b) Notwithstanding the foregoing, the Participant may elect
an alternate form of distribution (including a lump sum distribution) by filing
a notice in writing, signed by the Participant and filed with the Secretary of
the Employer while the Participant is alive and at least one year prior to the
commencement of benefits under subsection (a) of this Section. Any such
selection of the form of benefit may be changed at any
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time and from time to time, without the consent of any existing Beneficiary or
any other person, by filing a later selection in writing that is signed by the
Participant and filed with the Secretary of the Employer while the Participant
is alive and at least one year prior to the commencement of benefits under
subsection (a) of this Section.
(c) In the event of the death of the Participant, his
Beneficiary shall receive a lump sum distribution of the balance of the
Participant's Account as soon as practicable after the Participant's death.
Notwithstanding the foregoing, the Participant may elect an alternate form of
distribution for his Beneficiary by filing a notice in writing, signed by the
Participant and filed with the Secretary of the Employer while the Participant
is alive and at least one year prior to the commencement of benefits under
subsection (a) of this Section.
(d) Notwithstanding the foregoing, the Employer may at any
time, upon written request of the Participant, cause to be paid to such
Participant an amount equal to all or any part of the Participant's Account if
the Employer determines, in its absolute discretion based on such reasonable
evidence as it shall require, that such a payment or payments is necessary for
the purpose of alleviating the consequences of an Unforeseeable Emergency
occurring with respect to the Participant. Payments of amounts because of an
Unforeseeable Emergency shall be permitted only to the extent reasonably
necessary to satisfy the emergency need.
ARTICLE VI
MISCELLANEOUS
-------------
SECTION 6.1. LIMITATION ON RIGHTS OF PARTICIPANT AND
BENEFICIARIES - NO LIEN. This Plan is designed to be an unfunded, nonqualified
plan and the entire cost of this Plan shall be paid from the general assets of
the Employer. No liability for the payment of benefits under the Plan shall be
imposed upon any officer, director, employee, or stockholder of the Employer.
Nothing contained herein shall be deemed to create a lien in favor of the
Participant or any Beneficiary on any assets of any Employer. The
establishment of the Participant's Account hereunder is solely for the
Employer's convenience in administering the Plan and amounts "credited" to the
Account shall continue for all purposes to be part of the general assets of the
Employer. The Participant's Account is merely a record of the value of the
Employer's unsecured contractual obligation to the Participant and his
Beneficiary under the Plan and the Employer shall have no obligation to
purchase any assets that do not remain subject to the claims of the creditors
of the Employer for use in connection with the Plan. The Participant and each
Beneficiary shall have the status of a general unsecured creditor of the
Employer and shall have no right to, prior claim to, or security interest in,
any assets of the Employer.
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SECTION 6.2. NONALIENATION. No right or interest of the
Participant or any Beneficiary under this Plan shall be anticipated, assigned
(either at law or in equity) or alienated by the Participant or 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 the Participant or Beneficiary. If the
Participant or any 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 Employer 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 Employer may deem proper; provided, however, that the
provisions of this sentence shall not be applicable to the surviving spouse of
the deceased Participant if the Employer consents to such inapplicability,
which consent shall not unreasonably be withheld.
SECTION 6.3. EMPLOYMENT RIGHTS. Employment rights shall not
be enlarged or affected hereby. The Employer shall continue to have the right
to discharge or retire the Participant, with or without cause.
SECTION 6.4. ADMINISTRATION OF PLAN. (a) The Nominating,
Organization and Compensation Committee of the Board of Directors of the
Employer (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 Employer 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 shall determine the rights and status of the Participant and
Beneficiaries hereunder (including, without limitation, the amount of any
Supplemental Benefit to which the Participant or a Beneficiary may be entitled
under the Plan). The Participant or Beneficiary shall be entitled to submit
issues and comments in writing to the Committee for its consideration in
connection with any such interpretation or determination. The interpretations
and findings of the Committee shall be final and conclusive as to all
interested persons for all purposes of the Plan.
(b) Either the Committee or the Employer 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 6.5. 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 Employer may
direct payment of such benefit to the
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guardian, legal representative or person having the care and custody of such
minor, incompetent or person. The Employer 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 Employer from all liability with respect to such benefit.
SECTION 6.6. STATEMENT OF ACCOUNT. The Employer shall
deliver to the Participant a written statement of his Account as of the end of
each calendar year.
ARTICLE VII
AMENDMENT AND TERMINATION
-------------------------
SECTION 7.1. AMENDMENT. Subject to Section 7.3, the
Committee does hereby reserve the right to amend, at any time, any or all of
the provisions of the Plan, without the consent of any the Participant,
Beneficiary or any other person. Any such amendment shall be expressed in an
instrument executed by an officer of the Employer on the order of the Committee
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 7.2. TERMINATION. Subject to Section 7.3, the
Committee does hereby reserve the right to terminate the Plan at any time
without the consent of the Participant, Beneficiary or any other person. Such
termination shall be expressed in an instrument executed by an officer of the
Employer on the order of the Committee and shall become effective as of the
date designated in such instrument, or if no date is specified, on the date of
its execution.
SECTION 7.3. LIMITATIONS ON AMENDMENT AND TERMINATION.
Notwithstanding the foregoing provisions of this Article, no amendment or
termination of the Plan shall, without the written consent of the Participant
(or, in the case of his death, his Beneficiary), reduce the amount of any
Supplemental Benefit under the Plan of the Participant or any Beneficiary as of
the date of the amendment or termination.
IN WITNESS WHEREOF, NACCO Industries, Inc., has executed this
Plan at Cleveland, Ohio, this 31st day of December, 1994.
NACCO INDUSTRIES, INC.
By Charles A. Bittenbender
-----------------------
Title Vice President
---------------
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The undersigned Alfred M. Rankin, Jr. hereby agrees to the
terms of this Plan, as amended and restated as of January 1, 1994 and, in
particular, acknowledges that the Opening Account Balance described in Section
3.1(a) hereof fully satisfies the Employer's obligation to provide Mr. Rankin
with a Supplemental Retirement Benefit (as that term was defined in Section
1(e) of the Plan prior to the adoption of this amendment and restatement).
Date:_______________________ Alfred M. Rankin
---------------------
Alfred M. Rankin, Jr.
VOL402CL Doc: 75539.1
<PAGE> 1
Exhibit 10(x)
AMENDMENT NO. 1
TO THE
RETIREMENT BENEFIT PLAN FOR
ALFRED M. RANKIN, JR.
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994)
NACCO Industries, Inc. hereby adopts this Amendment No. 1 to
The Retirement Benefit Plan for Alfred M. Rankin, Jr. (the "Plan"). The
provisions of this Amendment shall be effective April 1, 1995. Words and
phrases used herein with initial capital letters which are defined in the Plan
are used herein as so defined.
Section 1
---------
Section 3.4 of the Plan is hereby amended in its entirety to
read as follows:
"SECTION 3.4. EARNINGS.
(a) DEFINITIONS. For purposes of this Section, the following
terms shall have the following meanings:
(i) "NET INCOME (BEFORE EXTRAORDINARY ITEMS)" is defined as
consolidated net income, as defined by general accepted accounting principles
("GAAP"), for NACCO Industries, Inc. and its subsidiaries for the subject year
before extraordinary items, but including any extraordinary items related to
refinancings (net of tax);
(ii) "AMORTIZATION OF GOODWILL" is defined as the
consolidated amortization expense related to the intangible asset goodwill for
NACCO Industries, Inc. and its subsidiaries for the subject year;
(iii) "WEIGHTED AVERAGE STOCKHOLDERS' EQUITY" is calculated
by adding the consolidated stockholders' equity for NACCO Industries, Inc., as
defined by GAAP, at the beginning of the subject year and the end of each month
of the subject year and dividing by thirteen;
(iv) "WEIGHTED AVERAGE ACCUMULATED AMORTIZATION OF GOODWILL"
is calculated by adding consolidated accumulated amortization of goodwill, as
defined by GAAP, at the beginning of the subject year and the end of each month
of the subject year and dividing by thirteen;
(v) "WEIGHTED AVERAGE UMWA ADJUSTMENT" is calculated by
adding the balance in the Obligation to United Mine Workers of America Combined
Benefit Fund, net of tax, for NACCO Industries, Inc. at the beginning of the
subject year and the end of each month of the subject year and dividing by
thirteen;
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<PAGE> 2
(vi) "FIXED INCOME FUND" shall mean the Stable Asset Fund
under the Profit Sharing Plan or any equivalent fixed income fund under such
Plan that is designated by the NACCO Industries, Inc. Retirement Funds
Investment Committee as the successor to the Stable Asset Fund; and
(vii) "ADJUSTED ROE" shall mean the average return on equity
of the Employer calculated by the Employer for the applicable time period,
based on A divided by B, where:
A = Net Income (before extraordinary items) + Amortization of
Goodwill; and
B = Weighted Average (Stockholders' Equity + Accumulated
Amortization of Goodwill + UMWA Adjustment).
Adjusted ROE shall be determined at least annually by the Employer.
(b) WHILE ACTIVELY EMPLOYED. At the end of each calendar
month during a calendar year while the Participant is employed by an Employer
on December 31 of such year, the Account of the Participant shall be credited
with an amount determined by multiplying such Participant's average Account
balance during such month by the blended rate earned during such month by the
Fixed Income Fund. Notwithstanding the foregoing, in the event that the
Adjusted ROE determined for such calendar year exceeds the rate credited to the
Participant's Account under the preceding sentence, the Participant's Account
shall retroactively be credited with the difference between (i) the amount
determined under the preceding sentence, and (ii) the amount determined by
multiplying the Participant's average Account balance during each month of such
year by the Adjusted ROE determined for such year, compounded monthly.
(c) FOLLOWING TERMINATION. After the Participant has
terminated employment with the Controlled Group, his Account shall be credited
with earnings as described in subsection (b), until his Account has been
distributed in full in accordance with Article V. The Adjusted ROE calculation
described in the second sentence of subsection (b) shall be made during the
month in which the Participant terminates employment and shall be based on the
year-to-date Adjusted ROE for the month ending prior to the date the
Participant terminated employment, as calculated by the Employer. For any
subsequent month, the Adjusted ROE calculation described in the second sentence
of subsection (b) shall not apply. The Fixed Income Fund calculation described
in the first sentence of subsection (b) for the month in which the Participant
receives a distribution from his Account shall be based on the blended rate
earned during the preceding month by the Fixed Income Fund.
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<PAGE> 3
(d) CHANGES IN EARNINGS ASSUMPTIONS. The Committee (as
defined in Section 6.4) may change the earnings rate credited on the
Participant's Account hereunder at any time upon at least 30 days advance
notice to the Participant."
Executed this 13th day of March, 1995.
---- ------
NACCO INDUSTRIES, INC.
By: Charles A. Bittenbender
------------------------
Title: Vice President
VOL402CL Doc: 145311.1
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<PAGE> 1
Exhibit 10(xiv)
THE NORTH AMERICAN COAL CORPORATION
1995 INCENTIVE COMPENSATION PLAN
December, 1994
<PAGE> 2
1995 INCENTIVE COMPENSATION PLAN
SUMMARY
The Incentive Compensation Plan (Plan) offers a strongly competitive
incentive opportunity to senior managers when all performance objectives under
their control or influence are achieved. This is accomplished through a
structure containing the following elements:
- Each participant is assigned an individual incentive target, stated
as a percentage of salary midpoint, that establishes the incentive
amount they will receive when performance objectives are met.
- The individual target amount is allocated among the following
performance components:
- Percentage weightings are assigned to each component based on
the participant's accountabilities and their impact on each component.
- One or more performance objectives will be established at the
beginning of the year for each performance component.
- A performance range, which defines the acceptable level of results, from
threshold to maximum, is created around each performance objective.
- A payout range is defined which provides for incentive payments up to
150 percent of the incentive target, EXCEPT TO THE EXTENT THE COMMITTEE
ELECTS TO INCREASE THE ACTUAL POOL BY UP TO 10%, AS DESCRIBED BELOW.
- A performance/payout schedule combines the two ranges into a matrix
that defines the level of payout that will result from each level of
performance.
- After audited financials are available, awards will be calculated based
on actual results against the established objectives.
- A final individual performance adjustment may be made, within
a range of +-10 percent of the calculated award based on a judgment of
the participant's overall performance.
-1-
<PAGE> 3
1995 INCENTIVE COMPENSATION PLAN
This incentive compensation plan will allow management and the Board to
establish, in advance, the performance expectations and related incentive
potential that NAC's executives will work with for the year. At year-end, the
structure channels judgment of the managements team's performance along
predetermined lines that should convey a sense of fairness in the deter-
mination of rewards.
PLAN STRUCTURE
INDIVIDUAL INCENTIVE TARGETS
----------------------------
The fundamental building block of the proposed Plan structure is the
individual incentive target. Each participant is assigned a target, stated as a
percentage of base salary, which will be paid when all relevant performance
objectives are achieved. The Plan provides for payments above or below the
target to reflect acceptable variances from performance objectives.
PERFORMANCE GOALS
-----------------
Four sets of goals are proposed:
Intentionally Omitted
INCENTIVE AWARD RANGE
---------------------
Actual performance results attained probably will not be exactly equal
to the established performance goals. Therefore, the Plan is designed to
provide payouts ranging up to 150 percent of the target award if actual results
fall within a predetermined range of acceptable performance.
-2-
<PAGE> 4
1995 INCENTIVE COMPENSATION PLAN
<TABLE>
The award range is defined as follows:
<CAPTION>
% of
Award Level Target Description
----------- ------ -----------
<S> <C> <C>
Maximum 150% Highest level of incentive paid.
Target 100% Competitive incentive opportunity
for achieving all important goals.
Threshold 50% Incentive paid when results meet
minimum acceptable standards.
Below threshold 0% Performance does not merit incentive
payment.
</TABLE>
COMPONENT WEIGHTINGS
--------------------
Participants' potential incentive awards will be allocated between
performance components based on their individual impact on results. The
allocations allow for awards to be earned based on the achievement of the
performance objectives over which each executive has the most control.
Weightings will be stated as a percentage and total 100 percent for each
participant. The weightings will be established each year to reflect current
organizational accountabilities and the relative importance of the various
performance components. Our recommended weightings are as follows:
Intentionally Omitted
When there is more than one goal for a performance component, further
percentage weightings may be assigned, within the overall weightings, to
reflect the relative priority of each goal. For example, if the individual
component has a 40 percent weighting and there are five individual goals, each
individual goal might be assigned a priority weighting of 20 percent.
-3-
<PAGE> 5
1995 INCENTIVE COMPENSATION PLAN
PERFORMANCE RANGE
-----------------
A range of performance acceptable for incentive payment will be
established around each performance objective. For quantitative goals, the
range may be set as a percentage of the objective. For goals that cannot be
quantified, the range will be defined in narrative form as clearly as possible.
The following general definitions will apply. The percentage ranges
indicated are only guidelines; specific percentage ranges or narrative
descriptions should be determined for each goal in line with the definitions.
<TABLE>
<CAPTION>
Performance Percentage
Level Guideline Definition
----------- ---------- ------------------
<S> <C> <C>
Threshold 75% Minimum acceptable results
justifying payment of incentives.
Objective 100% Results meet high performance
demands justifying fully
competitive rewards.
Maximum 125% Highest foreseeable level of
performance.
</TABLE>
PERFORMANCE/PAYOUT SCHEDULE
---------------------------
Combining the payout and performance ranges yields a performance/payout
schedule as in the following example:
<TABLE>
<CAPTION>
Performance Definition Results Levels Payout
----------- -------------- ------- ------------ ------
<S> <C> <C> <C> <C>
Threshold Just bonusable 75% Threshold 50%
Objective On plan 100% Target 100%
Maximum Heavy stretch 125% Maximum 150%
</TABLE>
This schedule is applied separately to the results of each established
performance element to determine the incentive amount earned in accordance with
assigned weightings. Performance that falls between the defined levels would
result in proportionally adjusted payouts which may be calculated
mathematically or determined judgmentally.
CORPORATE PERFORMANCE THRESHOLD
-------------------------------
No incentive awards will be earned under the Plan in any year unless
the threshold level under the corporate performance component is achieved. Once
the corporate performance threshold is attained each performance objective is
separate and distinct. This means that partial
-4-
<PAGE> 6
1995 INCENTIVE COMPENSATION PLAN
awards can be earned for the attainment of one performance objective even if
another is not sufficient to generate a payout.
INDIVIDUAL ADJUSTMENT FACTOR
----------------------------
Each individual award, as calculated above, may be adjusted upward or
downward by as much as 10 percent of the total award based on management's
perceptions of each individual's overall performance.
PARTIAL AWARDS
--------------
Executives who are hired or promoted during the year to positions
eligible for participation in the Plan may be included in the Plan on a pro
ratio basis.
COMMITTEE DISCRETION
--------------------
It is the intent of the Plan that the total incentive compensation, as
determined above, will be the final total corporate incentive compensation to
be paid. However, the committee, in its sole discretion, may increase or
decrease by up to ten percent the total incentive compensation or may approve
an incentive compensation payment where there would normally be no payments due
to corporate performance which is below the criteria established for the year.
1995 PERFORMANCE TARGETS
See Plan Summary.
-5-
<PAGE> 1
Exhibit 10(xii)
INSTRUMENT OF MERGER
The North American Coal Corporation, Hamilton
Beach-Proctor/Silex, Inc. and NACCO Materials Handling Group, Inc. (the
"Employers") hereby take the following actions, effective at the close of
business on December 31, 1994, with respect to The North American Coal
Corporation Salaried Employees Pension Plan ("Plan 005"), The Hamilton
Beach/Proctor-Silex Profit Sharing Retirement Plan (the "PSRP"), the NACCO
Materials Handling Group, Inc. Cash Balance Plan for Salaried Employees (the
"Salaried Plan"), the NACCO Materials Handling Group, Inc. Cash Balance Plan
for Sulligent Shop Employees (the "Sulligent Plan"), and the NACCO Materials
Handling Group, Inc. Cash Balance Plan for Berea Shop Employees (the "Berea
Plan") (collectively, the "Plans" and individually, a "Plan"), each as amended
through the date hereof, and the trusts related thereto (the "Trusts"). Words
and phrases used herein with initial capital letters which are defined in the
Plans are used herein as so defined.
I.
The PSRP, Sulligent Plan, Salaried Plan, and Berea Plan are
hereby merged into Plan 005 to form a single plan, within the meaning of
Treasury Regulations issued under section 414(1) of the Code (the "Merged
Plan"). Effective upon such merger, the name of the Merged Plan shall be the
"Combined Defined Benefit Plan for NACCO Industries, Inc. and its Subsidiaries
(the "Combined Plan")."
VOL402CL Doc: 111447.1
<PAGE> 2
2
II.
The Trust for each Plan shall continue to be maintained
pursuant to the instrument currently applicable thereto (the "Master Trust
Agreement"). Notwithstanding the foregoing, all of the assets of the Plans
shall be available to pay benefits to all Participants and Beneficiaries under
the Combined Plan, and the Master Trust Agreement shall be deemed to have been
amended to the extent necessary to effectuate this sentence.
III.
As required by Code section 414(l), each Participant in the
Combined Plan shall be entitled to receive benefits from the Combined Plan, if
it were to terminate immediately after the merger, at least equal to the
benefits that the Participant would have been entitled to receive from the Plan
in which he was a Participant prior to the merger, if such Plan had then
terminated. In furtherance of the foregoing sentence, if the sum of the assets
of the Plans at the time of the merger is less than the sum of the present
values of all Accrued Benefits under the Plans (whether or not vested) at that
time, the Employers shall comply with the requirements of Treas. Reg. Section
1.414(1)-1(e)(2) (or Treas. Reg. Section 1.414(1)-1(i)) and Treas. Reg. Section
1.414(l)-1(j).
VOL402CL Doc: 111447.1
<PAGE> 3
3
IV.
The Combined Plan shall be comprised of the following "Parts":
A. "Part I", which contains Articles I through XVII, and
Exhibits thereto, shall contain the provisions of
Plan 005 as in effect immediately prior to the
merger;
B. "Part II", which contains Articles I through XIX, and
Exhibits thereto, shall contain the provisions of the
PSRP as in effect immediately prior to the merger;
and
C. "Part III", which contains Articles I through XIX,
and Exhibits thereto, shall contain the provisions of
the NACCO Materials Handling Group, Inc. Cash Balance
Plan as in effect immediately prior to the merger
(the "Cash Balance Plan"), which is comprised of: (1)
the Berea Plan; (2) the Sulligent Plan; and (3) the
Salaried Plan.
V.
From and after the effective date of the merger, the following
Employees (as that term is defined in each Plan immediately prior to the
merger) shall be eligible to participate in the respective Parts of the
Combined Plan described below:
A. PART I OF THE COMBINED PLAN: Salaried Employees of the
Falkirk Mining Company, the Coteau Properties Company, the Sabine Mining
Company, Bellaire Corporation, North American Coal
VOL402CL Doc: 111447.1
<PAGE> 4
4
Royalty Company, The North American Coal Corporation, or NACCO Industries,
Inc., but excluding Leased Employees or Employees employed in an Excluded
Bargaining Unit and Employees who work for an Employer primarily outside of the
United States who are not citizens of the United States.
B. PART II OF THE COMBINED PLAN: Regular, full-time (as
defined in the PSRP) Employees who are on the U.S. payroll of Hamilton
Beach/Proctor-Silex, Inc. ("HB-PS"), but excluding nonresident aliens, Leased
Employees, temporary or seasonal Employees, or Employees who are members of a
collective bargaining unit recognized by HB-PS or certified by the National
Labor Relations Board unless there is a written agreement between HB-PS and the
collective bargaining representative for such Employees, that such Employees
shall be eligible to participate in the Plan.
C. PART III OF THE COMBINED PLAN: Employees of NACCO
Materials Handling Group, Inc. ("NMHG") who (1) are employed on a salaried
payroll, excluding, however, (i) such Employees of NMHG who first perform an
Hour of Service on or after July 1, 1992 and who are classified in salary
grades 27 and above, and (ii) such Employees of NMHG who are employed at or
report to the Flemington, New Jersey, Greenville, North Carolina or Lenoir,
North Carolina facilities; (2) are employed on the shop hourly payroll at the
Sulligent, Alabama location; or (3) are employed on the shop hourly payroll at
the Berea, Kentucky location; provided, however, that Employees who are
nonresident aliens,
VOL402CL Doc: 111447.1
<PAGE> 5
5
Leased Employees, temporary or seasonal Employees, or who are members of a
collective bargaining unit recognized by NMHG or certified by the National
Labor Relations Board shall not be eligible to participate in the Plan, unless,
in the case of Employees who are collective bargaining unit members, there is a
written agreement between NMHG and the collective bargaining representative of
such Employees that such Employees shall be eligible to participate in the
Plan.
VI.
The terms and conditions of the Combined Plan shall be
comprised of the combined terms and conditions and all other provisions of each
Plan, which shall remain in effect in the same manner as they were immediately
prior to the merger, but incorporating any changes therein made herein or in
Amendment No. 6 to Plan 005, Amendment No. 3 to the PSRP, and Amendment No. 3
to the Cash Balance Plan, which Amendments were adopted together with this
Instrument of Merger; provided, however, that the terms, conditions and other
provisions of each Part of the Combined Plan, as so amended, shall be
applicable and controlling only with respect to each of the respective
Employees thereof, as such individuals are specified in Section V above.
THE NORTH AMERICAN COAL CORPORATION
By: Charles A. Bittenbender
------------------------
Title: Assistant Secretary
Date: December 31, 1994
VOL402CL Doc: 111447.1
<PAGE> 6
6
HAMILTON BEACH/PROCTOR-SILEX, INC.
By: Charles A. Bittenbender
------------------------
Title: Assistant Secretary
Date: December 31, 1994
NACCO MATERIALS HANDLING GROUP, INC.
By: Charles A. Bittenbender
------------------------
Title: Assistant Secretary
Date: December 31, 1994
VOL402CL Doc: 111447.1
<PAGE> 1
Exhibit 10(xxiii)
INSTRUMENT OF WITHDRAWAL AND TRANSFER OF
LIABILITIES FROM THE
NORTH AMERICAN COAL CORPORATION
DEFERRED COMPENSATION PLAN FOR MANAGEMENT EMPLOYEES
---------------------------------------------------
NACCO Industries, Inc. ("NACCO") has provided excess Before
Tax and Matching Employer Contributions to certain of its employees ("NACCO
401(k) Employees") through The North American Coal Corporation Deferred
Compensation Plan for Management Employees (the "North American Coal Plan").
Effective January 1, 1995, NACCO shall provide such excess Before Tax and
Matching Employer Contributions to NACCO 401(k) Employees through the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (the "Plan"). The
liabilities of NACCO to NACCO 401(k) Employees for such excess Before Tax and
Matching Employer Contributions shall continue after January 1, 1995, under the
Plan. Any such liabilities of NACCO existing as of December 31, 1994 under the
North American Coal Plan shall be transferred from the North American Coal Plan
to the Plan effective January 1, 1995. NACCO hereby withdraws from the
North American Coal Plan effective December 31, 1994.
Date: 12/30/94 NACCO INDUSTRIES, INC.
By: Steven M. Billick
------------------
Title: Vice President & Controller
----------------------------
This Instrument of Withdrawal and Transfer of Liabilities and
the terms and provisions hereof are hereby consented to by The North American
Coal Corporation, the sponsor of the North American Coal Plan.
THE NORTH AMERICAN COAL
CORPORATION
By: Charles A. Bittenbender
------------------------
Title: Assistant Secretary
--------------------
CL Doc: 137632.1
NYMAIN Doc: 93993.1
504810-145-019
<PAGE> 1
Exhibit 10(xxv)
THE HAMILTON BEACH/PROCTOR-SILEX, INC.
UNFUNDED BENEFIT PLAN
(As Amended and Restated Effective January 1, 1995)
NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1
<PAGE> 2
HAMILTON BEACH/PROCTOR-SILEX, INC.
UNFUNDED BENEFIT PLAN
Hamilton Beach/Proctor-Silex, Inc. (the "Company") does hereby
amend and completely restate the Hamilton Beach/Proctor-Silex, Inc. Unfunded
Benefit Plan to read as follows, effective January 1, 1995.
ARTICLE I
PREFACE
---------
SECTION 1.1. EFFECTIVE DATE. The original effective date of
this Plan was March 10, 1993. The effective date of this amendment and
restatement is January 1, 1995.
SECTION 1.2. PURPOSE OF THE PLAN. The purpose of this Plan
is to provide for certain Employees of the Company benefits they would have
received (a) under the Cash Balance Plan but for (i) the dollar limitation on
Compensation taken into account as a result of Section 401(a)(17) of the Code,
and (2) the limitations imposed under Section 415 of the Code, and/or (b) under
the Savings Plan but for the limitations imposed under Section 402(g),
401(a)(17) or 401(k)(3) of the Code.
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.
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
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<PAGE> 3
2
include the plural unless otherwise clearly required by the context.
ARTICLE II
DEFINITIONS
-----------
Except as otherwise provided in this Plan, terms defined in
the Qualified Plans as they may be amended from time to time shall have the
same meanings when used herein, unless a different meaning is clearly required
by the context of this Plan. In addition, the following words and phrases
shall have the following respective meanings for purposes of this Plan.
SECTION 2.1. ACCOUNT shall mean the record maintained in
accordance with Section 3.2 by the Company as the Participant's Excess 401(k)
Sub-Account.
SECTION 2.2. ADJUSTED ROE shall mean the average return on
equity of the Company calculated for the applicable time period, based on A
divided by B, where:
A = Net Income Before Extraordinary Items (but including
extraordinary Items related to financings) + Current
Year Amortization of Goodwill; and
B = Weighted Average (Shareholder Equity + Accumulated
Amortization of Goodwill)
Adjusted ROE shall be determined at least annually by the Company.
SECTION 2.3. BENEFICIARY shall mean the person or persons
designated by the Participant as his Beneficiary under this Plan, in accordance
with the provisions of Article VII hereof.
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<PAGE> 4
3
SECTION 2.4. CASH BALANCE EMPLOYEE shall mean a participant
in the Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan (or
any successor plan).
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<PAGE> 5
4
SECTION 2.5. CASH BALANCE PLAN shall mean the Hamilton
Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan (or any successor
thereto), as the same may be amended from time to time.
SECTION 2.6. COMPANY shall mean Hamilton Beach/Proctor-Silex,
Inc. or any entity that succeeds Hamilton Beach/Proctor-Silex, Inc. by merger,
reorganization or otherwise.
SECTION 2.7. EXCESS RETIREMENT BENEFIT shall mean an Excess
Pension Benefit and an Excess 401(k) Benefit (as described in Article III)
which is payable to or with respect to a Participant under this Plan.
SECTION 2.8. 401(K) EMPLOYEE shall mean a participant in the
Hamilton Beach/Proctor-Silex, Inc. Employees' Retirement Savings Plan (401(k))
who is eligible for Before-Tax Contributions thereunder.
SECTION 2.9. INSOLVENT. For purposes of this Plan, the
Company shall be considered Insolvent at such time as it (a) is unable to pay
its debts as they mature, or (b) is subject to a pending voluntary or
involuntary proceeding as a debtor under the United States Bankruptcy Code.
SECTION 2.10. PARTICIPANT shall mean (a) a Cash Balance
Employee whose benefit under the Cash Balance Plan is limited by the
application of Section 401(a)(17) or 415 of the Code and/or (b) a 401(k)
Employee (i) who is unable to make all of the Before-Tax Contributions that he
has elected to make to the Savings Plan because of the limitations imposed
under Section
NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1
<PAGE> 6
5
402(g), 401(a)(17), or 401(k)(3) of the Code and (ii) who has at least 943 Hay
points.
SECTION 2.11. PLAN shall mean the Hamilton
Beach/Proctor-Silex, Inc. Unfunded Benefit Plan as herein set forth or as duly
amended.
SECTION 2.12. PLAN ADMINISTRATOR shall mean the Company.
SECTION 2.13. PLAN YEAR shall mean the calendar year.
SECTION 2.14. QUALIFIED PLAN shall mean (a) for Cash
Balance Employees, the Hamilton Beach/Proctor-Silex, Inc. Profit Sharing
Retirement Plan (or any successor plan) and (b) for 401(k) Employees, the
Hamilton Beach/Proctor-Silex, Inc. Employees' Retirement Savings Plan (401(k)).
SECTION 2.15 SAVINGS PLAN shall mean the Hamilton
Beach/Proctor-Silex, Inc. Employees' Retirement Savings Plan (401(k)), as the
same may be amended from time to time.
SECTION 2.16. UNFORESEEABLE EMERGENCY shall mean an event
which results (or will result) in severe financial hardship to the Participant
as a consequence of an unexpected illness or accident or loss of the
Participant's property due to casualty or other similar extraordinary or
unforeseen circumstances out of the control of the Participant.
SECTION 2.17. VALUATION DATE shall mean the last business day
of each Plan Year.
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<PAGE> 7
6
ARTICLE III
EXCESS RETIREMENT BENEFITS
--------------------------
SECTION 3.1. EXCESS PENSION BENEFITS. The Excess Pension
Benefit payable to a Participant who is a Cash Balance Employee shall be a
monthly benefit equal to the excess, if any, of (a) the amount of the monthly
benefit that would be payable to such Participant under the Cash Balance Plan
(in the form actually paid) if such Plan did not contain the limitations
imposed under Sections 401(a)(17) and 415 of the Code, over (b) the amount of
the monthly benefit that is actually payable to the Participant under the Cash
Balance Plan.
SECTION 3.2. EXCESS 401(K) BENEFITS.
(a) AMOUNT OF EXCESS 401(K) BENEFITS. Each
401(k) Employee who is a Participant under the terms of this Plan, may, prior
to the first day of any Plan Year, by completing a Notice of Election to Defer
Compensation or other form approved by the Company ("Deferral Election Form"),
direct the Company:
(i) to reduce his Compensation (as that
term is defined in the Savings Plan, but including amounts received in excess
of the limitations imposed under Code Section 401(a)(17) and amounts deferred
under this Plan) by the difference between (A) a certain percentage, in 1%
increments, with a maximum of 15%, of his Compensation for the calendar year,
and (B) the maximum Before-Tax Contributions actually permitted to be
contributed for him to the Savings Plan by reason of the application of the
limitations imposed under Sections 402(g), 401(a)(17), or 401(k)(3) of the
Code;
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<PAGE> 8
7
(ii) to credit the deferrals to the
Sub-Account described in Section 3.3(a) at the times described therein.
(b) DEFERRAL PERIOD. The deferral election described in
Subsection (a) above shall also contain such Participant's election regarding
the time of the commencement of payment of his Excess 401(k) Sub-Account. In
the Deferral Election Form, such Participant may elect to commence payment of
his Excess 401(k) Sub-Account on (i) the date on which he ceases to be an
employee of a Controlled Group member, (ii) the date on which he attains an age
specified in the Deferral Election Form, or (iii) the earlier or later of such
dates.
(c) EFFECT AND DURATION OF DEFERRAL ELECTION. Any
direction by a 401(k) Employee who is a Participant in this Plan to make
deferrals of Excess 401(k) Benefits hereunder shall be effective with respect
to Compensation otherwise payable to the Participant, and the Participant shall
not be eligible to receive such Excess 401(k) Benefits. Instead, such amounts
shall be credited to the Participant's Sub-Account as provided in Section
3.3(a). Any directions made in accordance with Subsections (a) or (b) above
shall be irrevocable and shall remain in effect for subsequent Plan Years
unless for subsequent Plan Years the directions are changed or terminated by
the Participant, on the appropriate form provided by the Plan Administrator,
prior to the first day of such subsequent Plan Year. Notwithstanding the
foregoing, a Participant's direction to make deferrals of Excess 401(k)
Benefits shall automatically terminate on the earlier of
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<PAGE> 9
8
the date on which (i) the Participant ceases employment with the Company, (ii)
the Company is deemed Insolvent, (iii) the Participant is no longer eligible to
make deferrals of Excess 401(k) Benefits hereunder, or (iv) the Plan is
terminated.
(d) Notwithstanding the foregoing, any Participant whose
eligibility to make Before-Tax Contributions to the Savings Plan has been
suspended because he has taken a hardship withdrawal from such plan shall not
be eligible to make deferrals of Excess 401(k) Benefits under this Plan for the
period of his suspension from the Savings Plan.
SECTION 3.3. PARTICIPANT'S ACCOUNTS. The Company shall
establish and maintain on its books an Account for each Participant which shall
contain the following entries:
(a) Credits to an Excess 401(k) Sub-Account for the
Excess 401(k) Benefits described in Section 3.2, which shall be credited to the
Sub-Account when a Participant is prevented from making a Before-Tax
Contribution under the Savings Plan.
(b) Credits to such Sub-Account for the earnings described in
Article IV, which shall continue until the vested portions of such Sub-Account
has been distributed to the Participant or his Beneficiary; and
(c) Debits for any distributions made from such Sub-Account.
SECTION 3.4. EFFECT ON OTHER BENEFITS. Benefits payable to
or with respect to a Participant under the Qualified Plans or any other
Company-sponsored (qualified or nonqualified) plan, if any, are in addition to
those provided under this Plan.
NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1
<PAGE> 10
9
ARTICLE IV
EARNINGS
----------
SECTION 4.1. FOR ACTIVE 401(K) EMPLOYEES. At the end of each
calendar month during a Plan Year, the Excess 401(k) Sub- Account of each
401(k) Employee who is a Participant under the terms of this Plan and who is
employed by the Company on December 31 of such Year shall be credited with an
amount of earnings determined from time to time by the Company. Effective
January 1, 1995, such amount shall be determined as follows:
(a) For Excess 401(k) Benefits attributable to amounts
deferred by a 401(k) Employee up to 7% of his Compensation, at the end of each
calendar month during a Plan Year, the portion of the Excess 401(k) Sub-Account
attributable to such Benefits for each such Participant shall be credited with
an amount determined by multiplying such portion of the Participant's average
Sub-Account balance during such month by the blended rate earned during such
month by the Stable Asset Fund under the Savings Plan. Notwithstanding the
foregoing, in the event that the Adjusted ROE determined for such Plan Year
that is applicable to the Participant exceeds the rate credited to the
Participant's Sub-Account under the preceding sentence, the Participant's
Sub-Account shall retroactively be credited with the difference between (i) the
amount determined under the preceding sentence, and (ii) the amount determined
by multiplying such portion of the Participant's average Sub- Account balance
during each month of such Plan Year by the Adjusted ROE determined for such
Plan Year, compounded monthly.
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<PAGE> 11
10
(b) For Excess 401(k) Benefits attributable to amounts
deferred by a 401(k) Employee in excess of 7% of his Compensation, at the end
of each calendar month during a Plan Year, the portion of the Excess 401(k)
Sub-Account attributable to such Benefits for each such Participant shall be
credited with an amount determined by multiplying such portion of such 401(k)
Employee's average Sub-Account balance during such month by the blended rate
earned during such month by the Stable Asset Fund under the Savings Plan.
(c) The Company may change the earnings rate credited on
an Excess 401(k) Sub-Account balance at any time upon at least 30 days advance
notice to 401(k) Employees.
SECTION 4.2. FOR TERMINATED EMPLOYEES. The Sub-Account of a
Participant who has terminated employment with the Controlled Group shall be
credited with earnings as described in Section 4.1, as modified by this Section
4.2, until each Sub-Account has been distributed in full. The Adjusted ROE
calculation described in the second sentence of Section 4.1(a) shall be made
during the month in which the Participant terminates employment and shall be
based on the year-to-date Adjusted ROE for the month ending prior to the date
the Participant terminated employment, as calculated by the Company. For any
subsequent month, the Adjusted ROE calculation described in the second sentence
of Section 4.1(a) shall not apply. The Stable Asset Fund calculation described
in the first sentence of Section 4.1(a) and in Section 4.1(b) for the month in
which the Participant receives a distribution from his Sub-Account shall be
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<PAGE> 12
11
based on the blended rate earned during the preceding month by the Stable Asset
Fund.
ARTICLE V
VESTING
---------
A Participant shall not become vested in his Excess Pension
Benefit until he becomes vested in his benefit under the Cash Balance Plan and
the Excess Pension Benefit of a Participant who is partially or fully vested
under the Cash Balance Plan shall at all times be vested hereunder to the
extent he is so vested. A Participant shall always be 100% vested in his
Excess 401(k) Benefit hereunder.
ARTICLE VI
DISTRIBUTION OF BENEFITS TO PARTICIPANTS
----------------------------------------
SECTION 6.1. TIME AND MANNER OF PAYMENT.
(a) EXCESS PENSION BENEFITS.
(i) TIMING. A Participant who is a Cash Balance
Employee is required to elect the time and manner of payment of his benefits
under the Cash Balance Plan before he will be eligible to receive payment of
his Excess Pension Benefit hereunder. The Excess Pension Benefit payable to a
Participant shall be paid at the same time or times and in the same manner as
the benefits payable to the Participant under the Cash Balance Plan.
(ii) FORM. Notwithstanding the foregoing, in the
event that the monthly payments of the Excess Pension Benefits payable to a
Participant hereunder following the Participant's termination of the employment
with the Controlled Group amount to
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12
less than Fifty Dollars ($50) per month, such Excess Pension Benefits shall be
paid in the form of a single lump sum payment. Such lump sum amount shall be
equal to the Actuarial Equivalent present value of such Excess Pension
Benefits.
(b) EXCESS 401(K) BENEFITS.
(i) TIMING. The Excess 401(k) Benefit shall be
paid (or commence to be paid) to the Participant at the time specified in the
Participant's Deferral Election Form pursuant to Section 3.2(b).
(ii) FORM. The Excess 401(k) Benefit shall be
distributed to the Participant in the form of ten annual installments with each
installment being based on the value of the Participant's Excess 401(k)
Sub-Account on the Valuation Date immediately preceding the date such
installment is to be paid and being a fraction of such value in which the
numerator is one and the denominator is the total number of remaining
installments to be paid. Notwithstanding the foregoing, the Participant may
elect to receive his Excess 401(k) Benefit in the form of a single lump sum
payment or in annual installments for a period of less than 10 years by filing
a notice in writing, signed by the Participant while he is alive and filed with
the Plan Administrator at least one year prior to the time he had elected to
commence receiving payment of the portion his Excess 401(k) Sub-Account to
which his election applies. Any such election of the form of benefit may be
changed at any time and from time to time, without the consent of any other
person, by filing a later election in writing that is signed by a Participant
who is a
NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1
<PAGE> 14
13
401(k) Employee and filed with the Plan Administrator while such Participant is
alive and at least one year prior to the time he had elected to commence
receiving payment of his Excess 401(k) Sub-Account.
(iii) UNFORESEEABLE EMERGENCY DISTRIBUTIONS.
Notwithstanding the foregoing, the Company may at any time, upon written
request of the Participant who is a 401(k) Employee, cause to be paid to such
Participant an amount equal to all or any part of the Participant's Excess
401(k) Sub-Account if the Company determines, in its absolute discretion based
on such reasonable evidence that it shall require, that such a payment or
payments is necessary for the purpose of alleviating the consequences of an
Unforeseeable Emergency occurring with respect to the Participant. Payments of
amounts because of an Unforeseeable Emergency shall be permitted only to the
extent reasonably necessary to satisfy the emergency need.
(iv) SMALL SUB-ACCOUNTS. Notwithstanding the
foregoing, in the event that the Excess 401(k) Sub-Account of a Participant who
is a 401(k) Employee does not exceed $5,000 at the time of such Participant's
termination of employment with the Controlled Group, such Sub-Account shall
automatically be paid to him in a single lump sum payment as soon as
practicable following his termination of employment.
SECTION 6.2. LIABILITY FOR PAYMENT/EXPENSES. The Company
shall be liable for the payment of the Excess Retirement Benefits which are
payable hereunder to the Participants.
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<PAGE> 15
14
Expenses of administering the Plan shall be paid by the Company, as directed by
the Company.
ARTICLE VII
BENEFICIARIES
-------------
SECTION 7.1. BENEFICIARY DESIGNATIONS. A designation of a
Beneficiary hereunder may be made only by an instrument (in form acceptable to
the Plan Administrator) signed by the Participant and filed with the Plan
Administrator prior to the Participant's death. In the absence of such a
designation and at any other time when there is no existing Beneficiary
designated hereunder, the Beneficiary of a Participant for his Excess Pension
Benefits and/or Excess 401(k) Benefits shall be his Beneficiary under the Cash
Balance Plan and the Savings Plan, respectively. A person designated by a
Participant as his Beneficiary who or which ceases to exist shall not be
entitled to any part of any payment thereafter to be made to the Participant's
Beneficiary unless the Participant's designation specifically provided to the
contrary. If two or more persons designated as a Participant's Beneficiary are
in existence with respect to a single Excess Retirement Benefit 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.
SECTION 7.2. CHANGE IN BENEFICIARY. (a) Anything herein or
in the Qualified Plans to the contrary notwithstanding, a Participant may, at
any time and from time to time, change a Beneficiary designation hereunder
without the consent of any
NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1
<PAGE> 16
15
existing Beneficiary or any other person. A change in Beneficiary hereunder
may be made regardless of whether such a change is also made under the
applicable underlying Qualified Plan. In other words, the Beneficiary
hereunder need not be the same as under the applicable underlying Qualified
Plan.
(b) Any change in Beneficiary shall be made by giving written
notice thereof to the Plan Administrator and any change shall be effective only
if received by the Plan Administrator prior to the death of the Participant.
SECTION 7.3. DISTRIBUTIONS TO BENEFICIARIES.
(a) AMOUNT OF BENEFITS.
(i) AMOUNT OF EXCESS PENSION BENEFIT. The
Excess Pension Benefit payable to a Beneficiary under this Plan
shall be a monthly benefit equal to the excess, if any, of (A)
the amount of the monthly benefit that would be payable to the
Beneficiary last effectively designated by the Participant
under the Cash Balance Plan (in the form actually paid) if
such Plan did not contain the limitations imposed under
Sections 401(a)(17) or 415 of the Code over (B) the amount of
the monthly benefit that is actually paid to such Beneficiary
under such plan.
(ii) AMOUNT OF EXCESS 401(K) BENEFIT. The Excess
401(k) Benefit payable to a Participant's Beneficiary under
this Plan shall be equal to such Participant's Excess 401(k)
Sub-Account balance on the date of the distribution of the
Sub-Account to the Beneficiary.
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<PAGE> 17
16
(b) TIME AND MANNER OF PAYMENT.
(i) EXCESS PENSION BENEFIT. The Excess Pension
Benefit payable to a Beneficiary under this plan shall be paid
at the same time or times and in the same manner as the
benefits payable to the Beneficiary last effectively
designated by the Participant under the Cash Balance Plan;
provided however, that the provisions of Subsection 6.1(a)(ii)
shall apply to such Benefit, treating the Beneficiary
hereunder as if he were the Participant.
(ii) EXCESS 401(K) BENEFIT. The Excess 401(k)
Benefit payable to a Beneficiary under this Plan shall be paid
as soon as practicable following the death of the Participant.
The Excess 401(k) Benefits payable to a Beneficiary hereunder
shall be paid in the form of a lump sum payment.
(c) EFFECT OF DIFFERENT BENEFICIARIES. In the event the
Beneficiary hereunder is different than the Beneficiary under the appropriate
underlying Qualified Plan, (i) if the Beneficiary hereunder dies after the
Participant but while the Beneficiary under the applicable underlying Qualified
Plan is still living, any remaining payments hereunder shall be payable, as
they come due, to the estate of the Beneficiary hereunder and (ii) if the
Beneficiary hereunder predeceases the Beneficiary under the applicable
underlying Qualified Plan and the Participant, the Beneficiary hereunder shall
revert to the Beneficiary last effectively designated under the Qualified Plan
unless and until
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<PAGE> 18
17
the Participant again makes a change of Beneficiary pursuant to Section 7.2
ARTICLE VIII
MISCELLANEOUS
-------------
SECTION 8.1. LIABILITY OF COMPANY. Nothing in this Plan
shall constitute the creation of a trust or other fiduciary relationship
between the Company and any Participant, Beneficiary or any other person.
SECTION 8.2. LIMITATION ON RIGHTS OF PARTICIPANTS AND
BENEFICIARIES - NO LIEN. The Plan is designed to be an unfunded, nonqualified
plan. Nothing contained herein shall be deemed to create a trust or lien in
favor of any Participant or Beneficiary on any assets of the Company. The
Company shall have no obligation to purchase any assets that do not remain
subject to the claims of the creditors of the Company for use in connection
with the Plan. No Participant or Beneficiary or any other person shall have
any preferred claim on, or any beneficial ownership interest in, any assets of
the Company prior to the time that such assets are paid to the Participant or
Beneficiary as provided herein. Each Participant and Beneficiary shall have
the status of a general unsecured creditor of the Company.
SECTION 8.3. NO GUARANTEE OF EMPLOYMENT. Nothing in this
Plan shall be construed as guaranteeing future employment to Participants. A
Participant continues to be an Employee of the Company solely at the will of
the Company subject to discharge at any time, with or without cause.
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<PAGE> 19
18
SECTION 8.4. 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 Plan
Administrator 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 Plan Administrator 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
Company from all liability with respect to such benefit.
SECTION 8.5. ASSIGNMENT. No right or interest under this
Plan of any Participant or Beneficiary shall be assignable or transferable in
any manner or be subject to alienation, anticipation, sale, pledge, encumbrance
or other legal process or in any manner be liable for or subject to the debts
or liabilities of the Participant or Beneficiary.
SECTION 8.6. SEVERABILITY. If any provision of this Plan or
the application thereof to any circumstance(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 IX
ADMINISTRATION OF PLAN
----------------------
SECTION 9.1. ADMINISTRATION. (a) IN GENERAL. The Plan
shall be administered by the Plan Administrator. The Plan
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<PAGE> 20
19
Administrator shall have sole and absolute discretion to interpret where
necessary all provisions of the Plan (including, without limitation, by
supplying omissions from, correcting deficiencies in, or resolving
inconsistencies or ambiguities in, the language of the Plan), to determine the
rights and status under the Plan of Participants, or other persons, to resolve
questions or disputes arising under the Plan and to make any determinations
with respect to the benefits payable under the Plan and the persons entitled
thereto as may be necessary for the purposes of the Plan. Without limiting the
generality of the foregoing, the Plan Administrator is hereby granted the
authority (i) to determine whether a particular employee is a Participant, and
(ii) to determine if an employee is entitled to Excess Retirement Benefits
hereunder and, if so, the amount and duration of such Benefits. The Plan
Administrator's determination of the rights of any employee or former employee
hereunder shall be final and binding on all persons, subject only to the claims
procedures outlined in Section 9.3 hereof.
(b) DELEGATION OF DUTIES. The Plan Administrator may
delegate any of its administrative duties, including, without limitation,
duties with respect to the processing, review, investigation, approval and
payment of Excess Retirement Benefits, to a named administrator or
administrators.
SECTION 9.2. REGULATIONS. The Plan Administrator shall
promulgate any rules and regulations it deems necessary in order to carry out
the purposes of the Plan or to interpret the provisions of the Plan; provided,
however, that no rule,
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<PAGE> 21
20
regulation or interpretation shall be contrary to the provisions of the Plan.
The rules, regulations and interpretations made by the Plan Administrator
shall, subject only to the claims procedure outlined in Section 9.3 hereof, be
final and binding on all persons.
SECTION 9.3. CLAIMS PROCEDURES. The Plan Administrator shall
determine the rights of any employee or former employee to any Excess
Retirement Benefits hereunder. Any employee or former employee who believes
that he has not received the Excess Retirement Benefits to which he is entitled
under the Plan may file a claim in writing with the Plan Administrator. The
Plan Administrator shall, no later than 90 days after the receipt of a claim
(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), either allow or deny the claim in writing. If a claimant does not
receive written notice of the Plan Administrator's decision on his claim within
the above-mentioned period, the claim shall be deemed to have been denied in
full.
A denial of a claim by the Plan Administrator, wholly or
partially, shall be written in a manner calculated to be understood by the
claimant and shall include:
(a) the specific reasons for the denial;
(b) specific reference to pertinent Plan provisions on
which the denial is based;
(c) a description of any additional material or
information necessary for the claimant to perfect the
claim and an explanation of why such material or
information is necessary; and
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<PAGE> 22
21
(d) an explanation of the claim review procedure.
A claimant whose claim is denied (or his duly authorized
representative) may within 60 days after receipt of denial of a claim file with
the Plan Administrator a written request for a review of such claim. If the
claimant does not file a request for review of his claim within such 60-day
period, the claimant shall be deemed to have acquiesced in the original
decision of the Plan Administrator on his claim. If such an appeal is so filed
within such 60 day period, the Company (or its delegate) shall conduct a full
and fair review of such claim. During such review, the claimant shall be given
the opportunity to review documents that are pertinent to his claim and to
submit issues and comments in writing.
The Company shall mail or deliver to the claimant a written
decision on the matter based on the facts and the pertinent provisions of the
Plan within 60 days after the receipt of the request for review (unless special
circumstances require an extension of up to 60 additional days, in which case
written notice of such extension shall be given to the claimant prior to the
commencement of such extension). Such decision shall be written in a manner
calculated to be understood by the claimant, shall state the specific reasons
for the decision and the specific Plan provisions on which the decision was
based and shall, to the extent permitted by law, be final and binding on all
interested persons. If the decision on review is not furnished to the claimant
within the above-mentioned time period, the claim shall be deemed to have been
denied on review.
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<PAGE> 23
22
SECTION 9.4. REVOCABILITY OF PLAN ADMINISTRATOR/ COMPANY
ACTION. Any action taken by the Plan Administrator or the Company with respect
to the rights or benefits under the Plan of any employee or former employee
shall be revocable by the Plan Administrator or the Company as to payments not
yet made to such person, and acceptance of any Excess Retirement Benefits under
the Plan constitutes acceptance of and agreement to the Plan Administrator's or
the Company's making any appropriate adjustments in future payments to such
person (or to recover from such person) any excess payment or underpayment
previously made to him.
SECTION 9.5. AMENDMENT. The Nominating, Organization and
Compensation Committee of the Board of Directors of the Company (the
"Committee") may at any time amend any or all of the provisions of this Plan,
except that (a) no such amendment may adversely affect any Participant's vested
Excess Retirement Benefit as of the date of such amendment, without the prior
written consent of such Participant, and (b) no such amendment may suspend the
crediting of earnings on the balance of a Participant's Account, until the
entire balance of such Account has been distributed. Any amendment shall be in
the form of a written instrument executed by an officer of the Company on the
order of the Committee. Subject to the foregoing provisions of this Section,
such amendment shall become effective as of the date specified in such
instrument or, if no such date is specified, on the date of its execution.
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<PAGE> 24
23
SECTION 9.6. TERMINATION.
(a) The Committee, in its sole discretion, may terminate this
Plan at any time and for any reason whatsoever, except that (i) no such
termination may adversely affect any Participant's vested Excess Retirement
Benefit as of the date of such termination, without the prior written consent
of such Participant, and (ii) no such termination may suspend the crediting of
earnings on the balance of a Participant's Account, until the entire balance of
such Account has been distributed. Any such termination shall be expressed in
the form of a written instrument executed by an officer of the Company on the
order of the Committee. Subject to the foregoing provisions of this Section,
such termination shall become effective as of the date specified in such
instrument or, if no such date is specified, on the date of its execution.
Written notice of any termination shall be given to the Participants as soon as
practicable after the instrument is executed.
(b) Notwithstanding anything in 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 form of distribution of
Participants' Excess Retirement Benefits.
NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1
<PAGE> 25
24
Executed, this 31st day of December, 1994, to be effective January 1,
1995.
HAMILTON BEACH/PROCTOR-SILEX, INC.
By: Charles A. Bittenbender
-----------------------
Title: Assistant Secretary
NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1
<PAGE> 1
Exhibit 10(xxvi)
AMENDMENT NO. 3
TO THE
HAMILTON BEACH/PROCTOR-SILEX, INC.
PROFIT SHARING RETIREMENT PLAN
Hamilton Beach/Proctor-Silex, Inc. hereby adopts this
Amendment No. 3 to The Hamilton Beach/Proctor-Silex, Inc. Profit Sharing
Retirement Plan (the "Plan"). The purpose of this Amendment is (a) to merge
the Plan and the NACCO Materials Handling Group, Inc. Cash Balance Plan for
Berea Shop Employees, the NACCO Materials Handling Group, Inc. Cash Balance
Plan for Sulligent Shop Employees, and the NACCO Materials Handling Group, Inc.
Cash Balance Plan for Salaried Employees into the North American Coal
Corporation Salaried Employees Pension Plan effective December 31, 1994. After
the merger, the merged plan shall be known as the Combined Defined Benefit Plan
for NACCO Industries, Inc. and Its Subsidiaries (the "Combined Plan"). The
provisions of this Amendment shall be effective December 31, 1994, except as
otherwise specified herein. Words and phrases used herein with initial capital
letters which are defined in the Plan are used herein as so defined.
Section 1
---------
The Preamble to the Plan is hereby amended by adding the
following new provision at the end thereof:
"Effective December 31, 1994, the Plan, along with
the NACCO Materials Handling Group, Inc. Cash Balance Plan
for Berea Shop
NYMAIN Doc: 92294.1
VOL402CL Doc. 137969.1
<PAGE> 2
2
Employees, the NACCO Materials Handling Group, Inc. Cash
Balance Plan for Sulligent Shop Employees and the NACCO
Materials Handling Group, Inc. Cash Balance Plan for Salaried
Employees, were merged into The North American Coal
Corporation Salaried Employees Pension Plan and the name of
such merged Plan was changed to the Combined Defined Benefit
Plan for NACCO Industries, Inc. and Its Subsidiaries."
Section 2
---------
The Plan is hereby amended in its entirety by adding the words
"Part II of" prior to the words "the Plan" wherever such words may appear
throughout the Plan. In addition, all references to Sections of the Plan
throughout the Plan are hereby amended to refer to Sections of Part II of the
Plan.
Section 3
---------
The first sentence of Article I is hereby amended by adding
the words "for construction of the provisions of Part II of the Plan" after the
words "meanings given below."
Section 4
---------
A new Section 1.46A is hereby added to the Plan immediately
following Section 1.46, to read as follows:
"1.46A PART II OF THE PLAN: The portion of the
Combined Plan that consists of The Hamilton Beach/Proctor-
Silex, Inc. Profit Sharing Retirement Plan."
NYMAIN Doc: 92294.1
VOL402CL Doc. 137969.1
<PAGE> 3
3
Section 5
---------
Section 1.50 of the Plan is hereby deleted in its entirety and
the following substituted therefor:
"The pension plan known as the Combined Defined
Benefit Plan for NACCO Industries, Inc. and Its Subsidiaries,
as the same may be amended or restated from time to time."
Section 6
---------
Sections 15.1, 15.2 and 16.1(a) of the Plan, as amended by
Amendment No. 1 thereof (which incorrectly referred to Section 15.3 instead of
16.1(a)), are each hereby further amended by adding the phrase "its Board of
Directors or" after the phrase "by action of" each time it appears therein. In
addition, Sections 15.2 and 16.1(a) of the Plan are each hereby amended by
adding the words "an officer of" after the words "executed by".
Executed this 31st day of December, 1994.
HAMILTON BEACH/PROCTOR-SILEX, INC.
By: Charles A. Bittenbender
-----------------------
Title: Assistant Secretary
--------------------
NYMAIN Doc: 92294.1
VOL402CL Doc. 137969.1
<PAGE> 1
Exhibit 10(xxvii)
AMENDMENT NO. 6
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. 6 to the North American Coal Corporation Salaried Employees
Pension Plan (As Amended and Restated as of January 1, 1989) as heretofore
amended ("Plan 005"). The purpose of this Amendment is (a) to provide for the
merger into Plan 005 of the NACCO Materials Handling Group, Inc. Cash Balance
Plan for Berea Shop Employees, the NACCO Materials Handling Group, Inc. Cash
Balance Plan for Sulligent Shop Employees, the NACCO Materials Handling Group,
Inc. Cash Balance Plan for Salaried Employees, and The Hamilton
Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan, effective December
31, 1994, and (b) to amend certain other provisions. After the merger, the
merged plan shall be known as the Combined Defined Benefit Plan for NACCO
Industries, Inc. and Its Subsidiaries (the "Combined Plan"). The provisions
of this Amendment shall be effective as of the dates indicated below. Words
and phrases used herein with initial capital letters which are defined in the
Plan are used herein as so defined.
Section 1
---------
The Preamble to Plan 005 as amended by Amendment No. 2 thereto
is hereby further amended by adding the following new provisions at the end
thereof:
VOL402CL Doc: 137966.1
<PAGE> 2
2
Effective December 31, 1994, the NACCO Materials
Handling Group, Inc. Cash Balance Plan for Berea Shop
Employees (the "Berea Plan"), the NACCO Materials Handling
Group, Inc. Cash Balance Plan for Sulligent Shop Employees
(the "Sulligent Plan"), the NACCO Materials Handling Group,
Inc. Cash Balance Plan for Salaried Employees (the "Salaried
Plan") and The Hamilton Beach/Proctor-Silex, Inc. Profit
Sharing Plan (the "PSRP") were merged into Plan 005.
Effective December 31, 1994, the name of Plan 005 was
changed to the Combined Defined Benefit Plan for NACCO
Industries, Inc. and Its Subsidiaries (the "Combined Plan").
Effective December 31, 1994, the Combined Plan shall
be comprised of the following Parts:
1. Part I, which contains Articles I through
XVII and Exhibits thereto, is Plan 005 as in
effect immediately prior to the merger and
this Amendment;
2. Part II, which contains Articles I through
XIX and Exhibits thereto, is the PSRP as in
effect immediately prior to the merger;
3. Part III, which contains Articles I through
XIX and Exhibits thereto, is the NACCO
Materials Handling Group, Inc. Cash Balance
Plan which is comprised of three separate
portions: (i) the Berea Plan, (ii) the
Sulligent Plan, and (iii) the Salaried Plan,
as each such portion was in effect
immediately prior to the merger.
The provisions of each Part as described above shall
apply only to that Part and not to any other Part of the
Combined Plan. The provisions of each Part shall remain
controlling as to the group of Employees covered under such
Part immediately prior to the merger, as described in the
Instrument of Merger. In addition, each Part of the Combined
Plan shall be administered separately and in the same manner
as immediately prior to the date of merger.
Section 2
---------
Effective December 31, 1994, Plan 005 is hereby amended in its
entirety by adding the words "Part I of" prior to the words "the Plan" each
time such words appear throughout Plan 005.
VOL402CL Doc: 137966.1
<PAGE> 3
3
In addition, all references to Sections of the Plan throughout Plan 005 are
hereby amended to refer to Sections of Part I of the Plan.
Section 3
---------
Effective December 31, 1994, Section 1.01 of Plan 005 is
hereby amended by adding the words "for construction of the provisions of Part
I of the Plan" after the words "respective meanings".
Section 4
---------
Effective December 31, 1994, a new Section 1.43A is hereby
added to Plan 005 immediately following Section 1.43A, to read as follows:
"1.43A PART I OF THE PLAN: The portion of the
Combined Plan which consists of The North American Coal
Corporation Salaried Employees Pension Plan (As Amended and
Restated as of January 1, 1989), and any Exhibits or
Amendments thereto.
Section 5
---------
Effective December 31, 1994, Section 1.49 of Plan 005 is
hereby amended in its entirety to read as follows:
"The pension plan known as the Combined Defined
Benefit Plan for NACCO Industries, Inc. and Its Subsidiaries,
as the same may be amended or restated from time to time.
VOL402CL Doc: 137966.1
<PAGE> 4
4
Section 6
---------
Effective December 31, 1994, Section 2.01 of Plan 005 is
hereby amended by adding a new Section 2.01(c) thereto to read as follows:
"(c) (NACCO Industries, Inc. Employees). Any person
who was a participant in the Merged Plan on December 31, 1993
shall become a Participant herein as of January 1, 1994."
Section 7
---------
Effective December 31, 1994, Sections 14.02(a) and 15.01(a) of
the Plan 005 is hereby amended by inserting the phrase "an officer of" after
the phrase "executed by".
EXECUTED this 31st day of December, 1994.
THE NORTH AMERICAN COAL CORPORATION
By: Charles A. Bittenbender
-----------------------
Title: Assistant Secretary
--------------------
VOL402CL Doc: 137966.1
<PAGE> 1
Exhibit 10(xxviii)
INSTRUMENT OF MERGER, AMENDMENT AND
TRANSFER OF SPONSORSHIP
OF BENEFIT PLANS
--------------------
NACCO Industries, Inc. ("NACCO") and The North American Coal
Corporation ("North American Coal") hereby adopt this Instrument of Merger,
Amendment and Transfer of Sponsorship of Benefit Plans, taking the following
actions relating to The NACCO Industries, Inc. Supplemental Retirement Benefit
Plan (the "Supplemental Retirement Plan") and The NACCO Industries, Inc.
$200,000 Cap Plan (the "$200,000 Cap Plan") effective August 31, 1994.
I.
The $200,000 Cap Plan shall be merged into the Supplemental
Retirement Plan to form a single plan.
II.
Following the merger, the sponsorship of the
Supplemental Retirement Plan shall be transferred from NACCO to North American
Coal and the name of the Plan shall be changed to "The North American Coal
Corporation Supplemental Retirement Benefit Plan."
III.
The terms and conditions and all other provisions of the
Supplemental Retirement Plan shall continue to be expressed in the two separate
plan documents entitled The North American Coal Corporation Supplemental
Retirement Benefit Plan and The NACCO Industries, Inc. $200,000 Cap Plan,
until such time as such documents are amended or superceded.
IV.
Each participant in the $200,000 Cap Plan shall be entitled to
receive a benefit from the Supplemental Retirement Plan, if it were to
terminate immediately after the merger, at least equal to the benefit the
participant would have been entitled to receive from the $200,000 Cap Plan if
the $200,000 Cap Plan had terminated immediately before the merger.
VOL402CL Doc: 3936.1
<PAGE> 2
2
NACCO INDUSTRIES, INC.
Charles A Bittenbender
By: -------------------------------
Title: Vice President
Date: October 27, 1994
THE NORTH AMERICAN COAL CORPORATION
Thomas A. Koza
By: ------------------------------
Title: Vice President-Law
Administration
Date: October 25, 1994
VOL402CL Doc: 3936.1
<PAGE> 1
Exhibit 10(xxix)
AMENDMENT NO. 1
TO THE
HAMILTON BEACH/PROCTOR-SILEX, INC.
UNFUNDED BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1995)
---------------------------------------------------
Hamilton Beach/Proctor-Silex, Inc. hereby adopts this
Amendment No. 1 to the Hamilton Beach/Proctor-Silex, Inc. Unfunded Benefit Plan
(the "Plan"). The provisions of this Amendment shall be effective as of
January 1, 1995. Words and phrases used herein with initial capital letters
which are defined in the Plan are used herein as so defined.
Section 1
---------
Section 2.2 of the Plan is hereby amended in its entirety to
read as follows:
"SECTION 2.2. Adjusted ROE.
--------------------------
(a) For purposes of this Section, the following terms shall
have the following meanings:
(i) "NET INCOME (BEFORE EXTRAORDINARY ITEMS)" is defined as
consolidated net income, as defined by general accepted accounting principles
("GAAP"), for the Company for the subject year before extraordinary items, but
including any extraordinary items related to refinancings (net of tax);
(ii) "AMORTIZATION OF GOODWILL" is defined as the
consolidated amortization expense related to the intangible asset goodwill for
the Company for the subject year;
(iii) "WEIGHTED AVERAGE STOCKHOLDERS' EQUITY" is calculated
by adding the consolidated stockholders' equity for the Company, as defined by
GAAP, at the beginning of the subject year and the end of each month of the
subject year and dividing by thirteen;
(iv) "WEIGHTED AVERAGE ACCUMULATED AMORTIZATION OF GOODWILL"
is calculated by adding consolidated accumulated amortization of goodwill, as
defined by GAAP, at the beginning of the subject year and the end of each month
of the subject year and dividing by thirteen.
(b) "ADJUSTED ROE" shall mean the average return on equity of
the Company calculated for the applicable time period, based on A divided by
B, where:
VOL402CL Doc: 145317.1
1
<PAGE> 2
A = Net Income (before extraordinary items) + Amortization of
Goodwill; and
B = Weighted Average (Stockholders' Equity + Accumulated Amortization
of Goodwill).
Adjusted ROE shall be determined at least annually by the Company."
Section 2
---------
A new Section 2.12A is hereby added to the Plan, immediately
following Section 2.12, to read as follows:
"SECTION 2.12A. FIXED INCOME FUND shall mean the Stable Asset
Fund under the Savings Plan or any equivalent fixed income fund thereunder
which is designated by the NACCO Industries, Inc. Retirement Funds Investment
Committee as the successor to the Stable Asset Fund."
Section 3
---------
Article IV of the Plan is hereby amended in its entirety to
read as follows:
"ARTICLE IV
EARNINGS
--------
SECTION 4.1. FOR ACTIVE 401(K) EMPLOYEES.
(a) For purposes of determining the earnings to be credited
to a 401(k) Employee's Excess 401(k) Sub-Account, such Sub- Account shall be
divided into two additional Sub-Accounts, the "7% 401(k) Deferral Sub-Account"
and the "Additional 401(k) Deferral Sub-Account." The 7% 401(k) Deferral
Sub-Account shall contain Excess 401(k) Benefits attributable to amounts
deferred by a 401(k) Employee of up to 7% of his Compensation, plus any
earnings attributable thereto. The Additional 401(k) Deferral Sub-Account
shall contain the Excess 401(k) Benefits attributable to amounts deferred by a
401(k) Employee in excess of 7% of his Compensation, plus any earnings
attributable thereto.
(b) At the end of each calendar month during a Plan Year, the
7% 401(k) Deferral Sub-Account of each 401(k) Employee who is employed by an
Employer on December 31 of a Plan Year shall be credited with an amount
determined by multiplying such Participant's average 7% 401(k) Deferral
Sub-Account balance during such month by the blended rate earned during such
month by the Fixed Income Fund. Notwithstanding the foregoing, in the event
that the Adjusted ROE determined for such Plan Year exceeds the rate credited
to the Participant's 7% 401(k) Deferral Sub-Account under the preceding
sentence, the Participant's 7% 401(k)
VOL402CL Doc: 145317.1
2
<PAGE> 3
Deferral Sub-Account shall retroactively be credited with the difference
between (i) the amount determined under the preceding sentence, and (ii) the
amount determined by multiplying the Participant's average 7% 401(k) Deferral
Sub-Account balance during each month of such Plan Year by the Adjusted ROE
determined for such Plan Year, compounded monthly.
(c) At the end of each calendar month during a Plan Year, the
Additional 401(k) Deferral Sub-Account of each Participant who is employed by
an Employer on December 31 of such Year shall be credited with an amount
determined by multiplying such Participant's average Additional 401(k) Deferral
Sub-Account balance during such month by the blended rate earned during such
month by the Fixed Income Fund.
SECTION 4.2. FOR TERMINATED EMPLOYEES. The Sub-Account of a
Participant who has terminated employment with the Controlled Group shall be
credited with earnings as described in Section 4.1, as modified by this Section
4.2, until each Sub-Account has been distributed in full. The Adjusted ROE
calculation described in the second sentence of Section 4.1(b) shall be made
during the month in which the Participant terminates employment and shall be
based on the year-to-date Adjusted ROE for the month ending prior to the date
the Participant terminated employment, as calculated by the Company. For any
subsequent month, the Adjusted ROE calculation described in the second sentence
of Section 4.1(b) shall not apply. The Fixed Income Fund calculation described
in the first sentence of Section 4.1(b) and in Section 4.1(c) for the month in
which the Participant receives a distribution from his Sub-Account shall be
based on the blended rate earned during the preceding month by the Fixed Income
Fund.
SECTION 4.3. CHANGES IN EARNINGS ASSUMPTIONS. The Committee
(as defined in Section 9.5) may change the earnings rate credited on Accounts
hereunder at any time upon at least 30 days advance notice to Participants."
Executed this 15th day of March, 1995.
HAMILTON BEACH/PROCTOR-SILEX, INC.
By: Charles A. Bittenbender
--------------------------
Title: Assistant Secretary
VOL402CL Doc: 145317.1
3
<PAGE> 1
Exhibit 10(xxx)
AMENDMENT NO. 3
TO THE
NORTH AMERICAN COAL CORPORATION
DEFERRED COMPENSATION PLAN FOR
MANAGEMENT EMPLOYEES
-------------------------------
The North American Coal Corporation hereby adopts this
Amendment No. 3 to The North American Coal Corporation Deferred Compensation
Plan for Management Employees (the "Plan"), effective as of January 1, 1995.
Words used herein with initial capital letters which are defined in the Plan
shall be used herein as so defined.
SECTION 1
---------
Paragraph 9(b) of the Plan is hereby amended in its entirety
to read as follows:
"(b) Notwithstanding the provisions of subparagraph (a)
above, the Company, in its absolute discretion exercised in good faith, may
accelerate the rate of distribution provided for in subparagraph (a) above,
only in the case of an "Unforeseeable Emergency." For this purpose, an
Unforeseeable Emergency is an event which results (or will result) in severe
financial hardship to the Participant (or his Beneficiary) as a consequence of
unexpected illness or accident or loss of the Participant's (or Beneficiary's)
property due to casualty or other similar extraordinary or unforeseen
circumstances out of the control of the Participant (or Beneficiary), as
determined by and in the sole discretion of the Board of Directors of the
Company or the Nominating, Organization and Compensation Committee of the Board
of Directors of the Company. Payments of amounts because of an Unforeseeable
Emergency shall be permitted only to the extent reasonably necessary to satisfy
the emergency need."
Section 2
---------
Effective December 31, 1994, the Employees of NACCO
Industries, Inc. ("NACCO") discontinued participation in the Plan and the
liabilities of NACCO to these former Participants in the Plan were transferred
from the Plan to the NACCO Materials Handling Group, Inc. Unfunded Benefit
Plan.
VOL402CL Doc: 7753.1
<PAGE> 2
2
Section 3
---------
Section 16 of the Plan is hereby amended in its entirety to
read as follows:
"16. AMENDMENT OR TERMINATION OF THE PLAN.
-------------------------------------
(a) The Plan may be amended prospectively at any time, and
from time to time, at the sole discretion of the Board or the Nominating,
Organization and Compensation Committee of the Board (the "Committee");
provided, however, that no such Amendment may adversely affect any
Participant's Account as of the date of such amendment, without the prior
written consent of such Participant.
(b) The Board and/or the Committee, in its sole discretion,
may terminate this Plan at any time and for any reason whatsoever, except that
no such termination may adversely affect any Participant's Account as of the
date of such termination, without the prior written consent of the Participant.
(c) Any such amendment or termination shall be expressed in a
written instrument executed by an officer of the Company on the order of the
Board or the Committee and shall become effective as of the date specified in
such instrument or, if no such date is specified, on the date of its execution.
(d) In the event of an amendment or termination, the amounts
theretofore credited to the Account of each Participant, and all subsequent
additions to such Account to reflect earnings provided in Paragraph 8 for the
period prior to the payment of the Account at the time or times provided in
Paragraphs 9 and 10 (as such Paragraphs existed prior to such termination or
amendment) shall be distributed at the time or times provided in Paragraphs 9
or 10 (as such Paragraphs existed prior to any such termination or amendment).
Notwithstanding the foregoing, the Board and/or the Committee may make any
change in the Plan that, under all the circumstances, is beneficial and
equitable to the Participants and is consistent with the spirit and purposes of
the Plan.
VOL402CL Doc: 7753.1
<PAGE> 3
3
(e) Notwithstanding the foregoing, in the event the Board has
adopted a plan of liquidation or dissolution of the Company, other than a plan
of reorganization, the Plan shall be automatically terminated and all amounts
credited to the Participants' Accounts shall be immediately payable
notwithstanding any other provisions contained herein."
Executed this 15th day of March, 1995.
---- ------
THE NORTH AMERICAN COAL CORPORATION
By: Thomas A. Koza
---------------------
Title: Vice President
VOL402CL Doc: 7753.1
<PAGE> 1
Exhibit 10(xxxi)
AMENDMENT NO. 4
TO THE
NORTH AMERICAN COAL CORPORATION DEFERRED COMPENSATION PLAN
FOR MANAGEMENT EMPLOYEES
The North American Coal Corporation hereby adopts this Amendment No. 4
to The North American Coal Deferred Compensation Plan for Management Employees
(the "Plan"). The provisions of this Amendment shall be effective April 1,
1995. Words and phrases used herein with initial capital letters which are
defined in the Plan are used herein as so defined.
Section 1
---------
Paragraph 8 of the Plan is hereby amended in its entirety to read as
follows:
"8. EARNINGS.
--------
(a) DEFINITIONS. For purposes of this Section, the following terms
shall have the following meanings:
(i) "NET INCOME (BEFORE EXTRAORDINARY ITEMS)" is defined as
consolidated net income, as defined by general accepted accounting principles
("GAAP"), for NACCO Industries, Inc. and its subsidiaries for the subject year
before extraordinary items, but including any extraordinary items related to
refinancings (net of tax);
(ii) "AMORTIZATION OF GOODWILL" is defined as the consolidated
amortization expense related to the intangible asset goodwill for NACCO
Industries, Inc. and its subsidiaries for the subject year;
(iii) "WEIGHTED AVERAGE STOCKHOLDERS' EQUITY" is calculated by adding
the consolidated stockholders' equity for NACCO Industries, Inc., as defined by
GAAP, at the beginning of the subject year and the end of each month of the
subject year and dividing by thirteen;
(iv) "WEIGHTED AVERAGE ACCUMULATED AMORTIZATION OF GOODWILL" is
calculated by adding consolidated accumulated amortization of goodwill, as
defined by GAAP, at the beginning of the subject year and the end of each month
of the subject year and dividing by thirteen;
(v) "WEIGHTED AVERAGE UMWA ADJUSTMENT" is calculated by adding the
balance in the obligation to United Mine Workers of America Combined Benefit
Fund, net of tax, for NACCO Industries, Inc. at the beginning of the subject
year and the end of each month of the subject year and dividing by thirteen;
1
VOL402CL Doc. 145291.1
<PAGE> 2
(vi) "FIXED INCOME FUND" shall mean the Stable Asset Fund under the
Savings Plan or any equivalent fixed income fund under such Plan that is
designated by the NACCO Industries, Inc. Retirement Funds Investment Committee
as the successor to the Stable Asset Fund; and
(vii) "ADJUSTED ROE" shall mean the average return on equity of NACCO
Industries, Inc. calculated by NACCO Industries, Inc. for the applicable time
period, based on A divided by B, where:
A = Net Income (before extraordinary items) + Amortization
of Goodwill; and
B = Weighted Average (Stockholders' Equity + Accumulated
Amortization of Goodwill + UMWA Adjustment).
Adjusted ROE shall be determined at least annually by NACCO
Industries, Inc.
(b) FOR ACTIVE EMPLOYEES. At the end of each calendar month during a
calendar year, the Account of each Participant who is employed by an Employer
on December 31 of such year shall be credited with an amount determined by
multiplying such Participant's average Account balance during such month by the
blended rate earned during such month by the Fixed Income Fund. Notwithstanding
the foregoing, in the event that the Adjusted ROE determined for such calendar
year exceeds the rate credited to the Participant's Account under the preceding
sentence, the Participant's Account shall retroactively be credited with the
difference between (i) the amount determined under the preceding sentence, and
(ii) the amount determined by multiplying the Participant's average Account
balance during each month of such year by the Adjusted ROE determined for such
year, compounded monthly.
(c) FOR TERMINATED EMPLOYEES. The Account of a Participant who has
terminated employment with the Controlled Group shall be credited with earnings
as described in subparagraph (b), as modified by this subparagraph (c), until
his Account has been distributed in full in accordance with Paragraphs (9) and
(10). The Adjusted ROE calculation described in the second sentence of
subparagraph (b) shall be made during the month in which the Participant
terminates employment and shall be based on the year-to-date Adjusted ROE for
the month ending prior to the date the Participant terminated employment, as
calculated by NACCO Industries, Inc. For any subsequent month, the Adjusted
ROE calculation described in the second sentence of subparagraph (b) shall not
apply. The Fixed Income Fund calculation described in the first sentence of
subparagraph (b) for the month in which the Participant receives a distribution
from his Account shall be based on the blended rate earned during the preceding
month by the Fixed Income Fund.
2
VOLA02CL Doc. 145291.1
<PAGE> 3
(d) CHANGES IN EARNINGS ASSUMPTIONS. The Nominating, Organization and
Compensation Committee of the Board of Directors of the Company (the
"Committee") or the Board of Directors of the Company (the "Board") may change
the earnings rate credited on Accounts hereunder at any time upon at least 30
days advance notice to Participants."
Executed this 15th day of March 1995.
------ -------
THE NORTH AMERICAN COAL CORPORATION
By: /s/ Thomas A. Koza
--------------------------------------------
Title: Vice President
3
VOLA02CL Doc. 145291.1
<PAGE> 1
Exhibit 10(xxxii)
AMENDMENT NO. 5A
TO
THE NORTH AMERICAN COAL CORPORATION
SALARIED EMPLOYEES PENSION PLAN
-------------------------------
The North American Coal Corporation hereby adopts this
Amendment No. 5A to the plan document entitled "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 the dates specified herein. Words and phrases used herein with
initial capital letters which are defined in the Plan are used herein as so
defined.
Section 1
---------
Effective June 1, 1995, (1) Section 1.07 of the Plan is
deleted in its entirety, and (2) new Sections 1.07 and 1.07A are hereby added
to the Plan to read as follows:
"1.07 APPLICABLE INTEREST RATE: The annual rate of interest
on 30-year Treasury securities for the month before the date of distribution
(which interest rate is the 'applicable interest rate' under Section
417(e)(3)(A)(ii)(II) of the Code as amended by the Retirement Protection Act of
1994). To the extent permitted by applicable Treasury Regulations, January 1
of the Plan Year in which the distribution occurs shall be treated as the date
of distribution.
1.07A APPLICABLE MORTALITY TABLE: The 1983 Group Annuity
Mortality Table, assuming a fixed blend of 50% of the male mortality rates and
50% of the female mortality rates (or such other mortality table which is
prescribed by the Secretary of the Treasury for this purpose under Section
417(e)(3)(A)(ii)(I) of the Code)."
Section 2
---------
Effective June 1, 1995, Section 5.04(c) of the Plan is hereby
amended in its entirety to read as follows:
"(c) If the amount of benefit is less than $30 a month, the
benefit shall be paid quarterly, half yearly or yearly in advance as the
Participant or Beneficiary directs. Notwithstanding the foregoing, if the
present value of any benefit hereunder, at any time after the Participant's
termination of employment or death and prior to the Pension Commencement Date,
is $3,500 or less (and such benefit never exceeded $3,500 at the time of any
prior distribution), such benefit shall be paid to the recipient as soon as
<PAGE> 2
2
administratively practicable after such termination or death. Such present
value shall be calculated using the Applicable Interest Rate and the Applicable
Mortality Table."
Section 3
---------
Effective as of January 1, 1993, Section 5.04(d) of the Plan
is hereby amended in its entirety to read as follows:
"(d) (1) The provisions of this Section shall be effective as
of January 1, 1993.
(2) The Committee shall provide a Participant or Beneficiary
with an application form (which shall contain a general description of
the forms of benefit available under the Plan) and such other
information required to be provided under Section 402(f) of the Code
no less than 30 days and no more than 90 days before a distribution is
to be made.
(3) Notwithstanding any provision of the Plan to the
contrary, if a Participant or Spouse is eligible to receive a
distribution from the Plan that constitutes an "eligible rollover
distribution" (as defined in Paragraph (6) of this Subsection) and the
Participant or Spouse elects to have all or a portion of such
distribution paid directly to an "eligible retirement plan" (as
defined in Paragraph (5) of this Subsection) and specifies the
eligible retirement plan to which the distribution is to be paid, such
distribution (or portion thereof) shall be made in the form of a
direct rollover to the eligible retirement plan so specified. A
direct rollover is a payment made by the Plan to the eligible
retirement plan so specified for the benefit of the Participant or
Spouse. Unless otherwise specifically provided herein, for purposes
of this Subsection, the term "Spouse" shall include a former Spouse
who is an alternate payee under the terms of a qualified domestic
relations order.
(4) The Committee shall prescribe reasonable procedures for
the elections to be made pursuant to this Section.
(5) For purposes of this Subsection, the term "eligible
retirement plan" means an individual retirement account or annuity
under Code Section 408, a defined contribution plan that satisfies the
requirements of Code Section 401(a) and accepts rollovers, an annuity
plan under Code Section 403(a) or any other type of plan that is
included within the definition of "eligible retirement plan" under
Section 401(a)(31)(D) of the Code; provided that with
<PAGE> 3
3
respect to a spouse (but not a former spouse who is an alternate
payee) who receives a distribution after a Participant's death, an
"eligible retirement plan" shall mean only an individual retirement
account or annuity under Code Section 408.
(6) For purposes of this Subsection, the term "eligible
rollover distribution" shall mean any distribution of all or any
portion of the balance to the credit of the distributee from an
employees' trust described in Code Section 401(a) which is exempt from
tax under Code Section 501(a), except (i) distributions which are not
expected to exceed $200 in any given Plan Year, (ii) any distribution
that is one of a series of substantially equal periodic payments (not
less frequently than annually) over the life (or life expectancy) of
the distributee or the joint lives (or life expectancies) of the
distributee and a designated beneficiary or for a period of 10 or more
years, (iii) any distribution to the extent required under Code
Section 401(a)(9), (iv) the portion of any distribution that is not
includible in gross income, and (v) such other amounts specified in
Treasury regulations and rulings, notices or announcements issued
under Section 402(c) of the Code.
(7) The provisions of this Subsection are intended to comply
with the provisions of Section 401(a)(31) of the Code and shall be
interpreted in accordance with such section and Treasury regulations
and rulings thereunder."
Section 4
---------
Effective June 1, 1995, Section 11.09(c) of the Plan is hereby
amended in its entirety to read as follows:
"(c) Notwithstanding the foregoing provisions of this Section:
(1) If the benefit under the Plan is payable in any form
other than the life annuity form, or if the Employees
contribute to the Plan or make rollover contributions or plan
to plan transfers, for purposes of determining whether the
limitations described in Subsection (b) of this Section have
been satisfied, such benefit shall be adjusted, in accordance
with rules determined by the Commissioner of the Internal
Revenue under Treasury Regulation Section 1.415-3(c), so that
such benefit is equivalent to an annual benefit. For purposes
of this part (1), any ancillary benefit which is not directly
related to retirement income benefits shall not be taken into
account, and
<PAGE> 4
4
that portion of any joint and survivor annuity which
constitutes a qualified joint and survivor annuity (as defined
in Section 417(b) of the Code) shall not be taken into
account.
(2) If the benefit under the Plan begins before the Social
Security Retirement Age, for purposes of determining whether
the limitation set forth in Paragraph (1) of Subsection (b)
has been satisfied, such benefit shall be reduced in
accordance with the following rules:
(X) if an Employee's Social Security Retirement Age is
age 65, the dollar limitation for benefits commencing
on or after age 62 is reduced by 5/9 of 1% for each
month by which benefits commence before the month in
which the Employee attains age 65;
(Y) if an Employee's Social Security Retirement Age is
greater than age 65, the dollar limitation for
benefits commencing at or after age 62 is reduced by
5/9 of 1% for each of the first 36 months and 5/12 of
1% for each of the additional months (up to 24
months) by which benefits commence before the month
of the Employee's Social Security Retirement Age;
(Z) the dollar limitation for benefits commencing prior
to age 62 is the Actuarial Equivalent of the
limitation for benefits commencing at age 62.
(3) If the benefit begins after the Social Security
Retirement Age, for purposes of determining whether the
limitation set forth in Paragraph (1) of Subsection (b) of
this Section has been satisfied, such limitation shall be
increased, in accordance with regulations prescribed by the
Secretary of the Treasury pursuant to Code Section
415(b)(2)(E), so that such limitation (as so increased) equals
an annual benefit (beginning when such benefit begins under
the Plan) which is Actuarial Equivalent to an annual benefit
equal to the limitation set forth in such Paragraph (1)
beginning at the Social Security Retirement Age.
(4) The interest rate assumption used to determine Actuarial
Equivalence for purposes of (1) or (2) above shall be the
greater of the Applicable Interest Rate or the rate specified
in Exhibit A. Adjustments under (1), (2) and (3) above shall
be made through the use of the Applicable Mortality Table."
<PAGE> 5
5
EXECUTED this 15th day of March, 1995.
----
THE NORTH AMERICAN COAL CORPORATION
By: Charles A. Bittenbender
--------------------------
Title: Assistant Secretary
149475.1
<PAGE> 1
Exhibit 10(xxxiii)
AMENDMENT NO. 2A
TO THE
HAMILTON BEACH/PROCTOR-SILEX, INC.
PROFIT SHARING RETIREMENT PLAN
------------------------------
Hamilton Beach/Proctor-Silex, Inc. hereby adopts this
Amendment No. 2A to the plan document entitled "The Hamilton
Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan (As Amended and
Restated Effective as of January 1, 1992)" (the "Plan"). The provisions of
this Amendment shall be effective as of the dates specified herein. Words and
phrases used herein with initial capital letters which are defined in the Plan
are used herein as so defined.
Section 1
---------
Effective June 1, 1995, Sections 1.A. and 1.B. of Exhibit A to
the Plan are hereby amended in its entirety to read as follows:
"A. CASH BALANCE CONVERSION. The annual rate of interest on
30-year Treasury securities for the month before the date of
distribution (which interest rate is the 'applicable interest
rate' under Section 417(e)(3)(A)(ii)(II) of the Code as
amended by the Retirement Protection Act of 1994). To the
extent permitted by applicable Treasury Regulations, January 1
of the Plan Year in which the distribution occurs shall be
treated as the date of distribution.
B. LUMP SUM DISTRIBUTIONS. The annual rate of interest on
30-year Treasury securities for the month before the date of
distribution (which interest rate is the 'applicable interest
rate' under Section 417(e)(3)(A)(ii)(II) of the Code as
amended by the Retirement Protection Act of 1994). To the
extent permitted by applicable Treasury Regulations, January 1
of the Plan Year in which the distribution occurs shall be
treated as the date of distribution."
Section 2
---------
Effective June 1, 1995, Section 2 of Exhibit A to the Plan is
hereby amended by renumbering Subsection B as C and by adding the following new
Subsection B thereto:
<PAGE> 2
2
"B. CASH BALANCE CONVERSIONS AND LUMP SUM DISTRIBUTIONS. The 1983
Group Annuity Mortality Table, assuming a fixed blend of 50%
of the male mortality rates and 50% of the female mortality
rates (or such other mortality table (which is prescribed by
the Secretary of the Treasury for this purpose under Section
417(e)(3)(A)(ii)(I) of the Code)."
Section 3
---------
Effective as of January 1, 1992, Section 1.40 of the Plan is
hereby amended in its entirety to read as follows:
"1.40 MINIMUM BENEFIT: For a Participant who was previously
covered under the Prior Plans listed in Section 1.52(c) or 1.52(d) hereof, the
Participant's Prior Plan Benefit. For a Participant who was previously covered
under the Prior Plans listed in Section 1.52(a) or 1.52(b) hereof, the
Participant's Accrued Benefit on the earlier of his Qualifying Termination or
December 31, 1994, determined in accordance with the terms of the Prior Plan as
in effect on December 31, 1991, expressed as a monthly benefit in the form of a
Single Life Annuity (without ancillary benefits) commencing on the
Participant's Normal Retirement Date."
Section 4
---------
Effective as of December 31, 1994, a new Section 5.2A is
hereby added to the Plan, immediately following Section 5.2, to read as
follows:
"5.2A ADDITIONAL CASH BALANCE CREDIT FOR THE 1994 PLAN YEAR.
For the Plan Year commencing on January 1, 1994, the following Cash Balance
Credit shall be added to the Cash Balance Account of each Participant who
completed an Hour of Service during the 1994 Plan Year. The additional Cash
Balance Credit shall be in addition to the Cash Balance Credit under Section
5.2 hereof and shall be equal to the sum of (a) plus (b), where (a) is the
Participant's Compensation for the 1994 Plan Year multiplied by a percentage
factor and (b) is the Participant's Compensation for the 1994 Plan Year which
exceeds the Social Security Wage Base for the 1994 Plan Year multiplied by a
percentage factor, both of which are determined in accordance with the
following schedule:
<PAGE> 3
3
<TABLE>
<CAPTION>
Percentage of
Percentage Compensation Exceeding
Age Compensation Social Security Wage Base
--- ------------ -------------------------
<S> <C> <C>
0-34 .40% .40%
35-39 .47% .47%
40-44 .57% .57%
45-49 .70% .70%
50-54 .87% .87%
55-59 1.07% .37%
60+ 1.27% 0%
</TABLE>
For purposes of determining the age to be used in the above calculation, age
shall mean the Participant's age in full years on his birthday in the 1994 Plan
Year."
Section 5
---------
Effective as of January 1, 1993, the last two sentences of
Section 7.2(d) of the Plan are hereby deleted in their entirety.
Section 6
---------
Effective as of January 1, 1993, a new Section 7.2(e) is
hereby added to the Plan, immediately following Section 7.2(d), to read as
follows:
"(e) (1) The provisions of this Section shall be effective as
of January 1, 1993.
(2) The Administrative Committee shall provide a Participant
or Beneficiary with an application form (which shall contain a general
description of the forms of benefit available under the Plan) and such
other information required to be provided under Section 402(f) of the
Code no less than 30 days and no more than 90 days before a
distribution is to be made.
(3) Notwithstanding any provision of the Plan to the
contrary, if a Participant or Spouse is eligible to receive a
distribution from the Plan that constitutes an "eligible rollover
distribution" (as defined in Paragraph (6) of this Subsection) and the
Participant or Spouse elects to have all or a portion of such
distribution paid directly to an "eligible retirement plan" (as
defined in Paragraph (5) of this Subsection) and specifies the
eligible retirement plan to which the distribution is to be paid, such
distribution (or portion thereof) shall be made in the form of a
direct
<PAGE> 4
4
rollover to the eligible retirement plan so specified. A direct
rollover is a payment made by the Plan to the eligible retirement plan
so specified for the benefit of the Participant or Spouse. Unless
otherwise specifically provided herein, for purposes of this
Subsection, the term "Spouse" shall include a former Spouse who is an
alternate payee under the terms of a qualified domestic relations
order.
(4) The Committee shall prescribe reasonable procedures for
the elections to be made pursuant to this Section.
(5) For purposes of this Subsection, the term "eligible
retirement plan" means an individual retirement account or annuity
under Code Section 408, a defined contribution plan that satisfies the
requirements of Code Section 401(a) and accepts rollovers, an annuity
plan under Code Section 403(a) or any other type of plan that is
included within the definition of "eligible retirement plan" under
Section 401(a)(31)(D) of the Code; provided that with respect to a
spouse (but not a former spouse who is an alternate payee) who
receives a distribution after a Participant's death, an "eligible
retirement plan" shall mean only an individual retirement account or
annuity under Code Section 408.
(6) For purposes of this Subsection, the term "eligible
rollover distribution" shall mean any distribution of all or any
portion of the balance to the credit of the distributee from an
employees' trust described in Code Section 401(a) which is exempt from
tax under Code Section 501(a), except (i) distributions which are not
expected to exceed $200 in any given Plan Year, (ii) any distribution
that is one of a series of substantially equal periodic payments (not
less frequently than annually) over the life (or life expectancy) of
the distributee or the joint lives (or life expectancies) of the
distributee and a designated beneficiary or for a period of 10 or more
years, (iii) any distribution to the extent required under Code
Section 401(a)(9), (iv) the portion of any distribution that is not
includible in gross income, and (v) such other amounts specified in
Treasury regulations and rulings, notices or announcements issued
under Section 402(c) of the Code.
(7) The provisions of this Subsection are intended to comply
with the provisions of Section 401(a)(31) of the Code and shall be
interpreted in accordance with such section and Treasury regulations
and rulings thereunder."
<PAGE> 5
5
Section 7
---------
Effective June 1, 1995, Section 12.10(c) of the Plan is hereby
amended in its entirety to read as follows:
"(c) Notwithstanding the foregoing provisions of this
Section:
(1) If the benefit under the Plan is payable in any form
other than the life annuity form, or if the Employees
contribute to the Plan or make rollover contributions or plan
to plan transfers, for purposes of determining whether the
limitations described in Subsection (b) of this Section have
been satisfied, such benefit shall be adjusted, in accordance
with rules determined by the Commissioner of the Internal
Revenue under Treasury Regulation Section 1.415-3(c), so that
such benefit is equivalent to an annual benefit. For purposes
of this part (1), any ancillary benefit which is not directly
related to retirement income benefits shall not be taken into
account, and that portion of any joint and survivor annuity
which constitutes a qualified joint and survivor annuity (as
defined in Section 417(b) of the Code) shall not be taken into
account.
(2) If the benefit under the Plan begins before the Social
Security Retirement Age, for purposes of determining whether
the limitation set forth in Paragraph (1) of Subsection (b) of
this Section has been satisfied, such benefit shall be reduced
in accordance with the following rules:
(X) if an Employee's Social Security Retirement Age is
age 65, the dollar limitation for benefits commencing
on or after age 62 is reduced by 5/9 of 1% for each
month by which benefits commence before the month in
which the Employee attains age 65;
(Y) if an Employee's Social Security Retirement Age is
greater than age 65, the dollar limitation for
benefits commencing at or after age 62 is reduced by
5/9 of 1% for each of the first 36 months and 5/12 of
1% for each of the additional months (up to 24
months) by which benefits commence before the month
of the Employee's Social Security Retirement Age;
<PAGE> 6
6
(Z) the dollar limitation for benefits commencing prior
to age 62 is the Actuarial Equivalent of the
limitation for benefits commencing at age 62.
(3) If the benefit begins after the Social Security
Retirement Age, for purposes of determining whether the
limitation set forth in Paragraph (1) of Subsection (b) of
this Section has been satisfied, such limitation shall be
increased, in accordance with regulations prescribed by the
Secretary of the Treasury pursuant to Code Section
415(b)(2)(E), so that such limitation (as so increased) equals
an annual benefit (beginning when such benefit begins under
the Plan) which is Actuarial Equivalent to an annual benefit
equal to the limitation set forth in such Paragraph (1)
beginning at the Social Security Retirement Age.
(4) The interest rate assumption used to determine Actuarial
Equivalence for purposes of (1) or (2) above shall be the
greater of the rate specified in Section 1.B. of Exhibit A or
the rate specified in section 1.C. of Exhibit A. Adjustments
under (1), (2) and (3) above shall be made through the use of
the mortality table specified in Section 2.B. of Exhibit A."
EXECUTED this 15th day of March, 1995.
----
HAMILTON BEACH/PROCTOR-SILEX, INC.
By: Charles A. Bittenbender
--------------------------
Title: Assistant Secretary
149475.1
<PAGE> 1
Exhibit 10(xxxiv)
AMENDMENT NO. 3
TO
THE NORTH AMERICAN COAL CORPORATION RETIREMENT SAVINGS PLAN
-----------------------------------------------------------
The North American Coal Corporation hereby adopts this
Amendment No. 3 to The North American Coal Corporation Retirement Savings Plan
(As Amended and Restated Effective as of January 1 1993) (the "Plan"),
effective as of the dates indicated herein. Words and phrases used herein with
initial capital letters which are defined in the Plan are used herein as so
defined.
Section 1
---------
Effective December 1, 1994, the Preamble to the Plan is hereby
amended by adding the following sentence to the end thereof:
"Effective December 1, 1994, the Total Account balance as of
November 30, 1994 under the Plan, of each Participant who was
employed by NACCO Industries, Inc. on that date was
transferred to the NACCO Materials Handling Group, Inc. Profit
Sharing Plan."
Section 2
---------
Effective as of January 1, 1993, Section 1.1(8)(a) of the Plan
is hereby amended by adding the word "such" after the phrase "or which would
have been subject to such withholding if the Employee had not signed".
Section 3
---------
Effective December 1, 1994, the third sentence of Section
1.1(16) of the Plan is hereby deleted and the following sentence is substituted
therefor:
"Effective December 1, 1994, NACCO Industries, Inc. ceased to be an
Employer and the Employers under the Plan are the Company, North
American Coal Royalty Company, Bellaire Corporation, The Coteau
Properties Company, The Falkirk Mining Company, and the Sabine Mining
Company."
Section 4
---------
Effective December 1, 1994, the second sentence of Section 4.1
of the Plan, as added by Amendment No. 2 to the Plan,
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<PAGE> 2
2
(relating to Matching Contributions for Employees of NACCO Industries, Inc.) is
hereby deleted.
Section 5
---------
Effective December 1, 1994, Section 4.3(2)(b) of the Plan, as
amended by Amendment No. 2 to the Plan, is hereby further amended by deleting
the phrase "(2-1/2% of Compensation for Participants who are Employees of NACCO
Industries, Inc. effective for 1994 and subsequent Plan Years)".
Section 6
---------
Effective as of October 1, 1994, Section 14.2 of the Plan is
hereby amended by adding the phrase "an officer of the Company on the order of"
before the phrase "the Nominating, Organization and Compensation Committee".
EXECUTED this 30th day of November, 1994, to be effective as
of the dates indicated above.
THE NORTH AMERICAN COAL CORPORATION
By: Charles A. Bittenbender
--------------------------
Title: Assistant Secretary
--------------------
VOL402CL Doc: 119893.1
<PAGE> 1
Exhibit 10(lxviii)
HAMILTON BEACH/PROCTOR-SILEX, INC.
Annual Incentive Compensation Plan
GENERAL
-------
Hamilton Beach/Proctor-Silex, Inc. (the "Company") has established an Annual
Incentive Compensation Plan (the "Plan") as part of a competitive compensation
program for the Officers and key management employees of the Company and its
Subsidiaries.
PLAN OBJECTIVE
--------------
The Company desires to attract and retain talented employees to enable the
Company to meet its financial and business objectives. The objective of the
Plan is to provide an opportunity to earn annual incentive compensation to
those employees whose performance has a significant impact on the Company's
short-term and long-term profitability.
ADMINISTRATION AND PARTICIPATION
--------------------------------
The Plan is administered by the Nominating, Organization and Compensation
Committee of the Board of Directors of the Company (the "Committee"). The
Committee:
a. May amend, modify, or discontinue the Plan.
b. Will approve participation in the Plan. Generally, participants
will include all employee in Hay Salary Job Grades 14 and above.
Employees who voluntarily terminate their employment prior to
year-end are not entitled to an award and employees joining the
Company after August of any year will not be entitied to an
award. However, the Committee may select any employee who has
contributed significantly to the Company's profitability to
participate in the Plan and receive an annual incentive
compensation award.
c. Will determine the annual performance criteria which generates
the incentive compensation pool.
d. Will determine the total amount of both the target and actual
annual incentive compensation pool.
e. Will approve individual incentive compensation awards to Officers
and employees above Hay Salary Job Grade 17.
f. May delegate to the Chief Executive Officer of the Company the
power to approve incentive compensation awards to employees in
and below Hay Salary Job Grade 17.
g. May consider at the end of each year the award of a discretionary
bonus amount to non-participants as an addition to the regular
incentive
<PAGE> 2
compensation pool on a special one-time basis to motivate
individuals not eligible to participate in the Plan.
h. May approve a pro rata incentive compensation award for
participants in the Plan whose employment is terminated (1) due
to death, disability, retirement or facility closure; such award
to be determined pursuant to the provisions of subparagraphs e.
and f. above or (2) under other circumstances at the
recommendation of the Chief Executive Officer of the Company.
DETERMINATION OF CORPORATE INCENTIVE COMPENSATION POOL
------------------------------------------------------
Each participant in the Plan will have an individual target incentive
compensation percentage which is determined by the participant's Salary Job
Grade. This percentage is multiplied by the midpoint of the participant's
Salary Job Grade to determine his individual target incentive compensation
award. The total of the target incentive compensation awards of all
participants equals the target corporate incentive compensation pool (the
"Target Pool"). The Target Pool is approved each year by the Committee.
The actual corporate incentive compensation pool (the "Actual Pool") is
determined at the end of each year based on the Company's actual performance
against specific criteria established in the beginning of the year by the
Committee. The Target Pool is adjusted upwards or downwards by corporate
performance adjustment factor to determine the Actual Pool. In no event will
the Actual Pool exceed 150% of the Target Pool, except to the extent that the
Committee elects to increase the Actual Pool by up to 10%, as described below.
It is the intent of the Plan that the Actual Pool, as determined above, will be
the final total corporate incentive compensation pool. However, the Committee,
in its sole discretion, may increase or decrease by up to 10% the Actual Pool
or may approve an incentive compensation pool where thee would normally be no
pool due to Company performance which is below the criteria established for the
year.
The Actual and Target Pools exclude commission personnel as salespersons,
regional general manager and manufacturing representatives.
DETERMINATION OF INDIVIDUAL INCENTIVE COMPENSATION AWARDS
---------------------------------------------------------
Salary Job Grades and the corresponding target incentive percentage for each
participant in the Plan will be established at the beginning of each year
and approved by the Committee. Individual target incentive compensation will
then be adjusted by the appropriate pool factor. Such adjusted individual
incentive compensation will then be further modified based on a participant's
performance as compared to his individual goals for the year. The total of all
individual incentive compensation awards must not exceed the Actual Pool for
the year.
PERFORMANCE TARGETS - See Plan Summary.
-------------------
<PAGE> 1
EXHIBIT (lxxi)
THE NORTH AMERICAN COAL CORPORATION
SALARIED EMPLOYEES PENSION PLAN
(As Amended and Restated as of January 1, 1989)
-----------------------------------------------
The North American Coal Corporation (Western Operations) Pension Plan for
Salaried Employees (the "Plan") was adopted effective September 1, 1986 by
Bellaire Corporation (formerly known as The North American Coal Corporation, an
Ohio corporation) when it was spun off from The NACCO Industries, Inc. Pension
Plan for Salaried Employees (as amended and restated September 1, 1986).
Effective January 1, 1989, The North American Coal Corporation, a Delaware
corporation (formerly known as Nortex Mining Company) became the sponsor of the
Plan. Effective on the date of the adoption of this Amendment and Restatement,
the name of the Plan is changed to "The North American Coal Corporation
Salaried Employees Pension Plan".
ARTICLE I - DEFINITIONS AND CONSTRUCTION
----------------------------------------
1.01 DEFINITIONS. The following terms when used herein with initial
capital letters shall have the following respective meanings unless the context
clearly indicates otherwise. Terms used herein in reference to the Prior Plan
or any Other Group Plan shall have the meanings assigned to such terms by such
plans.
1.02 ACCRUED BENEFIT: The amount of Pension to which a Participant is
entitled under the terms of the Plan on any date (determined without
application of any vesting requirements) expressed as a monthly benefit payable
in the form of a single
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<PAGE> 2
2
life annuity (without ancillary benefits) commencing on the Participant's
Normal Retirement Date.
1.03 ACTUARIAL EQUIVALENT: A benefit of equivalent actuarial value when
computed on the basis of the actuarial factors, assumptions and procedures
recommended by the Actuary and adopted for such purpose by the Committee. To
the extent not otherwise provided in various Sections of the Plan, such factors
and assumptions are set forth in Exhibit A attached to the Plan.
1.04 ACTUARY: An individual actuary who is an enrolled actuary under the
provisions of Section 3042 of ERISA or a firm of actuaries, at least one of
whose members is such an enrolled actuary, which individual or firm is selected
from time to time by the Committee and is, at the time involved, acting as
actuary for the Plan.
1.05 ADMINISTRATOR OR PLAN ADMINISTRATOR: The Company.
1.06 AGE: A person's "Age" at any time shall be his age on the then most
recent anniversary of his date of birth, except for the purpose of making
actuarial calculations and determinations. The anniversary of the date of
birth of a person born on February 29 shall, in years other than leap years, be
deemed to be February 28.
1.07 APPLICABLE INTEREST RATE: Effective as of January 1, 1987, the
interest rate or rates which would be used by the Pension Benefit Guaranty
Corporation for purposes of determining the present value of a lump sum
distribution on plan termination.
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<PAGE> 3
3
1.08 AUTOMATIC 50% SPOUSE OPTION: The normal form of benefit payment
provided in Section 4.09(b).
1.09 BENEFICIARY: The person or persons designated by the Participant as
his Beneficiary or Joint Pensioner under the Plan. Such a designation may be
made, revoked, or changed (without, except as provided below, the consent of
any Beneficiary), only by an instrument (in form acceptable to the Committee)
signed by the Participant and filed with the Secretary of the Committee before
the Participant's death. A designation by a married Participant of a person
other than his Spouse as his Beneficiary shall not take effect unless the
Participant's Spouse consents in writing thereto. A Spouse's consent required
by this Section shall (a) be signed by the Spouse, (b) acknowledge the effect
of such consent, (c) be witnessed by a Plan representative or notary public,
(d) be effective only with respect to such Spouse, and (e) designate a
Beneficiary which cannot be changed without spousal consent. Such consent is
not required if it is established to the satisfaction of a Plan representative
that the consent cannot be obtained because there is no Spouse, because the
Spouse cannot be located, or because of such other circumstances as the
Secretary of the Treasury may prescribe by regulations. In the absence of an
effective designation of a Beneficiary, a Participant's Beneficiary shall be
his estate. A Spouse or any other person receiving or eligible to receive a
benefit hereunder shall also be considered a Beneficiary.
1.10 BENEFIT SERVICE: (a) (General Rule for Employment After 1975) A
Participant shall receive Benefit
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<PAGE> 4
4
Service for the period of his employment as a Covered Employee under this Plan
on and after September 1, 1986. Calculation of Benefit Service shall begin
with a Participant's most recent date of hire as a Covered Employee under the
Plan and shall end with his next following Severance from Service. In
addition, a Participant shall receive the Benefit Service he was credited with
under the Prior Plan on and after January 1, 1976.
(b) (Previous Periods of Employment After 1975) If a Participant's last
Severance from Service occurs on or after January 1, 1985, Benefit Service
shall also include any prior periods of employment as a Covered Employee under
the Prior Plan or as a Covered Employee under the Plan (regardless of whether
there has been a break in the Participant's employment by the Controlled Group)
that end subsequent to December 31, 1975; provided, however, that Benefit
Service for purposes of this Subsection shall not include the period of a
Participant's service, if any, before January 1, 1976.
(c) (Employment Before 1976) A Participant shall also receive Benefit
Service for the period of his continuous service, if any, before the earlier of
January 1, 1976 and his Normal Retirement Date, in accordance with the
definition of "NACCO Service" in Amendment A to the January 1, 1976 restatement
of the Prior Plan.
(d) (Employment as Non-Covered Employee) (i) A Participant who was covered
under a UMW Negotiated Plan shall also receive Benefit Service equal to any
period of his employment by a Controlled Group Member which counts for
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<PAGE> 5
5
benefit purposes under the UMW Negotiated Plan and which is subsequent to
December 31, 1975 and prior to the commencement of the period of employment for
which the Participant receives Benefit Service under Subsection (a).
(ii) A Participant who was covered under an Other Group Plan shall also
receive Benefit Service equal to any period of his employment by a Controlled
Group Member which counts as Benefit Service under the Other Group Plan and
which is subsequent to August 31, 1986 and prior to the commencement of the
period of employment for which the Participant receives Benefit Service under
Subsection (a); provided, however, that a Participant shall not receive
Benefit Service under this paragraph (ii) for any period of employment for
which he receives Benefit Service under Subsection (b) or paragraph (i) of this
Subsection.
(e) (Disability) A Covered Employee having at least one year of Vesting
Service as a salaried Employee who is disabled and receiving benefits under a
Disability Income Plan shall also receive Benefit Service for the period for
which he receives (or is entitled to receive) such Disability Income Plan
benefits.
(f) (Additional Restrictions) For purposes of this Section, a Covered
Employee shall be considered to be employed and shall, therefore, receive
Benefit Service only while he is receiving Compensation or is on approved leave
of absence, temporary lay-off or suspension; provided, however, that the
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<PAGE> 6
6
period during which a former Employee receives severance pay shall not be
credited as Benefit Service.
(g) (Military Service) To the extent required by applicable law, an
Employee shall receive Benefit Service (and/or Vesting Service) for periods of
military service in the armed forces of the United States during which he had
re-employment rights under the Vietnam Era Veterans Readjustment Assistance Act
of 1974 (or under any prior or subsequent similar law), based on an assumed
continuation of his customary employment during such period, provided that he
was an Employee at the time he entered such military service and that he
returned to employment as an Employee while he retained such re-employment
rights.
(h) (Rounding) When an Employee's Benefit Service or Vesting Service is
computed, it shall be computed in full years and full months; the remaining
days that are not included in such computation shall be ignored. Where more
than one period of employment are to be aggregated in order to determine an
Employee's Benefit Service or Vesting Service, his Benefit Service and Vesting
Service from all periods shall be aggregated and rounded following such
aggregation. For purposes of such computations, a full year shall consist of
365 days and a full month shall consist of 30 days.
(i) (Previous Exclusions) For the purposes of this Section, an Employee
who becomes a Participant on January 1, 1988 as a result of the elimination of
the Plan provision prohibiting participation by persons hired after Age 60
shall be deemed to have been a Participant for that period of his employment
with
VOL402CL Doc: 154112.1
<PAGE> 7
7
the Employers which would otherwise have been counted as Benefit Service
pursuant to the provisions of this Section or which otherwise would have been
counted as Benefit Service under the applicable provisions of the Plan prior to
this Amendment and Restatement. With respect to a Participant who attained Age
65 prior to January 1, 1988 and who performs an Hour of Service for the
Controlled Group on or after January 1, 1988, all of the Participant's periods
of employment with the Employers after his attainment of Age 65 during which he
was a Covered Employee shall be counted as Benefit Service in accordance with
the provisions of this Section.
(j) (Non-duplication) Notwithstanding any other provision hereof, no
Participant shall receive Benefit Service credit hereunder more than once for
the same period of employment.
1.10A AM 2.
1.11 CODE: The Internal Revenue Code of 1986, as amended.
1.12 COMMITTEE OR PENSION COMMITTEE: The Pension Committee provided for in
Article VII hereof.
1.13 COMPANY: The North American Coal Corporation, a Delaware corporation
(known prior to June 30, 1988, as Nortex Mining Company). Prior to January 1,
1989, the Company was Bellaire Corporation (known prior to June 30, 1988 as
The North American Coal Corporation, an Ohio corporation).
1.14 COMPENSATION: (a) All remuneration paid to an Employee by a
Controlled Group Member, or which would have been
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<PAGE> 8
8
paid to such Employee had he not signed a compensation deferral agreement which
satisfies the requirements of Sections 401(k), 125 or 129 of the Code, which is
subject to withholding for federal income tax purposes, or which would have
been subject to such withholding if the Employee had not signed such a
compensation deferral agreement, excluding, however, relocation allowances,
tuition refunds, foreign service premiums, severance payments (including any
salary continuation in lieu of severance payments) and other similar fringe
benefits or perquisites.
(b) Notwithstanding the foregoing, Compensation in excess of the limitation
contained in Section 401(a)(17) of the Code shall not be taken into account for
any purpose under the Plan. For purposes of the preceding sentence, in the
case of a Highly Compensated Employee who is a 5-percent owner (as defined in
Section 416(i)(1) of the Code) or one of the ten most Highly Compensated
Employees, (i) such Highly Compensated Employee and his family members (as such
term is hereinafter defined) shall be treated as a single Employee and the
Compensation of each such family member shall be aggregated with the
Compensation of such Highly Compensated Employee, and (ii) the limitation on
Compensation shall be allocated among such Highly Compensated Employee and his
family members in proportion to each individual's Compensation. For purposes
of this Section, the term "family members" shall mean an Employee's Spouse and
lineal descendants who have not attained age 19 before the close of the year in
question.
VOL402CL Doc: 154112.1
<PAGE> 9
9
1.15 CONTROLLED GROUP: The Company and any and all other corporations,
trades and/or businesses, the Employees of which together with Employees of the
Company are required by Section 414 of the Code to be treated as if they were
employed by a single employer.
1.16 CONTROLLED GROUP MEMBER: Each corporation or unincorporated trade or
business that is or was a member of the Controlled Group, but only during such
period as it is or was a member of the Controlled Group.
1.17 COVERED COMPENSATION: For a Plan Year, the average (without indexing)
of the contribution and benefit bases (the "taxable wage bases") in effect
under Section 230 of the Social Security Act for the 35 calendar years ending
with the year an individual attains (or will attain) his Social Security
Retirement Age. In determining a Participant's Covered Compensation for a Plan
Year, the taxable wage base for the current Plan Year and any subsequent Plan
Year shall be assumed to be the same as the taxable wage base in effect as of
the beginning of the Plan Year for which the determination is being made. A
Participant's Covered Compensation for a Plan Year after the 35-year period
described in this Section is the Participant's Covered Compensation for the
Plan Year during which the Participant attained the Social Security Retirement
Age. A Participant's Covered Compensation for a Plan Year before the 35-year
period described in this Section is the taxable wage base in effect as of the
beginning of the Plan Year. A Participant's Covered Compensation shall be
automatically adjusted for each
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<PAGE> 10
10
Plan Year, provided that no such adjustment shall have the effect of decreasing
any Participant's Accrued Benefit because of increases in Social Security
benefits. For purposes of any Section of the Plan where the context requires a
monthly amount, a Participant's Covered Compensation as determined under this
Subsection shall be divided by 12.
1.18 COVERED EMPLOYEE: Effective September 1, 1986, a salaried Employee of
Bellaire Corporation (known prior to June 30, 1988, as The North American Coal
Corporation, an Ohio corporation) who was associated with the Indian Head Mine
or the Western or Southwestern Divisions of Bellaire Corporation, or a salaried
employee of North American Consultants, Inc. ("NACI"). The salaried Employees
of Bellaire Corporation who were associated with its Western or Southwestern
Divisions became Employees of The North American Coal Corporation (known prior
to June 30, 1988 as Nortex Mining Company) or of North American Coal Royalty
Company ("NAC Royalty") (known prior to July 18, 1988 as Nortex Royalty
Company) in 1988. The North American Coal Corporation (a Delaware corporation)
and NAC Royalty adopted the Plan as of June 30, 1988, and such Employees
continued to be Covered Employees. Effective December 23, 1988, the salaried
Employees of The North American Coal Corporation (a Delaware corporation) who
were associated with the Dallas Accounting Division ceased to be Covered
Employees under the Plan, and became covered employees under the NACCO
Industries, Inc. Pension Plan for Salaried Employees (Plan No. 006). In
addition, effective December 23, 1988, the salaried employees of NACI, the
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<PAGE> 11
11
salaried Employees of Bellaire Corporation associated with the Indian Head
Mine, the salaried Employees of NAC Royalty associated with the North Dakota
Land Division, and the salaried Employees of the Bismarck Office Division of
The North American Coal Corporation (a Delaware corporation) ceased to be
Covered Employees under the Plan, and became covered employees under the North
American Coal Corporation Pension Plan for Salaried Employees (Plan No. 004)
(the "Eastern Plan"). Effective December 31, 1989, the Eastern Plan was
terminated. Effective January 1, 1989, Bellaire Corporation, NAC Royalty and
NACI adopted the Plan. Accordingly, effective January 1, 1989, a Covered
Employee is a salaried Employee of The Falkirk Mining Company, The Coteau
Properties Company, The Sabine Mining Company, Bellaire Corporation, North
American Coal Royalty Company or North American Consultants, Inc., or a
salaried Employee of The North American Coal Corporation (a Delaware
corporation) associated with the Bismarck Office Division or the Dallas
Accounting Division, or a salaried Employee of any other Employer.
Notwithstanding the preceding, no Employee who is employed in an Excluded
Bargaining Unit or is a leased employee (as defined in Section 1.24) shall be a
Covered Employee.
1.19 DEFERRED VESTED PENSION: A Pension payable pursuant to Sections 3.05
and 4.04.
1.20 DISABILITY INCOME PLAN: A written plan or program adopted by a
Controlled Group Member which is designed to provide, for salaried Employees
who become disabled while covered by such Plan or program, periodic income
during periods while
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<PAGE> 12
12
they are not at work for a Controlled Group Member due to disability.
1.21 EARLIEST RETIREMENT DATE: The first date on which a Participant is
entitled to receive a Pension hereunder, or would be entitled to receive a
Pension hereunder if he terminated employment with the Controlled Group or
retired on or before such date, assuming, in the case of a deceased
Participant, that he had not died.
1.22 EARLY RETIREMENT DATE: The Early Retirement Date described in Section
3.04.
1.23 EARLY RETIREMENT PENSION: A Pension payable pursuant to Sections 3.04
and 4.03.
1.24 EMPLOYEE: An employee of a Controlled Group Member (including a
salaried officer, but not a director as such) and, to the extent required by
Section 414(n) of the Code, any person who is a "leased employee" of a
Controlled Group Member. A "leased employee" means any person who, pursuant to
an agreement between a Controlled Group Member and any other person ("leasing
organization"), has performed services for the Controlled Group Member on a
substantially full time basis for a period of at least one year, and such
services are of a type historically performed by employees in the business
field of the Controlled Group Member. Contributions or benefits provided a
leased employee by the leasing organization which are attributable to services
performed for a Controlled Group Member will be treated as provided by the
Controlled Group Member. A leased employee will not be considered an Employee
of a
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<PAGE> 13
13
Controlled Group Member, however, if (A) leased employees do not constitute
more than 20 percent of the Controlled Group Member's nonhighly compensated
work force (within the meaning of Section 414(n)(5)(C)(ii) of the Code) and (B)
such leased employee is covered by a money purchase pension plan maintained by
the leasing organization that provides (i) a nonintegrated employer
contribution rate of at least 10 percent of Compensation, but including amount
contributed pursuant to a salary reduction agreement which are excludable from
the leased employee's gross income under Section 125, Section 402(a)(8),
Section 402(h) or Section 403(b) of the Code, (ii) immediate participation and
(iii) full and immediate vesting.
1.25 EMPLOYER: Any person which adopts the Plan pursuant to Article XIII
hereof. As of September 1, 1986, the Employers were Bellaire Corporation
(known prior to June 30, 1988 as The North American Coal Corporation, an Ohio
corporation) and North American Consultants, Inc. ("NACI"). As of June 30,
1988, The North American Coal Corporation, a Delaware corporation, (known prior
to June 30, 1988 as Nortex Mining Company) and North American Coal Royalty
Company ("NAC Royalty") (known prior to July 18, 1988 as Nortex Royalty
Company) became Employers. As of December 23, 1988, NACI and NAC Royalty
ceased to be Employers. As of December 30, 1988, The Falkirk Mining Company
("Falkirk"), The Coteau Properties Company ("Coteau") and The Sabine Mining
Company ("Sabine") became Employers. As of December 31, 1988, Bellaire
Corporation ceased to be an Employer. Due to the termination of The North
American Coal Corporation Pension Plan
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<PAGE> 14
14
for Salaried Employees, Bellaire Corporation, NACI and NAC Royalty adopted the
Plan effective as of January 1, 1989. Accordingly, as of January 1, 1989, the
Employers are Falkirk, Coteau, Sabine, The North American Coal Corporation (a
Delaware corporation), Bellaire Corporation, NACI and NAC Royalty. In the case
of any person which adopts the Plan and which (a) ceases to exist, (b) ceases
to be a member of the Controlled Group or (c) withdraws or is eliminated from
the Plan, it shall not thereafter be an Employer.
1.26 ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
1.27 EXCLUDED BARGAINING UNIT: A collective bargaining unit which includes
Employees and which is recognized by a Controlled Group Member or certified by
the National Labor Relations Board (or a successor thereto), unless there is a
written agreement, between the Employer of the Employees in such collective
bargaining unit and the collective bargaining representative for such
Employees, that such Employees shall be eligible to participate in the Plan.
1.28 FIDUCIARY: Any person who (a) exercises any discretionary authority
or discretionary control respecting management of the Plan or exercises any
authority or control respecting management or disposition of its assets, (b)
renders investment advice for a fee or other compensation, direct or indirect,
with respect to any money or other property of the Plan, or has any authority
or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in
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the administration of the Plan or the Trust Fund. The term "Fiduciary" shall
also include any person to whom a Named Fiduciary delegates any fiduciary
responsibilities in accordance with the provisions hereof or of the Trust
Agreement as long as such delegation is in effect.
1.29 FINAL AVERAGE MONTHLY PAY: The average rate of monthly pay determined
by dividing by 60 the total amount of a Participant's Compensation during the
five consecutive calendar years during which his aggregate Compensation was the
highest, selected from the ten consecutive calendar years ending with the
calendar year in which occurs his Qualifying Termination. However, (a) any
calendar year during which the Participant did not have any Compensation for
working shall be ignored for all purposes in calculating his Final Average
Monthly Pay, (b) in case of a Participant whose Qualifying Termination occurs
after reaching Age 55, his Final Average Monthly Pay shall not be less than
what it would have been if his Qualifying Termination had occurred at any
earlier time after reaching Age 55, (c) if in such ten consecutive calendar
years the Participant did not have Compensation during any five consecutive
calendar years, his Final Average Monthly Pay shall not be less than the amount
determined by dividing his Compensation during such ten years by the number of
months (rounding to two decimal places any fraction of a month) in which he had
Compensation during those ten years, (d) a Participant shall be deemed to have
had no Compensation in a calendar year if he received or was entitled to
receive Disability Income Plan benefits in such year which were at a rate
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that was less than his regular salary rate, but only if so deeming him to have
received no Compensation will result in a larger Final Average Monthly Pay than
will result from counting the Participant's Compensation during such year, and
(e) in the case of a Participant who ceases to be a Covered Employee but
remains an Employee and is not thereafter re-employed as a Covered Employee,
such Participant's Final Average Monthly Pay shall be calculated as if he had a
Qualifying Termination on the date he ceased to be a Covered Employee.
1.30 HIGHLY COMPENSATED EMPLOYEE: (a) For a particular Plan Year, any
Employee (i) who, during the preceding Plan Year, (A) was at any time a
5-percent owner (as such term is defined in Section 416(i)(1) of the Code),
(B) received compensation from the Controlled Group in excess of $75,000 (as
such amount may be adjusted for increases in the cost of living pursuant to
regulations prescribed by the Secretary of the Treasury), (C) received
compensation from the Controlled Group in excess of $50,000 (as such amount
may be adjusted for increases in the cost of living pursuant to regulations
prescribed by the Secretary of the Treasury) and was in the top-paid group of
Employees for such Year, or (D)
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was at any time an officer (limited to no more than 50 Employees or, if
lesser, the greater of 3 Employees or 10 percent (10%) of the Employees) and
received compensation, effective January 1, 1987, greater than 50 percent
(50%) of the amount in effect under Section 415(b)(1)(A) of the Code for such
Year, or (ii) who during the particular Plan Year (but not the prior Plan
Year) (A) was at any time a 5-percent owner (as such term is defined in
Section 416(i)(l) of the Code) or (B) was included in the foregoing clauses
(B), (C) or (D) and was in the group consisting of the 100 Employees paid the
greatest compensation by the Controlled Group during such Plan Year.
(b) "Highly Compensated Employee" shall include a former Employee whose
employment with the Controlled Group terminated prior to the Plan Year and
who was a Highly Compensated Employee for the Plan Year in which his
employment terminated or for any Plan Year ending on or after his 55th
birthday.
(c) For the purposes of this Section, (i) the term "compensation" shall
mean the sum of an Employee's compensation as described in Section
11.09(a)(2) (subject to the limitations described in Section 1.14(b)), and
the Employee's before-tax contributions (if any) under any qualified
retirement plan sponsored by a Controlled Group Member, and (ii) the term
"top-paid group of Employees" shall mean that group of Employees of the
Controlled Group consisting of the top 20 percent (20%) of such Employees
when ranked on the basis of compensation paid by the Controlled Group during
the Plan Year.
1.31 HOUR OF SERVICE: An hour for which an Employee is paid, or entitled
to payment, by a Controlled Group Member for the performance of duties as an
Employee.
1.31A Amend 4
1.32 INVESTMENT COMMITTEE: The Investment Committee provided for in
Article VIII hereof.
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1.33 JOINT PENSIONER: See Section 4.10(a)(1). The term "Joint Pensioner"
shall include the Spouse of a Participant whose Pension is payable as provided
in Section 4.09(b).
1.34 LATE RETIREMENT DATE. The Late Retirement Date described in Section
3.03.
1.35 LATE RETIREMENT PENSION. A Pension payable pursuant to Sections 3.03
and 4.02.
1.35A Am 2
1.36 MINIMUM BENEFIT: The Participant's Accrued Benefit as of December 31,
1988 determined in accordance with the benefit formula contained in Exhibit B
attached hereto.
1.37 NAMED FIDUCIARIES: See Section 10.02.
1.38 NORMAL RETIREMENT AGE: Age 65; provided that, effective as of January
1, 1988, with respect to a Participant who commences participation in the Plan
within 5 years before his attainment of Age 65, "Normal Retirement Age" shall
mean the fifth anniversary of the date such Participant commenced
participation in the Plan.
1.39 NORMAL RETIREMENT DATE: The first day of the month coinciding with or
next following the day the Participant attains his Normal Retirement Age.
1.40 NORMAL RETIREMENT PENSION: A Pension payable pursuant to Sections
3.02 and 4.01.
1.41 OTHER GROUP PLAN: The NACCO Industries, Inc. Pension Plan for
Salaried Employees (including both the plan in existence on September 1, 1986
that was terminated effective November 30, 1986 and the new plan with the same
name that was
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established effective December 1, 1986) and The North American Coal Corporation
Pension Plan for Salaried Employees, which was terminated effective December
31, 1989.
1.42 OTHER PENSION: A pension, annuity or similar benefit provided under
any Other Pension Plan, including the amount of the Participant's vested
accrued benefit which has been annuitized, settled or discharged under (a) The
NACCO Industries, Inc. Pension Plan for Salaried Employees on November 30,
1986, the termination date of such plan, or (b) The North American Coal
Corporation Pension Plan for Salaried Employees on December 31, 1989, the
termination date of such Plan, expressed as a monthly benefit in the form of a
straight-life annuity (with no ancillary benefits) commencing on his Normal
Retirement Date.
1.43 OTHER PENSION PLAN: Any UMW Negotiated Plan and any Other Group Plan.
1.44 PARTICIPANT: A Pensioner or a person who satisfies the participation
requirements set forth in Sections 2.01 and 2.02 and continues to be a
Participant pursuant to Section 2.03 hereof.
1.45 PENSION: A Normal Retirement Pension, a Late Retirement Pension, an
Early Retirement Pension or a Deferred Vested Pension.
1.46 PENSION COMMENCEMENT DATE: Effective as of January 1, 1985, the first
day of the first period for which an amount is payable under the Plan as an
annuity or in any other form, regardless of whether such amount is in fact paid
on such day. An individual whose Pension is suspended pursuant to Section
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4.02(b) or Section 5.02 shall be treated as not having reached his Pension
Commencement Date, and the Pension Commencement Date for any amount which later
becomes payable shall be determined pursuant to the preceding sentence. An
individual who commences to receive a Pension pursuant to Section 11.12 shall
be treated as having reached his Pension Commencement Date.
1.47 PENSIONER: A former Employee whose employment with the Controlled
Group shall have terminated under such conditions that he is eligible for or
receiving a Pension under the Plan, even though such Pension has not begun and
will not begin until the arrival of the time at which such Pension becomes
payable.
1.48 PERIOD OF SEVERANCE: The period of time beginning with a Severance
from Service of an Employee and ending on the day on which he next thereafter
performs an Hour of Service.
1.49 PLAN: The pension plan known as The North American Coal Corporation
Salaried Employees Pension Plan, as the same may hereafter be amended or
restated from time to time. The Plan was spun off from The NACCO Industries,
Inc. Pension Plan for Salaried Employees effective September 1, 1986.
1.50 PLAN YEAR: A calendar year.
1.51 PRIOR PLAN: The NACCO Industries, Inc. Pension Plan for Salaried
Employees, as in effect from time to time prior to September 1, 1986.
Effective September 1, 1986, the Plan was spun off from the Prior Plan.
1.52 PUBLIC PENSION: See Section 4.05(b).
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1.53 QUALIFYING TERMINATION: The Retirement of a Participant, the
termination of a Participant's employment with the Controlled Group that makes
him eligible for a Deferred Vested Pension, or the death of a Participant if as
a result of his death a benefit is payable hereunder for his Beneficiary.
1.54 RETIREMENT: The termination of a Participant's employment with the
Controlled Group which makes him eligible for a Normal, Late or Early
Retirement Pension. The term "Retire" when referring to a Participant refers
to the fact that his employment with the Controlled Group is being or has been
terminated under conditions that constitute Retirement.
1.55 SEVERANCE FROM SERVICE: An Employee incurs a Severance from Service
on the earlier of (a) the day on which he ceases to be an Employee by reason of
his resignation, discharge, permanent layoff, Retirement or death or (b) the
first annual anniversary of the first day of a period in which he remains
absent from service with the Controlled Group (with or without pay) for any
reason other than his resignation, permanent layoff, Retirement, discharge or
death (such as vacation, holiday, sickness, suspension, disability (other than
disability entitling the Employee to benefits under a Disability Income Plan),
leave of absence or temporary layoff). Notwithstanding the foregoing
provisions of this Section, an Employee who is absent from service beyond the
first annual anniversary of the first date of absence
(i) by reason of the pregnancy of the individual,
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(ii) by reason of the birth of a child of the individual,
(iii) by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or
(iv) for purposes of caring for such child for a period beginning
immediately following such birth or placement,
shall not have a "Severance from Service" until the second annual anniversary
of the first date of such absence. The period between the first and second
anniversaries of the first date of absence from work shall not count, however,
as Benefit Service, Vesting Service, or a Period of Severance.
1.56 SOCIAL SECURITY RETIREMENT AGE: The age used as the retirement age
under Section 216(1) of the Social Security Act, as amended, except that such
Section shall be applied (a) without regard to the age increase factor, and (b)
as if the early retirement age under Section 216(1)(2) of the Social Security
Act were 62.
1.57 SPOUSE: The person to whom an Employee is legally married at the time
in question; provided, however, that a former Spouse may be treated as a Spouse
or surviving Spouse to the extent required under a "qualified domestic
relations order" (as such term is defined by Section 414(p) of the Code).
1.58 TRUST: The Trust created by the Trust Agreement and known as The
North American Coal Corporation (Western Operations) Pension Trust for Salaried
Employees.
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1.59 TRUST AGREEMENT: The Agreement and Declaration of Trust dated as of
September 1, 1986, between the Company and Ameritrust Company National
Association as such Agreement and Declaration of Trust may be amended,
supplemented or restated from time to time, or any Agreement and Declaration of
Trust superseding the same.
1.60 TRUST FUND: The assets held in trust under the provisions of the Plan
and the Trust Agreement, without distinction as to principal or income.
1.61 TRUSTEE: Ameritrust Company National Association, or its successor or
successors in trust under the Trust Agreement.
1.62 UMW NEGOTIATED PLAN: Any plan or fund, established or maintained
pursuant to negotiations with the United Mine Workers of America or a successor
thereto or district or local thereof, which provides for pension, annuity or
similar benefits, provided a Controlled Group Member makes or has made
contributions to provide benefits under such plan or from such fund.
1.63 VESTING SERVICE: (a) An Employee shall receive Vesting Service for
the period of his Benefit Service. In addition, an Employee shall receive
Vesting Service for (i) periods of time not counted as Benefit Service that
would count as Benefit Service except for the fact that he is employed (A) by
an Employer in a capacity other than as a Covered Employee or (B) by a
non-Employer Controlled Group Member, or (ii) any Period of Severance which
commences by reason of a quit, discharge,
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permanent layoff or Retirement and which continues for less than one year;
provided, however, that no work, employment or time before an Employee attains
Age 18 shall be counted in determining his Vesting Service.
(b) Notwithstanding anything in the Plan to the contrary, employment with
and remuneration paid by The Warner Collieries Company and its Associated
Companies (as defined in Section 9.3 of the Plan is in effect on December 31,
1975 and as amended by Amendment No. 1 thereto) shall be considered as Vesting
Services as a salaried Employee and Compensation to the extent provided in said
Section 9.3 with respect to "service", "service as a full-time salaried
employee" and "credited compensation".
1.64 CONSTRUCTION OF DOCUMENTS: (a) Unless the context clearly otherwise
requires, masculine words wherever used herein or in the Trust Agreement shall
include feminine and neuter words and the singular shall include the plural
wherever appropriate.
(b) The words "herein", "hereof", "hereunder" and other words of similar
import in the Plan or the Trust Agreement refer to the entire Plan or the Trust
Agreement (as the case may be) rather than to the portion of the Plan or the
Trust Agreement in which they appear.
(c) Present tense verbs herein shall be construed as being both past tense
verbs and present tense verbs where it is apparent from the context of the
passage involved that as applied
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to some person the event or situation involved may have occurred in the past.
(d) Where headings have been supplied for portions of the Plan or of the
Trust Agreement (other than the headings to the defined terms in Sections 1.02
through 1.63) they have been supplied for convenience only and are not to be
taken as limiting or extending the meaning of any of such portions of such
documents.
(e) As used herein, the phrase benefits "with respect to" a Participant,
Pensioner or Employee means benefits under the Plan for such person and his
Beneficiaries.
(f) A number of the provisions hereof and of the Trust Agreement are
designed to contain provisions required or contemplated by certain federal laws
and/or regulations thereunder. Each such provision herein and in the Trust
Agreement is intended to have the meaning required or contemplated by such
provision of such law or regulations and shall be construed in accordance with
valid regulations and valid published governmental rulings and interpretations
of such provision. In applying such provisions hereof or of the Trust
Agreement, each Fiduciary may rely (and shall be protected in relying) on any
determination or ruling made by any agency of the United States Government that
has authority to issue regulations, rulings, interpretations or determinations
with respect to the federal law thus involved.
(g) Except to the extent federal law controls, the Plan shall be governed,
construed and administered according to
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the laws of the State of Ohio. All persons accepting or claiming benefits
under the Plan or Trust Agreement shall be bound by and deemed to consent to
their provisions.
(h) Wherever the word "person" appears in the Plan, it shall refer to both
natural and legal persons.
(i) This Amendment and Restatement of the Plan shall constitute an
amendment, restatement and continuation of the Plan. This Amendment and
Restatement is generally effective as of January 1, 1989. During the period
from January 1, 1989 until the date of the adoption of this Amendment and
Restatement, benefits under the Plan were frozen for all Participants as a
result of the adoption of the Model Amendments No. 1, 2 and 3 from IRS Notice
88-131. The adoption of this Amendment and Restatement retroactively
extinguishes the freeze on benefit accruals to January 1, 1989.
Certain provisions of this Amendment and Restatement of the Plan are
effective as of some other date. The provisions of this Amendment and
Restatement of the Plan which are effective prior to January 1, 1989 shall be
deemed to amend the corresponding provisions of the Plan as in effect before
this Amendment and Restatement and all amendments thereto. Events occurring
before the applicable effective date of any provision of this Amendment and
Restatement of the Plan shall be governed by the applicable provision of the
Plan in effect on the date of the event.
(j) Nothing contained in this Amendment and Restatement of the Plan shall
reduce or have the effect of
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reducing the Accrued Benefit (within the meaning of Section 411(d)(6) of the
Code) of any Participant under the terms of the Plan as in effect before this
Amendment and Restatement. This Amendment and Restatement of the Plan shall be
interpreted and administered accordingly.
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ARTICLE II - BECOMING A PARTICIPANT AND TERMINATION OF PARTICIPATION
--------------------------------------------------------------------
2.01 COMMENCEMENT OF PARTICIPATION.
(a) (Participation as of January 1, 1989). Each Employee who was a
Participant in the Plan on January 1, 1989 shall continue to be a Participant
in the Plan as hereby restated, if he is a Covered Employee on January 1, 1989.
(b) (Participation After January 1, 1989) Any other Employee shall become
a Participant in the Plan on the day on which he becomes a Covered Employee.
2.02 EXCLUSIONS. An Employee may not become a Participant if he works for
an Employer primarily outside of the United States and he is not a citizen of
the United States.
2.03 TERMINATION OF PARTICIPATION. A Participant who is not a Pensioner
shall only cease to be a Participant when he ceases to be an Employee. Such a
former Participant shall again become a Participant as soon as he again becomes
a Covered Employee or becomes a Pensioner.
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ARTICLE III - ELIGIBILITY FOR PENSIONS
--------------------------------------
3.01 REQUIREMENTS FOR PENSION. An Employee or former Employee shall not be
eligible for a Pension under the Plan as hereby restated unless, in addition to
any other requirements set forth in the Plan, the termination of his employment
with the Employers occurs on or after January 1, 1989. The benefit, if any,
payable with respect to a former Employee whose employment with the Employers
terminated before January 1, 1989 (and who is not rehired by an Employer
thereafter) shall be determined by and paid in accordance with the terms and
provisions of the Plan as in effect at the date of such termination, except to
the extent that certain provisions of the Plan, as amended and restated hereby
as of January 1, 1989, apply to such individual as a result of applicable law
or to the extent that the context clearly requires the application of such
provision to such individual.
3.02 NORMAL RETIREMENT. A Participant whose employment with the Controlled
Group is terminated on his Normal Retirement Date shall be entitled to a Normal
Retirement Pension as provided in Section 4.01. A Participant's right to his
Normal Retirement Pension shall be nonforfeitable upon the attainment of his
Normal Retirement Age while he is an Employee.
3.03 LATE RETIREMENT. A Participant who postpones his Retirement to a date
subsequent to his Normal Retirement Date (his "Late Retirement Date") shall be
entitled to a Late Retirement Pension as provided in Section 4.02.
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3.04 EARLY RETIREMENT. A Participant having at least ten years of Vesting
Service as a salaried Employee whose employment with the Controlled Group is
terminated at a date at or after Age 55 but before his Normal Retirement Date
and while he is a salaried Employee (his "Early Retirement Date") shall be
eligible for an Early Retirement Pension as provided in Section 4.03.
3.05 DEFERRED VESTED TERMINATIONS. A Participant having at least five
years of Vesting Service whose employment with the Controlled Group is
terminated before he becomes eligible for any other Pension hereunder shall be
eligible for a Deferred Vested Pension as provided in Section 4.04.
3.06 DISABILITY. If a Covered Employee having at least one year of Vesting
Service as a salaried Employee becomes disabled and as a result thereof he
receives benefits under a Disability Income Plan, (a) he shall be credited with
Benefit and Vesting Service for the period provided in Section 1.10(e) and (b)
except as provided in Section 3.07, he shall for purposes of the Plan be deemed
to be a Covered Employee during the period for which he continues to receive
(or to be entitled to receive) such Disability Income Plan benefits.
3.07 SURVIVING SPOUSE PENSION. If a Participant having at least ten years
of Vesting Service as a salaried Employee and having attained Age 52 dies
before his Pension Commencement Date and while he is a Covered Employee, and if
he is survived by his Spouse to whom he has been legally married during the
entire year immediately preceding his death, such
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Spouse shall be eligible for a Surviving Spouse Pension as provided in Section
4.07. However, if such a Participant's death occurs while he is not in fact an
Employee but is deemed (pursuant to Section 3.06) to be a Covered Employee due
to the receipt of or entitlement to benefits under a Disability Income Plan,
such Spouse shall only be entitled to a Surviving Spouse Pension if such Spouse
was legally married to the Participant when he became so disabled as to be
entitled to such disability benefits.
3.08 PRE-RETIREMENT SPOUSE PENSION. (a) If a Participant having a
nonforfeitable right to a Pension hereunder dies before his Pension
Commencement Date and after having any service or paid leave after August 22,
1984 that is recognized hereunder, and if he is survived by his Spouse to whom
he has been legally married during the entire year immediately preceding his
death who is not eligible for the Surviving Spouse Pension, such Spouse shall
be eligible for a Pre-Retirement Spouse Pension as provided in Section 4.08.
(b) Any Participant (1) who had any service after December 31, 1975 that is
recognized hereunder, (2) to whom Subsection (a) of this Section would not
apply but for this Subsection, (3) who, when he terminated employment with the
Controlled Group, had at least ten years of Vesting Service, and (4) who was
alive, and whose Pension Commencement Date had not occurred, on July 19, 1985,
may elect, during the period beginning on July 19, 1985 and ending on the
earlier of the date of the Participant's Pension Commencement Date or the date
of
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his death, to have the rules of Subsection (a) of this Section apply to him.
If the Participant makes such an election, the Pension otherwise payable with
respect to him shall be reduced, to reflect the increased cost attributable to
having the pre-retirement survivor coverage for the period during which it was
in effect, on the basis of the actuarial factors, assumptions and procedures
set forth in Exhibit A. The Committee shall give participants described in
this Subsection notice of its provisions and the reduction described herein
shall not apply to the period between July 19, 1985 and the time such notice is
given.
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ARTICLE IV - PENSION AND DEATH BENEFITS
---------------------------------------
4.01 NORMAL RETIREMENT PENSION. The Normal Retirement Pension for a
Participant entitled to such a Pension shall be a Pension payable, except as
otherwise provided in the Plan, for the Participant's lifetime, in a monthly
amount equal to the greater of (a) the Participant's Minimum Benefit, or (b) A
plus B, multiplied by C, plus D ([(A+B) x C] + D) where:
A = 1.1% of the Participant's Final Average Monthly Pay not exceeding the
Participant's Covered Compensation;
B = 1.6% of the Participant's Final Average Monthly Pay in excess of the
Participant's Covered Compensation;
C = The Participant's number of years of Benefit Service not in excess of
30 years; and
D = 0.5% of the Participant's Final Average Monthly Pay, multiplied by the
Participant's number of years of Benefit Service in excess of 30
years.
Except as otherwise provided herein, such Pension shall begin on the first of
the month coincident with or following the Participant's Normal Retirement
Date.
4.02 LATE RETIREMENT PENSION. (a) The Late Retirement Pension for a
Participant entitled to such a Pension shall be determined in the same manner
as a Normal Retirement Pension but based on the Participant's Benefit Service,
Covered Compensation and Final Average Monthly Pay as of his Late Retirement
Date. Except as otherwise provided herein, such Pension shall begin on the
first day of the month coincident with or following the Participant's Late
Retirement Date.
(b) Notwithstanding Subsection (a) of this Section, a Participant's Late
Retirement Pension shall begin as of the
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first day of any month after his Normal Retirement Date and before his
Retirement (1) during which he is credited with less than 40 Hours of Service
(including, for this purpose, hours for which he is paid, or entitled to
payment, by a Controlled Group Member on account of the period of time during
which no duties are performed) or (2) during which he is credited with at least
40 Hours of Service (as so defined) and the Company has not given him the
notice required by 29 C.F.R. Section 2530.203-3(b)(4) that payment of his
Normal Retirement Pension is being withheld. If a benefit becomes payable to a
Participant pursuant to the preceding sentence, the benefit accruals, if any,
required by the Plan for the period of payment with respect to such Participant
shall, in accordance with regulations promulgated by the Secretary of the
Treasury, be treated as satisfied to the extent of the Actuarial Equivalent of
such benefit payments.
4.03 EARLY RETIREMENT PENSION. (a) The Early Retirement Pension for a
Participant entitled to such a Pension shall be determined in the same manner
as a Normal Retirement Pension but based on the Participant's Benefit Service,
Covered Compensation and Final Average Monthly Pay as of his Early Retirement
Date.
(b) The Early Retirement Pension described in Subsection (a) of this
Section shall commence on the first day of the month coincident with or
following the Participant's Normal Retirement Date, unless the Participant
elects within the 90-day period ending on his Pension Commencement Date (with,
if he is married and if he elects a benefit option other than the
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Automatic 50% Spouse Option or a Joint Pensioner Option under Section
4.10(a)(1) with his Spouse as the Joint Pensioner, the consent of his Spouse),
that the Early Retirement Pension commence in a reduced amount on the first day
of any earlier month designated by him, which day is subsequent to his
Qualifying Termination. Such reduced Early Retirement Pension shall be equal
to the amount determined under Subsection (a) of this Section, reduced by
0.33333% for each month that his Early Retirement Pension commences before his
Normal Retirement Date.
4.04 DEFERRED VESTED PENSION. (a) The Deferred Vested Pension for a
Participant entitled to such a Pension shall be determined in the same manner
as the Normal Retirement Pension but based on the Participant's Benefit
Service, Covered Compensation and Final Average Monthly Earnings at the time of
his Qualifying Termination.
(b) A Participant's Deferred Vested Pension shall commence on the first day
of the month coincident with or following his Normal Retirement Date; provided,
however, that a Participant who had at least 10 years of Vesting Service as a
salaried Employee on his Qualifying Termination may elect, within the 90-day
period ending on his Pension Commencement Date (with, if he is married and if
he elects a benefit option other than the Automatic 50% Spouse Option or a
Joint Pensioner Option under Section 4.10(a)(1) with his Spouse as the Joint
Pensioner, the consent of his Spouse), to have his Deferred Vested Pension
commence in a reduced amount on the first day of any earlier month designated
by him which day is within the ten-year period
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prior to his Normal Retirement Date and is subsequent to his Qualifying
Termination. Such reduced Deferred Vested Pension shall be the Actuarial
Equivalent of the Normal Retirement Pension determined using the actuarial
factors specified in Exhibit A, ignoring the death benefit specified in section
4.06.
(c) The Accrued Benefit of a Participant who terminates his employment with
the Controlled Group at a time when he does not have a nonforfeitable right to
any Pension hereunder shall be deemed to have been distributed to the
Participant immediately upon such termination of employment, and the
Participant's entire Accrued Benefit shall thereupon be forfeited. Such
forfeitures shall not be applied to increase the benefits any Employee would
otherwise receive under the Plan, but shall be used to reduce the future
contributions of the Employers. If the Participant is subsequently
re-employed, the deemed distribution described in the first sentence of this
Subsection shall be deemed to have been repaid to the Plan upon such
re-employment if there were fewer than five consecutive 1-year Periods of
Severance during the period between the Participant's original termination of
employment with the Controlled Group and his subsequent re-employment with the
Controlled Group.
4.04A Am 5
4.05 REDUCTIONS FOR OTHER PRIVATE AND PUBLIC BENEFITS. (a) If a Pensioner
is (or would upon application be) entitled to an Other Pension under any Other
Pension Plan and if (in a case where the Other Pension Plan is an Other Group
Plan) he was
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a Covered Employee under the Plan after the last date on which he was a Covered
Employee under the Other Group Plan, his monthly Pension hereunder (determined
after reductions for early commencement but before adjustments for any optional
form of benefit) shall be reduced by the monthly amount, beginning when his
Pension hereunder is to begin and payable monthly for his then remaining
lifetime and no longer, that is the Actuarial Equivalent of such Other Pension.
However, his monthly Pension hereunder shall not be reduced by any portion of
such Other Pension that was paid for by his own contributions to such Other
Pension Plan and any portion thereof that was not attributable to employment
with the Controlled Group. The amount of such Other Pension shall be
determined after reductions for early commencement but before adjustments for
any optional form of benefit and without regard for any optional election of a
contingent annuitant, joint and survivor or period certain option or any
similar option. Where all or a part of an Other Pension is or has been
discharged or settled by a lump sum payment or a similar payment, the
provisions hereof shall be applied to such Other Pension the same as if it had
not been so discharged or settled. The Pension Committee may, after
consultation with an Actuary, equitably adjust a Pensioner's monthly Pension
hereunder if the Pensioner's Pension hereunder is suspended in accordance with
Section 4.02(b) or 5.02 and the Pensioner's benefit (if any) under the Other
Group Plan is not suspended.
(b) The term "Public Pension" shall mean any benefit for disability, old
age or retirement (including workers'
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compensation benefits and black lung benefits, but excluding benefits under the
federal Social Security Act or any successor thereto) which is paid from a
governmental fund or is provided for or required by statutory law; provided
that (1) such benefit is paid (i) by one or more Controlled Group Members, or
(ii) pursuant to an insurance policy under which a Controlled Group Member pays
or has paid premiums and such benefits are in fact paid from such policy, or
(iii) from a fund to which a Controlled Group Member contributes or has
contributed by the payment of premiums, taxes or otherwise (other than taxes
for the general purposes of a government) and (2) the term "Public Pension"
shall not include payment of or reimbursement for medical expenses.
Notwithstanding the foregoing, in the event that a Pensioner's black lung
benefits are attributable (in whole or in part) to employment with a
non-Controlled Group Member, the Pensioner's Pension hereunder shall be offset
only by the portion of such benefits attributable to employment with the
Controlled Group. The applicable offset will be calculated by multiplying each
benefit payment by a fraction, the numerator of which is the Pensioner's years
of service with the Controlled Group and the denominator of which is the
Pensioner's years of total employment in the coal industry.
(c) A Pensioner's Pension hereunder shall be reduced by any Public Pension
to which he is (or would upon application be) entitled. This reduction shall
be accomplished by reducing the Pensioner's Pension hereunder for each month by
the amount of such Public Pension that is payable with respect to such month
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for the Pensioner, and his Spouse, or dependents if any. No reduction shall be
made pursuant to this Subsection (c) with respect to (1) any portion of a
Public Pension for a Pensioner that is payable for any period of time that
precedes the date his Pension hereunder is to begin, or (2) any Public Pension
from which the Pensioner's Pension hereunder is deducted. In the event a
Pensioner receives a Public Pension that includes any retroactive payment for
any prior month during which he received a Pension hereunder, the Committee
shall adjust future payments or distributions to such Pensioner or his
Beneficiaries to recover any excess payments theretofore made from the Trust
Fund to such Pensioner.
(d) The Committee shall have full authority to determine under the
foregoing provisions of this Section the amount of reductions provided for in
this Section and may adopt rules, applying uniformly to all Participants
similarly situated, as it may deem advisable to carry out the purpose and
provisions of this Section.
4.06 POST-RETIREMENT DEATH BENEFIT. If a Pensioner, other than one
entitled to a Deferred Vested Pension, dies while receiving his Pension
hereunder (or while he would have been receiving such Pension except for
Section 5.06(a)), there shall be payable to his Beneficiary the difference (if
any) between (a) $5,000 and (b) the value (as of the date of the Pensioner's
death) of any death benefit payable (or payable upon application) with respect
to such Pensioner under any group life insurance which had been paid for in
whole or in part by a Controlled Group
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Member; provided, however, that the death benefit provided for in this Section
shall not be payable if the Pensioner qualifies for a substantially similar
benefit provided by an Other Group Plan (or under the terms of the annuity
contracts issued to such person upon the termination of The NACCO Industries,
Inc. Pension Plan for Salaried Employees as of November 30, 1986 or upon the
termination of The North American Coal Corporation Pension Plan for Salaried
Employees on December 31, 1989) and if the Pensioner was a Participant in such
Other Group Plan after the last date on which he was a Covered Employee
hereunder.
4.07 SURVIVING SPOUSE PENSIONS. (a) The Surviving Spouse Pension for the
surviving Spouse of a deceased Participant which Spouse is entitled to such
benefit (1) shall be (for Spouses of Participants who die prior to their Normal
Retirement Date) a monthly benefit equal to 50% of what would have been such
Participant's Normal Retirement Pension (payable in the form of a single life
annuity with no reduction for early commencement) if he had reached his Normal
Retirement Date on the date he died and if (instead of dying) he had continued
to live or (in the case of Spouses of Participants who die on or after their
Normal Retirement Date) a monthly benefit equal to 50% of what would have been
such Participant's Normal or Late Retirement Pension, as applicable, (payable
in the form of a single life annuity with no reduction for early commencement)
if he would have retired on the date of his death, (2) shall begin on the first
day of the month after the Participant's death if such Spouse is living on such
day, (3) shall, except as otherwise provided herein, be
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payable monthly thereafter (on the first of each month) during such Spouse's
remaining lifetime and (4) shall cease with the payment due on the first day of
the last month in which such Spouse is living. If the surviving Spouse is
eligible for a survivorship pension, annuity, or similar benefit under an Other
Group Plan because of the death of the Participant prior to the date on which
such Participant's pension was due to begin under such Other Group Plan and if
the deceased Participant was a Covered Employee under the Plan after the last
date on which he was a Covered Employee under the Other Group Plan, the
surviving Spouse's monthly benefit hereunder shall be reduced, beginning when
such Spouse's benefit under such Other Group Plan is to begin, by the monthly
amount of the survivorship benefit to which the Spouse is entitled under such
Other Group Plan. Where all or part of such survivorship benefit under such
Other Group Plan is or has been discharged or settled by a lump sum payment or
a similar payment, the provisions hereof shall be applied to such survivorship
benefit the same as if it had not been so discharged or settled.
(b) Any death, survivor or similar benefit under a plan or program that
provides for a Public Pension, which is (or would upon application be) payable
on account of the death of the Participant and because of a disease that is
designated by law or governmental regulation as an occupational disease of an
industry that includes the coal mining industry or businesses, shall be
deducted from the Surviving Spouse Pension under this Section until the amount
deducted equals the amount of such death,
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survivor or similar benefit. Such deduction shall be accomplished by reducing
the Surviving Spouse Pension determined under Subsection (a) of this Section
for each month by the amount of such death, survivor or similar benefit that is
payable with respect to such month for the surviving Spouse. The monthly
offset provided under the preceding sentence shall be calculated at the time
the Surviving Spouse Pension begins or, if later, the date the death, survivor
or similar benefit under the plan or program providing for a Public Pension
begins, and shall not thereafter be changed or adjusted notwithstanding any
change in the amount of the Public Pension. No reduction shall be made
pursuant to the preceding three sentences of this Subsection with respect to
(1) any portion of a Public Pension for a surviving Spouse that is payable for
any period of time that precedes the date his Pension hereunder is to begin, or
(2) any Public Pension from which the Surviving Spouse Pension hereunder is
deducted. In the event a surviving Spouse receives a Public Pension that
includes any retroactive payment for any prior month during which he received
a Pension hereunder, the Committee shall adjust future pension payments with
respect to such Spouse to recover any excess payments theretofore made from the
Trust Fund to such Spouse.
4.08 PRE-RETIREMENT SPOUSE PENSION. (a) The monthly amount of the
Pre-Retirement Spouse Pension for the Spouse of a deceased Participant entitled
to such benefit shall be the Actuarial Equivalent (as of the date such benefit
commences) of that amount which the surviving Spouse would have been entitled
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to receive (determined by counting only the Participant's Benefit Service as of
the date of his death) if:
(1) in the case of a Participant who dies after his Earliest
Retirement Date, the Participant had retired or otherwise terminated employment
with the Controlled Group during the month before his death with his Pension
payable under the Automatic 50% Spouse Option (or, in the case of a Participant
who (i) elected a Joint Pensioner option under Section 4.10(a)(1) with his
Spouse as the Joint Pensioner to receive payments after the death of the
Participant of 66-2/3%, 75% or 100% of the reduced Pension payable to the
Participant under such option and (ii) dies before the Pension Commencement
Date, under the option elected by the Participant) commencing on the first day
of the month following the month in which he died; or
(2) in the case of a Participant who dies on or before his Earliest
Retirement Date,
(i) the Participant's (in the case only of a Participant who dies while he
is an Employee) employment with the Controlled Group had terminated on the date
of his death,
(ii) the Participant had survived to his Earliest Retirement Date,
(iii) the Participant had retired at his Earliest Retirement Date, with a
Pension payable immediately under the Automatic 50% Spouse Option (or, in the
case of a Participant who (A) elected a Joint Pensioner option under Section
4.10(a)(1) with his Spouse as the Joint Pensioner to receive payments after the
death of the Participant of 66-2/3%, 75% or 100% of the
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reduced Pension payable to the Participant under such option and (B) dies
before the Pension Commencement Date, under the option elected by the
Participant), and
(iv) the Participant died on the day after his Earliest Retirement Date.
(b) The Pre-Retirement Spouse Pension described in this Section shall
begin on the first day of the month following the month in which occurs the
Participant's Earliest Retirement Date or, if the Participant dies after his
Earliest Retirement Date, on the first day of the month following the month in
which the Participant dies, unless, in the case of a Pre-Retirement Spouse
Pension first payable in a month prior to the month following the month in
which the Participant would have attained his Normal Retirement Age had he not
died, the surviving Spouse elects later commencement on the first day of any
subsequent month up to the month following the month in which the Participant
would have attained his Normal Retirement Age had he not died, but in any case
only if the Spouse is living on such date. If the Spouse elects to defer
commencement of the Pre-Retirement Spouse Pension, the benefit such Spouse
shall receive shall be the Actuarial Equivalent of the benefit such Spouse
would have received had there been no deferral.
4.09 NORMAL FORMS OF BENEFITS. (a) Notwithstanding any other provision of
the Plan, a Pension payable to a Participant shall be paid in the applicable
form described in Subsection (b) or (c) of this Section unless payment in such
form
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is effectively waived pursuant to Subsection (b) or (c) of this Section.
(b)(1) A Participant who is married on his Pension Commencement Date shall
have his Pension paid in the form of an "Automatic 50% Spouse Option" unless
the Participant elects to waive such Option during the 90-day period ending
on his Pension Commencement Date, provided that any election to waive such
Option shall not take effect unless (i) the Participant's Spouse consents in
writing to such election, and the Spouse's consent acknowledges the effect of
such election and is witnessed by a Plan representative or a notary public,
or (ii) it is established to the satisfaction of a Plan representative that
the consent required under (i) cannot be obtained because there is no Spouse,
because the Spouse cannot be located, or because of such other circumstances
as the Secretary of the Treasury may prescribe by regulations. Effective
January 1, 1987, the election to waive the Automatic 50% Spouse Option must
designate a Beneficiary (or a form of benefits) that may not be changed
without the written consent of the electing Participant's Spouse, unless the
written consent of the Spouse expressly permits designations by the
Participant without any requirement of further consent by the Spouse. The
Automatic 50% Spouse Option shall provide payments as if the Participant had
elected a Joint Pensioner Option under Section 4.10(a)(1) with his Spouse as
his Joint Pensioner and 50% as the percentage of the reduced Pension payable
to
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the Participant to be continued to the Spouse after the death of the
Participant, if the Spouse survives the Participant. Any election by the
Participant to waive the Automatic 50% Spouse Option may be revoked by the
Participant during the 90-day period ending on the Participant's Pension
Commencement Date. A Participant's election to waive the Automatic 50%
Spouse Option and any revocation of such election may be made solely by an
instrument (in form acceptable to the Committee) signed by the Participant
and filed with the Secretary of the Committee during such election period.
(2) The Committee in accordance with applicable law and regulations shall
provide to each Participant, within a reasonable period of time before the
Participant's Pension Commencement Date, a written explanation of (i) the
terms and conditions of the Automatic 50% Spouse Option, (ii) the
Participant's right to make, and the effect of, an election to waive the
Automatic 50% Spouse Option, (iii) the rights of the Participant's
Spouse hereunder, (iv) the right to make, and the effect of,
revocation of an election to waive the Automatic 50% Spouse Option, and
(v) a general description of the eligibility features and relative
values of a single life annuity and the other optional forms of benefit
described in Section 4.10.
(3) Pension payments for the Spouse shall commence on the first day of the
month following the month in which the
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Participant dies, provided the Spouse is living on such day and is otherwise
eligible to receive such payments under this Section, and shall continue
during the Spouse's remaining lifetime, the last monthly payment being
payable on the first day of the month in which the Spouse dies. If a
Participant's Spouse predeceases the Participant before the Participant's
Pension Commencement Date, the Participant shall be treated as though he had
elected to waive the Automatic 50% Spouse Option. If a Participant's Spouse
dies on or after the Participant's Pension Commencement Date, the
Participant's reduced Pension will not be increased thereby.
(c) A Participant who is not married on his Pension Commencement Date shall
have his Pension paid in the form of a single life annuity, as provided in
Section 4.01 hereof, unless such Participant elects, within the 90-day period
ending on his Pension Commencement Date, to waive the payment of his benefits
in such form.
4.10 OPTIONAL FORMS OF BENEFITS. (a) A Participant who has waived the
payment of his Pension in the form provided in Section 4.09 may elect (subject
to the provisions of this Section and to such rules as may be adopted by the
Committee) any one, or a compatible combination, of the optional forms of
benefits specified in the following paragraphs or to have his Pension paid in
the form of a single life annuity as specified in Section 4.01 (which form
shall be considered an optional form of benefit for purposes of this Section.)
Any such optional form of benefit or combination of optional forms of benefits
shall be the Actuarial
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Equivalent of the Pension otherwise payable from the Trust Fund. In
determining such Actuarial Equivalent, the death benefit specified in Section
4.06 shall be ignored.
(1) (JOINT PENSIONER OPTIONS) A Participant may elect to receive a reduced
Pension payable for him during his lifetime on and after his Pension
Commencement Date, and after his death to have a Pension payable during the
surviving lifetime of and for a natural person (herein called his "Joint
Pensioner") designated by the Participant for such purpose at the rate of
50%, 66-2/3%, 75% or 100% of the reduced Pension payable for the Participant.
Pension payments for the Joint Pensioner shall begin with the first day of
the month after the month in which the Participant dies, provided his death
does not void this Option as provided in Subsection (c) of this Section, and
provided his Joint Pensioner is living on such day, and the last monthly
payment for the Joint Pensioner shall be payable on the first day of the last
month in which the Joint Pensioner is living. If a Participant's Joint
Pensioner dies before the Participant's Pension hereunder is to begin, the
election shall be of no effect and the Participant shall be treated the same
as though he had not elected a Joint Pensioner Option. If a Participant's
Joint Pensioner dies on or after the date the Participant's Pension hereunder
is to begin and while the Participant is living, the Joint Pensioner Option
elected shall continue in force and the Participant's reduced Pension will
not be increased thereby.
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(2) (10 YEAR CERTAIN) A Participant may elect to receive a reduced Pension
payable for him during his lifetime on and after his Pension Commencement
Date with the provision that, in the event of his death on or after such date
and before 120 monthly Pension payments have been paid for him, monthly
Pension payments will be continued (at the same reduced rate) to his
Beneficiary until the number of monthly Pension payments made for his
Beneficiary, when added to the number of monthly Pension payments made for
the Participant, equals a total of 120 (referred to herein as the "10 Year
Certain").
(3) (SOCIAL SECURITY OPTION) A Participant whose Pension commences prior
to his Social Security Retirement Age may elect to have the amount of
monthly pension payable for him increased before his Social Security
Retirement Age (or, if requested by the Participant, before an earlier date
on which he may elect to have his old age benefits under the Social Security
Act begin) and decreased thereafter, to the end that his Pension hereunder,
when combined with the old age benefits payable under the Social Security
Act (as estimated as of the date his Pension hereunder is to begin), will
provide a level amount of retirement income insofar as practicable.
(b) (ELECTION OF OPTIONS) An election of an Option or Options under this
Section may be made (and may be rescinded), and the Participant's Joint
Pensioner and the percentage of the Participant's reduced Pension to be paid
after his death to his Joint Pensioner may be designated (and such designations
may be
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changed), solely by an instrument (in form acceptable to the Committee) signed
by the Participant and filed with the Secretary of the Committee while the
Participant is living and within the 90-day period ending on his Pension
Commencement Date. A Participant whose Pension has commenced under the Plan
may not change the terms of any Option he has elected, may not change his
designated Joint Pensioner and may not rescind any Option he has elected.
Except for spousal consent required under any other Section hereof, the consent
of a Participant's Beneficiary to any rescission or change in an Option or the
terms thereof or to a change in the Participant's Joint Pensioner, in any case
before the Participant's Pension commences, shall not be required. The
Committee shall require proof satisfactory to it of the Participant's good
health at the time he makes an election of an Option, before such election is
allowed, unless such election is made at least 60 days before his Pension
Commencement Date.
(c) (OTHER TERMS OF THESE OPTIONS) The time for the commencement of
Pension payments for the Participant shall not be affected by the election of a
Joint Pensioner Option (which term includes the Automatic 50% Spouse Option) or
the 10 Year Certain. If a Participant elects an Option under Subsection (a) of
this Section and dies before his Pension Commencement Date, the election shall
be void. However, if a Pensioner dies after his Pension Commencement Date, but
on or before the date his Pension actually commences, and if no Surviving
Spouse Pension or Pre-Retirement Spouse Pension is payable for his surviving
Spouse, his Pension shall, for purposes of the Joint Pensioner
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and 10 Year Certain Options, be deemed to have begun on the first day of the
month in which he died.
(d) (LIMITATION ON OPTIONS) Notwithstanding any other provision of this
Section, a Participant's election of an Option provided for in this Section
shall not become effective unless the present value of the payments expected to
be made to him under such Option is more than 50% of the present value of the
total of the payments expected to be made under such Option to him and his
Beneficiaries, but this limitation shall not apply to the Joint Pensioner
Options (which term includes the Automatic 50% Spouse Option) if the
Participant's Spouse is the Participant's Joint Pensioner. Such present values
shall be determined as of the date the Participant's Pension hereunder begins
(or, if earlier, the date which is one month before the Participant's death),
using the actuarial assumptions specified in Exhibit A to the Plan.
(e) If a Participant elects an Option under this Section and his Pension is
to be reduced in the manner provided by Section 4.05(c) on account of a Public
Pension, the monthly amount payable under such Option shall be the Actuarial
Equivalent of the amount determined by reducing his Pension by the Public
Pension as specified in Section 4.05(c).
(f) The Committee rules with respect to optional forms of benefits may be
changed by the Committee from time to time, but they shall be uniform in their
application to all Participants who are similarly situated. However, except as
otherwise permitted by the Code, no such rule or change herein
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shall result in the elimination or reduction of an "optional form of benefit"
(as defined in Treasury Regulation Section 1.411(d)-4; Q&A-1).
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ARTICLE V - VARIOUS PROVISIONS CONCERNING PENSIONS
--------------------------------------------------
5.01 APPLICATION FOR PENSIONS. (a) A Participant eligible to receive a
Pension hereunder and wishing to Retire, and any Pensioner who is eligible for
but is not receiving a Pension hereunder, shall obtain a form of application
for that purpose from the Company and shall sign and file with the Secretary of
the Committee his application on such form, furnishing such information as the
Committee may reasonably require, including satisfactory proof of his Age and
that of his Spouse (if any) and any authority in writing that the Company may
request authorizing it to obtain pertinent information, certificates,
transcripts and/or other records from any public office. An application for a
Pension may not be filed more than 90 days before such Pension is to begin.
(b) Except as provided in Sections 4.02(b), 5.03(b) and 11.12, no Pension
shall be payable hereunder for a Participant if he dies before his Pension
Commencement Date and before he files an application pursuant to Subsection (a)
of this Section and a Pensioner's Pension hereunder shall not begin until the
Participant (or surviving Spouse) files an application for such Pension
pursuant to Subsection (a) of this Section. Notwithstanding the foregoing, if
a proper application is filed by a Participant after his Normal Retirement Date
and after his Pension otherwise would have begun pursuant to the Plan, or by
his surviving Spouse after the benefit otherwise would have begun pursuant to
Sections 4.07 or 4.08, then, subject to Section 5.03(a), a lump-sum retroactive
payment shall be made (without
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interest) on account of the months for which such Pension or benefit would
otherwise have been paid pursuant to this Plan.
5.02 DURATION OF PENSIONS. After a Pensioner's Normal Retirement Pension,
Late Retirement Pension, Early Retirement Pension or Deferred Vested Pension
has begun, it shall, except as otherwise provided in the Plan with respect to
optional forms of benefits, continue during his remaining lifetime, the last
monthly payment of such Pension being payable on the first day of the month in
which he dies, except that no Pension shall be payable for any Pensioner for
any month on the first day of which he is an Employee and is receiving
Compensation for work currently being performed and during which he completes
40 or more Hours of Service (as defined in Section 4.02(b)) provided his
Employer has given him notice in accordance with applicable law that his
Pension payments are being withheld pursuant to the foregoing provisions.
5.03 PAYMENT OF BENEFITS. (a) Except as otherwise provided in the Plan,
any benefit hereunder shall be paid monthly on the first day of each month for
which such benefit is payable, but no benefit shall be payable for a Pensioner
unless he is living on the Pension Commencement Date and no benefit shall be
payable for a Beneficiary unless he is living on the date such benefit becomes
payable.
(b) If the amount of benefit is less than $30 a month, the benefit shall be
paid quarterly, half yearly or yearly in advance as the Participant or
Beneficiary directs; provided, however, that if the present value of such
benefit, at any time
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after the Participant's termination of employment or death and prior to the
Pension Commencement Date, is $3,500 or less, such benefit shall be paid as
soon as administratively practicable following such termination or death in a
lump sum that is the Actuarial Equivalent of such benefit. Such $3,500 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.
(c) No interest shall be due on any benefit payment by reason of the fact
that it is not paid on or before the date it is payable.
(d) Am 2
5.04 REHIRE OF PENSIONERS. If after the Qualifying Termination of a
Participant he again becomes an Employee, such re-employment shall not have any
effect on benefits under the Plan with respect to him which are payable on
account of such Qualifying Termination, except as provided in Sections 4.02(b)
and 5.02. If on or after such re-employment he again becomes a Participant in
the Plan or in any Other Group Plan and later again incurs a Qualifying
Termination, any benefits hereunder which become payable with respect to him
on account of such subsequent Qualifying Termination (a) shall be calculated
(1) in accordance with other Sections hereof after adding to the length of his
Benefit Service after his previous Qualifying Termination his length of Benefit
Service at the time of his previous Qualifying Termination and taking into
account Compensation earned both before and after his previous Qualifying
Termination
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and (2) without regard to the benefits that have been paid and that are or may
become payable with respect to him on account of his previous Qualifying
Termination and (b) shall be reduced, in accordance with regulations
promulgated by the Secretary of the Treasury, by the Actuarial Equivalent of
all benefits with respect to him that have been paid and that are or may become
payable under the Plan on account of his previous Qualifying Termination
(including his election of any optional form of benefit).
5.05 SPENDTHRIFT PROVISIONS. To the extent permitted by law and except as
otherwise provided under a qualified domestic relations order pursuant to
Section 414(p) of the Code, no right or interest of any kind in the Trust Fund
shall be transferable, alienable or assignable by any Participant or
Beneficiary, nor, except as otherwise provided or permitted by the Plan, shall
any such right or interest be subject to anticipation, encumbrance,
garnishment, attachment, execution or levy of any kind, voluntary or
involuntary.
5.06 FACILITY OF PAYMENT. (a) If the Committee finds that any Participant
or Beneficiary to whom a benefit is payable hereunder is unable to care for his
affairs because of physical, mental or legal incompetence, the Committee shall
cause any payment due to him hereunder for which prior claim has not been made
by a duly qualified guardian or other legal representative to be paid to the
person deemed by the Committee to be maintaining or responsible for the
maintenance of such Participant or Beneficiary; and any such payment shall be
deemed
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a payment for the account of such Participant or Beneficiary and shall
constitute a complete discharge of any liability therefor under the Plan.
(b) If an individual dies before receiving all the payments to be made to
him hereunder or before cashing any or all of the checks representing such
payment or payments, such payment(s) shall be made to one of the following
persons with preference being given to classes in the order named: (1) his
Spouse, (2) his children who are of legal age and/or the guardian of his minor
children, (3) his father or mother, or both, (4) his other relatives by blood
or marriage, or (5) his estate; and the receipt of such payment(s) shall be a
valid and complete discharge for the payment of such benefit. However, if such
deceased individual was a Participant and (i) a Joint Pensioner Option
(including an Automatic 50% Spouse Option) was in effect for him on his death,
such payment(s) so payable (but not paid) to him shall be paid to his Joint
Pensioner, if living, or (ii) if a Joint Pensioner Option was not so in effect
and the Participant had designated a then living Beneficiary, such payment(s)
so payable (but not paid) to him shall be paid to his Beneficiary.
5.07 DISTRIBUTIONS PURSUANT TO A QDRO. Notwithstanding any provision of
the Plan to the contrary, if a qualified domestic relations order (as defined
in Section 414(p) of the Code) so provides, the portion of the Participant's
Accrued Benefit payable to the alternate payee(s) may be distributed to the
alternate payee(s) prior to the date on which
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the Participant reaches his "earliest retirement age" (as defined in Section
414(p)(4)(B) of the Code) in the form of a lump sum payment which is the
Actuarial Equivalent of the benefit the alternate payee would otherwise be
entitled to receive at the Participant's earliest retirement age.
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ARTICLE VI - FINANCING THE PLAN
-------------------------------
6.01 EMPLOYER CONTRIBUTIONS. (a) The Plan shall be funded through the
Trust Fund. Employees shall not be required or permitted to make any
contributions hereunder.
(b) The Employers shall contribute and pay into the Trust Fund, in cash or
in property of any kind (to be administered and disposed of as provided herein
and in the Trust Agreement), such amounts and at such times as may be required
by applicable law and such additional amounts and at such times as the Board of
Directors of the Company may from time to time determine. The value of any
property so contributed shall be its fair market value at the time it is so
contributed.
6.02 TRUST AGREEMENT. The Company has executed the Trust Agreement to
create the Trust Fund. The Trustee in its relation to the Plan shall be
entitled to all the rights, privileges, immunities and benefits conferred upon
it, and shall be subject to all the duties and responsibilities imposed upon
it, under the Plan and Trust Agreement. The Trust Agreement is hereby
incorporated into the Plan by reference. Each Employer, by adopting the Plan,
approves the Trust Agreement and each amendment or supplement thereto which may
be adopted in accordance with the terms of the Trust Agreement.
6.03 TRUST FUND. The Trust Fund shall be held in trust by the Trustee and
shall be administered in accordance with the provisions of the Trust Agreement.
Neither the Trustee, nor the Actuary, nor the Employers, nor the Pension or
Investment
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Committees nor any member of either of such Committees in any manner
guarantees the Trust Fund against loss or depreciation.
6.04 PAYMENT OF BENEFITS. Except as otherwise provided by applicable law,
(a) all benefits provided for in the Plan (less deductions provided for in the
Plan) shall be paid solely out of the Trust Fund, (b) neither the Actuary, nor
any Employer, nor the Trustee (in its individual capacity), nor the Pension or
Investment Committees nor their members shall be in any manner liable for
benefits payable under the Plan and (c) such benefits shall be only such as
can be provided by the assets in the Trust Fund.
6.05 EXPENSES OF THE PLAN. The reasonable expenses incident to the
management and operation of the Plan, including the compensation of the
Actuary, the Trustee, attorneys, auditors, accountants, or investment managers
or advisors for the Plan, if any, and such other technical and clerical
assistance as may be required, shall be payable out of the Trust Fund;
provided, however, that the Employers, in their absolute discretion, may elect
at any time to pay part or all thereof directly, but any such election shall
not bind the Employers as to their right to elect with respect to the same or
other expenses at any other time to have such expenses paid from the Trust
Fund.
6.06 FUNDING POLICY. The Company shall (a) determine, establish and carry
out a funding policy and method consistent with the objectives of the Plan and
the requirements of Title I of ERISA and (b) subject to the right to amend
and/or terminate
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the Plan, contribute (or cause the Employers to contribute) under the Plan from
time to time any minimum amounts that may be required by applicable law or by
any other Section of the Plan.
6.07 RETURN OF CONTRIBUTIONS. (a) In the case of a contribution which is
made to the Trust Fund by a mistake of fact, such a contribution shall be
returned to the contributing Employer to the extent that it shall exceed the
amount which would have been contributed had there not occurred a mistake of
fact within one year following the date of the payment of the contribution.
(b) If a contribution to the Trust Fund is conditioned upon the
deductibility of the contribution under Section 404 of the Code, then, to the
extent the deduction is disallowed, the contribution shall be returned to the
extent disallowed to the contributing Employer within after one year following
the disallowance of the deduction.
(c) If the Internal Revenue Service shall determine that the Plan as
applied to an Employer who has adopted the Plan pursuant to Article XIII hereof
is not qualified under Section 401(a) of the Code for the initial Plan Year in
which such adoption is effective, all contributions made by or on behalf of
such Employer shall be returned to such Employer within one year after the
denial of qualification; provided that the application for determination was
filed within the time prescribed by law for filing the Employer's return for
the taxable year in which the Plan was adopted.
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(d) Earnings attributable to excess contributions made under Subsections
(a) or (b) of this Section may not be returned, but losses attributable thereto
must reduce the amounts to be so returned.
(e) After satisfaction of all liabilities of the Plan as set forth in
Section 15.02, any excess assets remaining in the Trust Fund shall revert to
the Company.
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ARTICLE VII - PENSION COMMITTEE
-------------------------------
7.01 MEMBERSHIP. The Pension Committee shall consist of three or more
members who may be, but are not required to be, Participants, Employees or
directors of an Employer. The President of the Company shall be an ex officio
member and the Chairman of the Committee and shall appoint the other members.
The number of members of the Committee (not less than three) shall be fixed by
the Chairman of the Committee, who may at any time increase, or decrease to not
less than three, the number of members. Any member may be removed by the
Chairman of the Committee at any time or may resign at any time by delivering
his written resignation to the Chairman of the Committee. Upon the existence
of any vacancy in the membership of the Committee, a successor shall be
appointed by the Chairman of the Committee, unless the number of members is
decreased as above provided.
7.02 CERTIFICATION OF MEMBERSHIP. The President of the Company shall
certify the number and names of the Committee members to the Trustee. The
Trustee may rely on any such certification until it receives written notice
from the President of the Company as to a change in the membership of the
Committee.
7.03 DUTIES. The members of the Committee shall serve without remuneration
for such services unless the Board of Directors of the Company shall provide
for remuneration for such services. The Committee shall have such functions
and duties with respect to the Plan and only such functions and duties with
respect to the Plan as are specifically conferred upon it by the Plan or the
Trust Agreement or as may be delegated to it pursuant
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to Section 10.03. The Committee may also have functions and duties with
respect to any Other Group Plan to the extent that such functions and duties
are given to the Committee by the President of NACCO Industries, Inc. A
Committee member shall not be disqualified from acting because of any interest,
benefit or advantage, inasmuch as members of the Committee may be directors of
an Employer, Participants or Employees, but no such member shall vote or act in
connection with the Committee's action relating solely to himself. Except as
may be required by law, no bond or other security need be required of any
Committee member in such capacity in any jurisdiction.
7.04 REVOCABILITY OF COMMITTEE ACTION. Any action taken by the Committee
with respect to the rights or benefits under the Plan of any Participant or
Beneficiary shall be revocable by the Committee as to payments or distributions
not theretofore made from the Trust Fund pursuant to such action; and
appropriate adjustments may be made in future payments or distributions to a
Participant or his Beneficiaries to offset any excess payment or underpayment
theretofore made from the Trust Fund to such Participant or his Beneficiaries.
7.05 COMMITTEE PROCEDURES. The Committee may adopt and amend, from time to
time, such rules for its government and the conduct of its business as it deems
advisable, including a rule authorizing one or more of its members or officers
to execute instruments in its behalf evidencing its action and, to the extent
not prohibited by applicable law, the Trustee and other persons may rely on any
instrument signed by such person or
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persons so authorized as properly evidencing the action of the Committee. The
Committee may from time to time, by resolution adopted by it, delegate to one
or more of its members or officers, to an employee or employees, to a
subcommittee or subcommittees or to an agent or agents of the Committee, such
of the Committee's functions and duties as the Committee deems advisable. The
Committee may elect such officers in addition to a Chairman as it deems
advisable and such officers need not be members of the Committee. Except as
may otherwise be provided by rules or procedures adopted by the Committee, the
Committee may act by majority action either at a meeting or in writing without
a meeting and an action which purports to be an action of the Committee and
which is evidenced by the signatures of a majority of the Committee members
shall be deemed to be the action of the Committee.
7.06 COMMITTEE RULES. The Committee may from time to time adopt rules for
the administration of the Plan. Such rules may be amended by the Committee
from time to time, but such rules, as the same may be amended, (a) insofar as
they apply to the rights of Participants, shall be uniform in their application
to all Participants who are similarly situated and (b) shall not be
inconsistent with the terms of the Plan or the Trust Agreement.
7.07 PLAN INTERPRETATION AND FINDINGS OF FACT. The Committee shall have
sole and absolute discretion to interpret the provisions of the Plan
(including, without limitation, by supplying omissions from, correcting
deficiencies in, or
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resolving inconsistencies or ambiguities in, the language of the Plan), to
determine the rights and status under the Plan of Participants and other
Persons, to decide disputes arising under the Plan and to make any
determinations and findings with respect to the benefits payable thereunder and
the Persons entitled thereto as may be required for the purposes of the Plan.
In furtherance of, but without limiting, the foregoing, the Committee is hereby
granted the following specific authorities, which it shall discharge in its
sole and absolute discretion in accordance with the terms of the Plan (as
interpreted, to the extent necessary, by the Committee):
(a) To resolve all questions arising under the provisions of the Plan as
to any individual's entitlement to become a Participant;
(b) To determine the amount of benefits, if any, payable to any Person
under the Plan; and
(c) To conduct the review procedure specified in Section 9.03. All
decisions of the Committee as to the facts of any case, as to the
interpretation of any provision of the Plan or its application to any case, and
as to any other interpretative matter or other determination or question under
the Plan shall be final and binding on all parties affected thereby, subject to
the provisions of Section 7.04 and Article IX. The Committee shall direct the
Trustee relative to benefits to be paid under the Plan and shall furnish the
Trustee with any information
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reasonably required by it for the purpose of paying benefits under the Plan.
7.08 ACTUARIAL FACTORS. The Committee may adopt, and amend from time to
time, such actuarial factors, assumptions and procedures to be used for
actuarial valuations and determinations of the normal costs and actuarial
requirements of the Plan as may be recommended by the Actuary and as the
Committee deems necessary or desirable.
7.09 ASSISTANCE; EXPENSES. The Committee may employ such clerical, legal,
actuarial, accounting or other assistance or services as it deems necessary or
advisable in connection with the performance of its functions or duties. The
reasonable expenses of the Committee shall be paid out of the Trust Fund,
unless paid directly by the Employers.
7.10 ABSENCE OF COMMITTEE. If the Committee ceases to exist or if and
while, for any other reason, there is no Pension Committee, the Investment
Committee, Company or Trustee, in that order, may exercise any or all of the
powers and perform any or all of the functions of the Committee.
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ARTICLE VIII - INVESTMENT COMMITTEE
-----------------------------------
8.01 MEMBERSHIP. The Investment Committee shall consist of three or more
members who may be, but are not required to be, Participants, Employees or
directors of an Employer. Such members and their successors shall be appointed
by the Board of Directors of the Company to serve for such terms as said Board
may fix, and future appointees shall signify their acceptance thereof to the
President or Secretary of the Company. Any member of the Investment Committee
may be removed at any time by the Board of Directors of the Company, which may
also increase or decrease the number of members of such Committee. Any member
of the Investment Committee may resign at any time by delivering his written
resignation to the President or Secretary of the Company. Upon the existence
of any vacancy in the membership of such Committee, the President of the
Company may appoint a successor to serve until the next meeting of the Board of
Directors of the Company.
8.02 ASSISTANCE. The Investment Committee may employ such investment
advice, services or assistance and such legal, clerical or other assistance as
it deems necessary or advisable to assist it in the performance of its
functions and duties. The expenses incurred by such Committee in securing such
advice, services or assistance shall be paid from the Trust Fund and be treated
as an expense thereof unless the Trustee is directed otherwise by the
Committee. Any other reasonable expenses of such Committee shall be paid out
of the Trust Fund, unless paid directly by the Employers.
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8.03 DUTIES AND PROCEDURES. Sections 7.02, 7.03 and 7.05 shall apply to
the Investment Committee and its members the same as they apply to the Pension
Committee and its members, except that the Investment Committee shall elect its
Chairman. The Investment Committee may have functions and duties with respect
to any Other Group Plan to the extent that such functions and duties are given
to the Investment Committee by the Board of Directors of NACCO Industries, Inc.
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ARTICLE IX - CLAIMS AND REVIEW PROCEDURES
-----------------------------------------
9.01 METHOD OF FILING CLAIM. Any Participant or Beneficiary who believes
that he is entitled to have received a benefit under the Plan which he has not
received may file with the Secretary of the Pension Committee a written claim
specifying the basis for his claim and the facts upon which he relies in making
such claim. Such a claim must be signed by the claimant or his authorized
representative and shall be deemed filed when delivered to such agent for
service of process who shall promptly transmit such written claim to the
Pension Committee.
9.02 NOTIFICATION TO CLAIMANT. Unless such claim is allowed in full by the
Committee, the Committee shall (within 90 days after such claim was filed, plus
an additional period of 90 days if required for processing and if notice of the
additional 90 day extension of time indicating the specific circumstances
requiring the extension and the date by which a decision shall be rendered is
given to the claimant with the first 90-day period) cause written notice to be
mailed or delivered to the claimant of the total or partial denial of such
claim. Such notice shall be written in a manner calculated to be understood by
the claimant and shall include (a) one or more specific reasons for the denial
of the claim, (b) specific reference(s) to provisions of the Plan and/or Trust
Agreement on which the denial of the claim is based, (c) a description of any
additional material or information necessary for the claimant to perfect the
claim, (d) an explanation of why such material or information is necessary,
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and (e) an explanation of the review procedure specified in Section 9.03.
9.03 REVIEW PROCEDURE. Within three months after the mailing or delivery
of a notice of denial of a claim, the claimant or his duly authorized
representative may appeal such denial by filing with such agent for service of
process his written request for a review of said claim. If the claimant does
not file such request within such three-month period, the claimant shall be
conclusively presumed to have accepted as final and binding the initial
decision of the Committee on his claim. If such an appeal is so filed within
such three months, the Committee, or a Named Fiduciary designated by the
Committee, shall conduct a full and fair review of such claim. During such
full review, the claimant (or his duly authorized representative) shall be
given an opportunity to review documents that are pertinent to his claim and to
submit issues and comments in writing and (if he requests a hearing on his
claim and the Committee or such Named Fiduciary concludes such a hearing is
advisable and schedules such a hearing) to present his case in person or by an
authorized representative at such hearing. After the completion of such full
review, the reviewer shall mail or deliver to the claimant a written decision
on the matter based on the facts and pertinent provisions of the Plan, Trust
Agreement and/or applicable law. Such decision shall be mailed or delivered
within a period of 60 days after the receipt of the request for review unless
special circumstances require an extension of time, in which case such
decision shall be rendered
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not later than 120 days after receipt of such request. If an extension of time
for review is required, written notice of the extension shall be furnished to
the claimant prior to the commencement of the extension. Such decision (a)
shall be written in a manner calculated to be understood by the claimant, (b)
shall state one or more specific reasons for the decision, including specific
reference(s) to provisions of the Plan and/or Trust Agreement on which the
decision is based, and (c) shall, to the extent not prohibited by applicable
law, be final and binding on all interested persons.
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ARTICLE X - ADMINISTRATION OF THE PLAN AND FIDUCIARY RESPONSIBILITY
-------------------------------------------------------------------
10.01 RESPONSIBILITY FOR ADMINISTRATION. Except to the extent that
particular responsibilities are assigned or delegated to other Fiduciaries
pursuant to the Trust Agreement or some other Section hereof, the Company (as
the Plan Administrator) shall be responsible for the administration of the
Plan. Each other Fiduciary shall have only such powers, duties,
responsibilities and authorities as are specifically conferred upon him or
delegated to him pursuant to provisions of the Plan or Trust Agreement. Any
person may serve in more than one fiduciary capacity with respect to the Plan
or Trust Fund if, pursuant to the Plan and/or Trust Agreement, he is assigned
or delegated any multiple fiduciary capacities.
10.02 NAMED FIDUCIARIES. For purposes of the Plan, the Named Fiduciaries
shall be the Company, NACCO Industries, Inc., the Pension Committee, the
Investment Committee, the President of the Company and the Trustee. The
Company may, by an instrument authorized and signed by the President of the
Company and delivered to the Committee, designate any other person as a Named
Fiduciary to perform functions specified in such instrument (or in a delegation
pursuant to Section 10.03) which relate to the administration of the Plan or
the Trust Fund, provided such designee accepts such designation. Such a
designation may be terminated at any time by written notice from the President
of the Company to the designee or by written notice from the designee to the
President.
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10.03 DELEGATION OF FIDUCIARY RESPONSIBILITIES. (a) The President of the
Company may delegate to any person any one or more powers, functions, duties
and/or responsibilities with respect to the Plan or the Trust Fund, other than
(1) those assigned to the Investment Committee pursuant to the Trust Agreement
or some other Section hereof and (2) trustee responsibilities (as defined in
Section 405(c) of ERISA) assigned to the Trustee by the Trust Agreement or some
other Section hereof. However, no such power, function, duty or responsibility
which is assigned to a Fiduciary (other than to the Company) pursuant to the
Trust Agreement or some other Section hereof shall be so delegated without the
written consent of such Fiduciary.
(b) Any delegation pursuant to Subsection (a) of this Section: (1) shall
be signed by the President of the Company, be delivered to and accepted in
writing by the delegatee and be delivered to the Secretary of the Committee,
(2) shall contain such provisions and conditions relating to such delegation as
the President deems appropriate, (3) shall specify the powers, functions,
duties and/or responsibilities therein delegated, (4) may be amended from time
to time by written agreement signed by the President of the Company and by the
delegatee and delivered to the Secretary of the Committee and (5) may be
revoked (in whole or in part) at any time by written notice (i) from the
President of the Company delivered to the delegatee and the Secretary of the
Committee or (ii) from the delegatee delivered to the President of the Company
and the Secretary of the Committee.
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10.04 IMMUNITIES. Except as otherwise provided in Section 10.05 or by
applicable law, (a) no Fiduciary shall have the obligation to discharge any
duty, function or responsibility which is specifically assigned to another
Fiduciary by the terms of the Plan or Trust Agreement or is delegated to
another Fiduciary pursuant to procedures for such delegation provided for
herein or in the Trust Agreement; (b) no Fiduciary shall be liable for any
action taken or not taken with respect to the Plan or Trust Fund except for his
own negligence, bad faith or willful misconduct; (c) no Fiduciary shall be
personally liable upon any contract or other instrument made or executed by him
or in his behalf in the administration of the Plan or Trust Fund; (d) no
Fiduciary shall be liable for the neglect, omission or wrongdoing of another
Fiduciary; (e) the Company and each Employer and each officer or director
thereof, Employees, the Pension Committee and each member thereof, the
Investment Committee and each member thereof, and any other person to whom the
President of the Company delegates (or any provision hereof or of the Trust
Agreement assigns) any duty with respect to the Plan or Trust Fund, may rely
and shall be fully protected in acting in good faith (1) upon the advice of
counsel acceptable to the Company (who may be counsel for an Employer or
another Fiduciary), (2) upon the records of a Controlled Group Member, (3) upon
the opinion, certificate, valuation, report, recommendation or determination of
the Actuary or the Trustee or of any person acceptable to the Company that is
employed by such Fiduciary to render advice with regard to any responsibility
such Fiduciary
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has under the Plan or Trust Agreement and (4) upon any certificate, statement
or other representation made by or any information furnished by the Actuary, an
Employee, a Participant, a Beneficiary or the Trustee; and (f) the Committee
and its members shall not be required to make inquiry into the propriety of any
action by the Company, an Employer, the Actuary or the Trustee.
10.05 LIMITATION ON EXCULPATORY PROVISIONS. Notwithstanding any other
provision of the Plan or the Trust Agreement, no provision of the Plan or the
Trust Agreement shall be construed to relieve (or have the effect of relieving)
any Fiduciary from any responsibility or liability for any obligation,
responsibility or duty imposed on such Fiduciary by Part 4 of Title I of ERISA.
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ARTICLE XI - MISCELLANEOUS PROVISIONS REQUIRED BY THE CODE
----------------------------------------------------------
11.01 GENERAL. Subsequent Sections of this Article are included in the
Plan pursuant to requirements of the Code, and shall prevail over any provision
of the Plan or the Trust Agreement which is inconsistent therewith.
11.02 PROVISION PURSUANT TO CODE SECTION 401(A)(2). Except as specifically
provided in the Plan, it shall be impossible, at any time prior to the
satisfaction of all liabilities with respect to Employees and their
Beneficiaries under the Trust, for any part of the corpus or income of the
Trust Fund to be (within the taxable year or thereafter) used for, or diverted
to, purposes other than for the exclusive benefit of the Employees or their
Beneficiaries.
11.03 PROVISION PURSUANT TO CODE SECTION 401(A)(8). Forfeitures shall not
be applied to increase the benefits any Employee would otherwise receive under
the Plan.
11.04 PROVISION PURSUANT TO CODE SECTIONS 401(A)(12) AND 414(1). There
shall not be any merger or consolidation of this Plan with, or transfer of
assets or liabilities of this Plan to, any other plan, unless each Participant
in the merged, consolidated or transferee plan would (if that plan then
terminated) receive a benefit immediately after the merger, consolidation, or
transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation or transfer
(if this Plan had then terminated). The Company reserves the right to merge or
consolidate this Plan with, and to transfer the assets of the
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Plan to, any other plan, without the consent of any other Employer.
11.05 PROVISION PURSUANT TO CODE SECTION 401(A)(14). Unless the
Participant otherwise elects, the payment of benefits under the Plan to the
Participant will begin not later than the 60th day after the latest of the
close of the Plan Year in which
(a) occurs the date on which the Participant attains the earlier of age 65
or his Normal Retirement Age,
(b) occurs the 10th anniversary of the year in which the Participant
commenced participation in the Plan, or
(c) the Participant terminates his service with the Controlled Group.
11.06 PROVISION PURSUANT TO CODE SECTION 401(A)(15). In the case of a
Participant or Beneficiary who is receiving benefits under the Plan, or in the
case of a Participant who has terminated his employment with the Controlled
Group and who has nonforfeitable rights to benefits, such benefits shall not be
decreased by reason of any increase in the benefit levels payable under Title
II of the Social Security Act or any increase in the wage base under such Title
II, if such increase takes place after the earlier of the date of first receipt
of such benefits or the date of such termination, as the case may be.
11.07 PROVISION PURSUANT TO CODE SECTION 411(A)(10)(B).
If any Plan amendment changes any vesting schedule under the Plan, each
Participant having not less than three years of Vesting Service whose
nonforfeitable percentage under the Plan,
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as amended, would be less than such percentage determined without regard to
such amendment shall be permitted to elect, within a reasonable period after
the adoption of such amendment, to have his nonforfeitable percentage computed
under the Plan without regard to such amendment.
11.08 PROVISION PURSUANT TO CODE SECTION 411(D)(3). Upon the termination
or partial termination of the Plan, the rights of all affected Employees to
benefits accrued to the date of such termination or partial termination, to the
extent funded as of such date, shall be nonforfeitable to the extent they do
not exceed any limitations on such benefits in Article XVI hereof.
11.09 PROVISION PURSUANT TO CODE SECTION 415(B).
(a) As used in this Section, (1) the term "annual benefit" means a benefit
payable annually in the form (in this Section called "life annuity form") of a
straight life annuity (with no ancillary benefits) under a plan to which
Employees do not contribute and under which no rollover contributions are made
and (2) the term "Compensation" means Compensation as defined in Section 1.14
but excluding amounts, if any, which were not paid to an Employee because he
signed a Compensation deferral agreement in connection with The NACCO
Industries, Inc. Savings Plan.
(b) Except as otherwise provided in this Section, the benefits under the
Plan with respect to a Participant for any Plan Year (which shall be the
limitation year) shall not exceed, when expressed as an annual benefit, the
lesser of:
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(1) the dollar limitation in effect for such year under Section
415(b)(1)(A) of the Code, or
(2) 100 percent of the Participant's average Compensation for the period
of three consecutive calendar years during which the Participant both was an
active Participant in the Plan and had the greatest aggregate Compensation from
the Controlled Group.
(c) Notwithstanding the foregoing:
(1) if the benefit under the Plan is payable in any form other than the
life annuity form, or if the Employees contribute to the Plan or make rollover
contributions or plan to plan transfers, for purposes of determining whether
the limitations described in Subsection (b) of this Section have been
satisfied, such benefit shall be adjusted, in accordance with regulations
prescribed by the Secretary of the Treasury or his delegate, so that such
benefit is equivalent to an annual benefit, provided that for purposes of this
paragraph any ancillary benefit which is not directly related to retirement
income benefits shall not be taken into account, and that portion of any joint
and survivor annuity which constitutes a qualified joint and survivor annuity
(as defined in Section 417(b) of the Code) shall not be taken into account, and
(2) if the benefit under the Plan begins before the Social Security
Retirement Age, for purposes of determining whether the limitation set forth in
paragraph (1) of Subsection (b) has been satisfied, such benefit shall be
reduced, in accordance with regulations prescribed by the Secretary of the
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Treasury, so that such limitation (as so reduced) equals an annual benefit
(beginning when such benefit under the Plan begins) which is equivalent to an
annual benefit equal to the limitation beginning at the Social Security
Retirement Age, provided that the reduction under this part shall be made in
such manner as the Secretary of the Treasury may prescribe which is consistent
with the reduction under the Social Security Act for old age insurance benefits
commencing before the Social Security Retirement Age; and
(3) if the benefit begins after the Social Security Retirement Age, for
purposes of determining whether the limitation set forth in paragraph (1) of
Subsection (b) has been satisfied, such limitation shall be increased, in
accordance with regulations prescribed by the Secretary of the Treasury, so
that such limitation (as so increased) equals an annual benefit (beginning when
such benefit begins under the Plan) which is equivalent to an annual benefit
equal to the limitation set forth in such paragraph (1) beginning at the Social
Security Retirement Age; and
(d) Except as provided in Subsection (e) of this Section, the benefits
payable with respect to a Participant under any defined benefit plan shall be
deemed not to exceed the limitations set forth in Subsection (b) of this
Section if:
(1) the retirement benefits payable with respect to such Participant
under such plan and under all other defined benefit plans of the Controlled
Group do not exceed $10,000 for the Plan Year, or for any prior Plan Year, and
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(2) the Controlled Group has not at any time maintained a defined
contribution plan in which the Participant participated.
(e) In the case of an Employee who has less than ten years of
participation in the Plan, the limitation set forth in paragraph (1) of
Subsection (b) of this Section shall be the limitation determined under such
paragraph (without regard to this Subsection), multiplied by a fraction, the
numerator of which is the number of years (or parts thereof) of the Employee's
participation in the Plan and the denominator of which is ten, and in the case
of an Employee who has less than 10 years of Vesting Service with the
Controlled Group, the limitations set forth in paragraph (2) of Subsection
(b), and in Subsection (d) of this Section shall be such limitations
(determined without regard to this Subsection) multiplied by a fraction, the
numerator of which is the number of years (or parts thereof) of Vesting
Service which the Employee has with the Controlled Group and the denominator
of which is 10. Notwithstanding the foregoing provisions of this Subsection,
in no event shall the limitations in Subsections (b) and (d) of this Section
be reduced to an amount less than 1/10 of such limitations (determined without
regard to this Subsection). To the extent provided in regulations prescribed
by the Secretary of the Treasury, this Subsection shall be applied separately
with respect to each change in the benefit structure of the Plan.
(f) Notwithstanding anything in this Section to the contrary, if the
annual benefit of a Participant who has
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terminated employment with the Controlled Group is limited pursuant to the
limitations set forth in paragraphs (1) or (2) of Subsection (b) of this
Section, such annual benefit shall be increased in accordance with the
cost-of-living adjustments of Section 415(d) of the Code.
11.10 PROVISION PURSUANT TO CODE SECTION 415(E). (a) In any case in which
an individual is a Participant in both a defined benefit plan and a defined
contribution plan maintained by the Controlled Group, the sum of the defined
benefit plan fraction and the defined contribution plan fraction for any Plan
Year shall not exceed 1.0. For purposes of the preceding sentence:
(1) The defined benefit plan fraction for any year is a fraction, (i) the
numerator of which is the projected annual benefit of the Participant under
the Plan (determined as of the close of the Plan Year), and (ii) the
denominator of which is the lesser of (A) the product of 1.25, multiplied by
the dollar limitation in effect under Section 415(b)(1)(A) of the Code for
the Plan Year or (B) the product of 1.4, multiplied by the amount which may
be taken into account under Section 415(b)(1)(B) of the Code with respect to
such Participant under the Plan for the Plan Year; and
(2) The defined contribution plan fraction for any year is a fraction, (i)
the numerator of which is the sum of the annual additions to the
Participant's account as of the close of the Plan Year and for all prior Plan
Years, and
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(ii) the denominator of which is the sum of the lesser of the following
amounts determined for the Plan Year and for each prior year of service with
the Controlled Group:
(A) The product of 1.25, multiplied by the dollar limitation in effect
under Section 415(c)(1)(A) of the Code for the Plan Year, or
(B) The product of 1.4, multiplied by the amount which may be taken into
account under Section 415(c)(1)(B) of the Code with respect to such
Participant under the Plan for the Plan Year.
(b) Except as may otherwise be provided in any defined contribution plan
which is material to the limitations stated in this Section, such reductions
shall be made in benefits hereunder with respect to a Participant in this Plan
as is necessary to comply with the limitations of this Section.
11.11 OTHER CODE SECTION 415 PROVISIONS. (a) For purposes of applying the
limitations set forth in Sections 11.09 and 11.10, (1) all defined benefit
plans (whether or not terminated) of the Controlled Group shall be treated as
one defined benefit plan, and (2) all defined contribution plans (whether or
not terminated) of the Controlled Group shall be treated as one defined
contribution plan.
(b) If the Controlled Group has more than one defined benefit plan (1)
Section 11.09(b)(2) shall be applied separately to each such plan, but (2) in
applying Section 11.09(b)(2) to the aggregate of such defined benefit plans for
purposes of this Section, the high three years of Compensation taken into
account
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shall be the period of three consecutive calendar years during which the
individual had the greatest compensation from the Controlled Group.
(c) As used in Sections 11.09, 11.10 and this Section, the phrase
"Controlled Group" shall be construed in the light of Sections 414(b) and
414(c) of the Code, as modified by Sections 415(h), 414(m) and 414(n) of the
Code; the word "plan" shall include any plan or program required pursuant to
Section 415 of the Code to be taken into account in applying to this Plan the
limitations of Section 415 of the Code; and the terms "defined contribution
plan" and "defined benefit plan" shall have the respective meanings specified
in Section 415(k) of the Code.
(d) Where a Spouse's benefit hereunder is based on the Pension to which a
Participant is otherwise entitled, such Pension shall be calculated without
regard to the limitations set forth in Sections 11.09 and 11.10. Such
limitations shall then be applied to the Spouse's benefit as so calculated.
11.12 PROVISION PURSUANT TO CODE SECTION 401(A)(9).
(a) Notwithstanding any other provision of the Plan, the Accrued Benefit of
any Participant who, as of April 1 of the calendar year following the calendar
year in which he attains Age 70-1/2 has not commenced to receive distribution
of such Accrued Benefit, will commence to be distributed to him as of such
date, based on the amount of such Participant's Accrued Benefit as of such
date.
(b) The Accrued Benefit of a Participant described in Subsection (a) of
this Section shall be distributed in the manner
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described in Article IV hereof, treating the date described in Subsection (a)
of this Section as the Participant's Pension Commencement Date. Without
limiting the generality of the foregoing, a Participant required to commence
receiving his Pension pursuant to Subsection (a) of this Section shall be
permitted to elect to receive such Pension in any optional form of benefit
available hereunder, provided that any applicable spousal consent requirements
are satisfied with respect to such election.
(c) If a Participant accrues any additional benefits under the Plan after
the date described in Subsection (a) of this Section, such additional benefits
shall commence to be distributed, in the same form as the Pension then
currently being paid to such Participant, beginning with the first monthly
payment made in the calendar year following the calendar year in which such
additional benefit accrues. Notwithstanding the foregoing, such additional
benefit accruals shall be offset (in whole or in part), in accordance with the
regulations promulgated by the Secretary of the Treasury, by any benefit
payments then being made to the Participant hereunder.
(d) Distributions under the Plan shall be made in accordance with Section
401(a)(9) of the Code and Treasury Regulations issued thereunder, including
Treas. Reg. Section 1.401(a)(9)-2, provided that such provisions shall override
the other distribution provisions of the Plan only to the extent that they are
inconsistent with such other Plan provisions.
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ARTICLE XII - MISCELLANEOUS PROVISIONS
--------------------------------------
12.01 EMPLOYMENT RIGHTS. Nothing herein contained shall constitute or be
construed as a contract of employment between any Employer and any Employee or
Participant and all Employees shall remain subject to discipline, discharge and
layoff to the same extent as if the Plan had never gone into effect. An
Employer by adopting the Plan, making payments into the Trust Fund or taking
any other action with respect to the Plan does not obligate itself to continue
the employment of any Employee or Participant for any period or, except as
provided in Sections 6.01 and 13.02, to make any payments into the Trust Fund.
12.02 RIGHTS IN TRUST FUND. No person shall have any rights in or to the
Trust Fund or any part thereof except as and to the extent expressly provided
in the Plan or the Trust Agreement.
12.03 SEVERABILITY PROVISION. If any provision of the Plan or Trust
Agreement or the application thereof to any circumstance or person is declared
invalid by a court of competent jurisdiction, the remainder of the Plan or
Trust Agreement and the application of such provision to other circumstances or
persons shall not be affected thereby.
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ARTICLE XIII - EMPLOYERS
------------------------
13.01 EMPLOYERS. As of January 1, 1989, the Employers under the Plan are
The North American Coal Corporation (a Delaware corporation), Falkirk Mining
Company, The Coteau Properties Company, The Sabine Mining Company, Bellaire
Corporation, North American Coal Royalty Company and North American
Consultants, Inc. Any other person who is a Controlled Group Member may, with
the consent of the Board of Directors of the Company, adopt the Plan and
thereby become an Employer hereunder by (a) executing an instrument evidencing
such adoption which shall have been approved by its governing body (if any) and
(b) filing a copy of such instrument with the Trustee. Such adoption may be
subject to such terms and conditions as the Board of Directors of the Company
requires or approves.
13.02 COSTS TO BE SHARED. The costs of the Plan (including Employer
contributions pursuant to the Plan and expenses incurred in connection with the
Plan or the Trust Fund which are to be paid by the Employers) shall be shared
by the Employers on such basis as may be agreeable to the Company and the other
Employers and as will permit, to the extent possible, the deduction (for
purposes of federal taxes on income) by each Employer of its payments toward
such costs.
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ARTICLE XIV - AMENDMENT
-----------------------
14.01 RIGHT TO AMEND. The Company has reserved, and does hereby reserve,
the right to amend at any time and from time to time, by action of its Board of
Directors, any or all of the provisions of the Plan without the consent of any
Employee, Participant or Beneficiary or other person and without the consent of
any other Employer. By adopting the Plan and thereby becoming an Employer
hereunder, each Employer shall be deemed to have authorized the Company at any
time and from time to time to adopt amendments to the Plan that will be
effective with respect to such Employer. The Trust Agreement may be amended in
the manner and to the extent provided therein.
14.02 PROCEDURE. Any amendment of the Plan (a) shall be expressed in an
instrument executed by the Company on the order of its Board of Directors and
filed with the Trustee, (b) shall become part of the Plan and (c) shall become
effective as of the date designated in such instrument. If no such effective
date is so designated, such amendment shall become effective on the date of the
execution of such amendment.
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ARTICLE XV - TERMINATION
------------------------
15.01 RIGHT TO TERMINATE OR WITHDRAW. (a) The Company has reserved, and
does hereby reserve, the right (by action of its Board of Directors) to
terminate the Plan at any time (without the consent of any other Employer or of
any Employee, Participant, Beneficiary or other person) either in whole or in
part or as to any or all of the Employers or as to any designated group of
Employees (including former Employees) and their Beneficiaries. Any such
termination (1) shall be expressed in an instrument executed by the Company on
the order of its Board of Directors and filed with the Trustee and (2) shall
(except as may otherwise be required by applicable law) become effective as of
the date designated in such instrument or, if no such effective date is so
designated, on the date of the execution of such instrument.
(b) Any Employer (other than the Company) may elect separately to withdraw
from the Plan, without the consent of any other Employer or of any Employee,
Participant, Beneficiary or other person, and such withdrawal shall constitute
a termination of the Plan solely as to such Employer. Any such withdrawal and
termination (1) shall be expressed in an instrument executed by the terminating
Employer on the order of its Board of Directors or other governing body (if
any) and filed with the Company and the Trustee and (2) shall (except as may
otherwise be required by applicable law) become effective when so filed unless
some other effective date is designated in such instrument and approved by the
Company.
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15.02 APPLICATION OF ASSETS UPON TERMINATION. If the Plan is terminated
pursuant to Section 15.01 as to all Employees, Participants and Beneficiaries,
the assets remaining in the Trust Fund (available to provide benefits) shall be
allocated in accordance with applicable law for the purpose of paying benefits
provided for in the Plan. Any assets remaining in the Trust Fund after the
satisfaction of all liabilities under the Plan to Participants and
Beneficiaries shall be distributed to the Company.
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ARTICLE XVI - LIMITATION ON BENEFITS OF CERTAIN PARTICIPANTS
------------------------------------------------------------
16.01 RESTRICTION OF BENEFITS ON PLAN TERMINATION. Notwithstanding any
other provision of the Plan to the contrary, in the event of a termination of
the Plan, the benefit of any highly compensated Employee (and highly
compensated former Employee) shall be limited to a benefit that is
nondiscriminatory under Section 401(a)(4) of the Code.
16.02 RESTRICTION ON PLAN DISTRIBUTIONS. (a) Notwithstanding any other
provision of the Plan or Trust Agreement, the annual payments provided by the
Plan with respect to any Participant who is a highly compensated Employee or
highly compensated former Employee and who is one of the 25 highest paid
Employees of the Controlled Group (a "Restricted Participant") shall be
restricted to an amount equal to the payments that would be made on behalf of
the Restricted Participant under a single life annuity that is the Actuarial
Equivalent of the sum of (1) the Restricted Participant's Accrued Benefit, and
(2) the Restricted Participant's other benefits under the Plan.
(b) The limitations described in Subsection (a) of this Section shall not
apply if (1) after payment to a Restricted Participant of all of his benefits
under the Plan, the value of Plan assets equals or exceeds 110 percent of the
value of current liabilities, or (2) prior to payment to a Restricted
Participant of all of his benefits under the Plan, the value of the Restricted
Participant's benefits is less than one (1) percent of the value of the Plan's
current liabilities.
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16.03 MISCELLANEOUS PROVISIONS. (a) For purposes of this Article, the
term "highly compensated employee" shall mean an Employee described in Section
414(q) of the Code; the term "highly compensated former Employee" shall mean a
former Employee described in Section 414(q)(9) of the Code; the term "current
liabilities" shall mean those liabilities described in Section 412(l)(7) of the
Code; and the term "benefit" shall mean the Accrued Benefit of a Restricted
Participant, loans in excess of the amount specified in Section 72(p)(2)(A) of
the Code, any periodic income, any withdrawal values payable to a living
Employee, and any death benefits not provided for by insurance on the
Employee's life.
(b) The provisions of this Article are meant to comply with the
requirements of Proposed Treasury Regulation Section 1.401(a)(4)-5(c) and shall
be interpreted accordingly.
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ARTICLE XVII - TOP-HEAVY PLAN REQUIREMENTS
------------------------------------------
17.01 DEFINITIONS. For the purposes of this Article, the following terms,
when used with initial capital letters, shall have the following respective
meanings:
(a) AGGREGATION GROUP: Permissive Aggregation Group or Required
Aggregation Group as the context shall require.
(b) ANNUAL RETIREMENT BENEFIT: A benefit payable annually in the form of a
single life annuity (with no ancillary benefits) beginning at a Participant's
Normal Retirement Date.
(c) COMPENSATION: Except as specifically provided elsewhere in this
Article, "compensation" as defined in Section 11.09(a)(2), subject to the
limitations described in Section 1.14(b).
(d) DETERMINATION DATE: For any Plan Year, the last day of the immediately
preceding Plan Year.
(e) EXTRA TOP-HEAVY GROUP: An Aggregation Group if, as of a Determination
Date, the aggregate present value of accrued benefits for Key Employees in all
plans in the Aggregation Group is more than ninety percent (90%) of the
aggregate present value of all accrued benefits for all Employees in such
plans.
(f) EXTRA TOP-HEAVY PLAN: See Section 17.03.
(g) FORMER KEY EMPLOYEE: A Non-Key Employee with respect to a Plan Year
who was a Key Employee in a prior Plan Year, and his Beneficiary in the event
of his death.
(h) KEY EMPLOYEE: An Employee or former Employee who, at any time during
the current Plan Year or any of the four
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preceding Plan Years, is (1) an officer of a Controlled Group Member (as the
term "officer" is limited in Section 416(i)(1)(A) of the Code) having an annual
Compensation, effective as of January 1, 1987, greater than 50 percent of the
amount in effect under Section 415(b)(1)(A) of the Code for any such Plan Year,
(2) one of the 10 Employees having annual Compensation from the Controlled
Group of more than the limitation in effect under Section 415(c)(1)(A) of the
Code and owning (or considered as owning within the meaning of Section 318 of
the Code) the largest interests in a Controlled Group Member, (3) a 5-percent
owner (as such term is defined in Section 416(i)(1)(B)(i) of the Code) of a
Controlled Group Member, or (4) a 1-percent owner (as such term is defined in
Section 416(i)(1)(B)(ii) of the Code) of a Controlled Group Member having an
annual Compensation from the Controlled Group of more than $150,000. For
purposes of paragraph (2) of this Subsection, if two Employees have the same
interest in a Controlled Group Member, the Employee having greater annual
Compensation therefrom shall be treated as having a larger interest. The term
"Key Employee" shall also include such Employee's Beneficiary in the event of
his death. For purposes of this Subsection, "Compensation" has the meaning
given such term by Section 414(q)(7) of the Code.
(i) NON-KEY EMPLOYEE: An Employee or former Employee who is not a Key
Employee, and his Beneficiary in the event of his death.
(j) PERMISSIVE AGGREGATION GROUP: The group of qualified plans of the
Controlled Group consisting of:
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(1) the plans in the Required Aggregation Group; plus
(2) one or more plans designated from time to time by the Pension Committee
that are not part of the Required Aggregation Group but that satisfy the
requirements of Sections 401(a)(4) and 410 of the Code when considered with
the Required Aggregation Group.
(k) REQUIRED AGGREGATION GROUP: The group of qualified plans of the
Controlled Group consisting of,
(1) each plan in which a Key Employee participates; and
(2) each other plan which enables a plan in which a Key Employee
participates to meet the requirements of Section 401(a)(4) or 410 of the
Code.
(l) TOP-HEAVY ACCRUED BENEFIT: A Participant's (including a Participant
who has received a total distribution from the Plan) or a Beneficiary's Accrued
Benefit under the Plan as of the valuation date coinciding with or immediately
preceding the Determination Date, provided, however, that (1) such Accrued
Benefit shall include the aggregate distributions made to such Participant or
Beneficiary during the five consecutive Plan Years ending with the Plan Year
that includes the Determination Date (including distributions under a
terminated plan which if it had not been terminated would have been included in
a Required Aggregation Group) and (2) if an Employee or former Employee has not
performed services for any Employer maintaining the Plan at any time during the
five-year period ending on the Determination Date, any Accrued Benefit for such
Employee or former Employee
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(or the Accrued Benefit of his Beneficiary) shall not be taken into account.
Effective January 1, 1987, a Participant's Accrued Benefit under this paragraph
shall be determined (i) under the method which is used for accrual purposes for
all plans of the Employer, or (ii) if there is no such method, as if such
benefit accrued not more rapidly than the lowest accrual rate permitted under
Section 411(b)(1)(C) of the Code.
(m) TOP-HEAVY GROUP: An Aggregation Group if, as of a Determination Date,
the aggregate present value of accrued benefits for Key Employees in all plans
in the Aggregation Group is more than sixty percent (60%) of the aggregate
present value of accrued benefits for all Employees in such plans.
(n) TOP-HEAVY PLAN: See Section 17.02.
17.02 DETERMINATION OF TOP-HEAVY STATUS. The Plan shall be a Top-Heavy
Plan if, as of a Determination Date, the Plan is not included in a Permissive
Aggregation Group which is not a Top-Heavy Group, and:
(a) the aggregate present value of Top-Heavy Accrued Benefits for Key
Employees is more than sixty percent (60%) of the aggregate present value of
Top-Heavy Accrued Benefits of all Employees, excluding for this purpose the
aggregate Top-Heavy Accrued Benefits of Former Key Employees; or
(b) the Plan is included in a Required Aggregation Group which is a
Top-Heavy Group.
17.03 DETERMINATION OF EXTRA TOP-HEAVY STATUS. The Plan shall be an Extra
Top-Heavy Plan if, as of the Determination
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Date, the Plan is not included in a Permissive Aggregation Group which is not
an Extra Top-Heavy Group, and:
(a) the aggregate present value of Top-Heavy Accrued Benefits for Key
Employees is more than ninety percent (90%) of the aggregate present value of
all Top-Heavy Accrued Benefits of all Employees, excluding for this purpose
the aggregate present value of Top-Heavy Accrued Benefits of Former Key
Employees; or
(b) the Plan is included in a Required Aggregation Group which is an Extra
Top-Heavy Group.
17.04 TOP-HEAVY PLAN REQUIREMENTS. Notwithstanding any other provisions of
the Plan to the contrary, if the Plan is a Top-Heavy Plan for any Plan Year,
the Plan shall then satisfy the following requirements for such Plan Year:
(a) MINIMUM VESTING REQUIREMENT. An Employee who has completed at least
two years of Vesting Service shall have a nonforfeitable right to a percentage
of his Accrued Benefit derived from Employer contributions determined under the
following table:
<TABLE>
<CAPTION>
Years of Vesting Nonforfeitable
SERVICE PERCENTAGE
-----------------------------------
<S> <C>
less than 2............... 0
2......................... 20
3......................... 40
4......................... 60
5......................... 100
</TABLE>
(b) MINIMUM BENEFIT REQUIREMENT. Except as otherwise provided in
Subsection (d) of this Section, the Accrued Benefit derived from Employer
contributions of each Participant who is a Non-Key Employee, when expressed as
an Annual Retirement Benefit, shall be not less than the lesser of:
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(1) two percent (2.0%) of the Participant's average Compensation for years
in the testing period times his years of Benefit Service; or
(2) twenty percent (20%) of the Participant's average Compensation for
years in the testing period.
For purposes of this Subsection, years of Benefit Service completed in a Plan
Year of the Prior Plan beginning before January 1, 1984 and years of Benefit
Service during which a Plan Year ended for which the Plan was not a Top-Heavy
Plan shall not be taken into account. The testing period under this Subsection
shall be the period of consecutive years (not exceeding five) during which the
Participant had the greatest aggregate Compensation from the Controlled Group,
provided that years shall not be included
(i) which are not included in years of Benefit Service under this
Subsection;
(ii) which end in a Plan Year of the Prior Plan beginning before January
1, 1984; and
(iii) which begin after the close of the last year in which the Plan was
a Top-Heavy Plan or an Extra Top-Heavy Plan.
(c) ADJUSTMENT TO MAXIMUM BENEFITS AND ALLOCATIONS. If the Plan is a
Top-Heavy Plan for any Plan Year, and if the Controlled Group maintains a
defined contribution plan which could or does provide benefits to Participants
in this Plan:
(1) If the Plan is not an Extra Top-Heavy Plan (but is a Top-Heavy
Plan), then "three percent (3%)" shall be substituted for "two percent (2%)"
in paragraph (1) of
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Subsection (b) of this Section and "20 percent" in paragraph (2) of
Subsection (b) of this Section shall be increased by one percentage point
for each year for which such Plan was taken into account under this
Subsection.
(2) If the Plan is an Extra Top-Heavy Plan, then the limitation of Section
11.10 shall be calculated by substituting "1.0" for "1.25" each place such
"1.25" figure appears therein.
17.05 COORDINATION WITH OTHER PLANS. (a) In applying this Article, an
Employer and all Controlled Group Members shall be treated as a single
employer, and the qualified plans maintained by such single employer shall be
taken into account.
(b) In the event that another defined contribution plan or defined benefit
plan maintained by the Controlled Group provides contributions or benefits on
behalf of Participants in this Plan, such other plan shall be taken into
account in determining whether this Plan satisfies Section 17.04, and the
minimum benefit required for a Non-Key Employee in this Plan under Section
17.04(b) will be eliminated if the Controlled Group maintains another qualified
plan under which such minimums are required to be provided.
17.06 CONSTRUCTION. The term "present value of accrued benefits" as used
in this Article shall in all appropriate cases include account balances of
affected Employees.
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Dated as of January 1, 1989, but actually executed on this 28th day of
December, 1991.
THE NORTH AMERICAN COAL CORPORATION
By /s/ THOMAS A. KOZA
-----------------------------
Title: Vice President --
Law Administration
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<TABLE>
The North American Coal Corporation Exhibit A
Basis for Determining Actuarial Equivalence
1. Interest rate: 8%
2. Mortality rates *:
<CAPTION>
Age Rate Age Rate Age Rate
<S> <C> <C> <C> <C> <C>
16 0.000451 50 0.004936 84 0.111961
17 0.000463 51 0.005493 85 0.120611
18 0.000476 52 0.006086 86 0.129574
19 0.000491 53 0.006716 87 0.138741
20 0.000507 54 0.007379 88 0.148254
21 0.000525 55 0.008079 89 0.158204
22 0.000545 56 0.008762 90 0.168612
23 0.000566 57 0.009472 91 0.179291
24 0.000590 58 0.010239 92 0.190140
25 0.000616 59 0.011156 93 0.201894
26 0.000646 60 0.012198 94 0.215629
27 0.000678 61 0.013335 95 0.230437
28 0.000714 62 0.014534 96 0.245797
29 0.000753 63 0.015824 97 0.262348
30 0.000797 64 0.017371 98 0.280217
31 0.000845 65 0.019204 99 0.299501
32 0.000898 66 0.021423 100 0.320857
33 0.000957 67 0.023920 101 0.344235
34 0.001021 68 0.026620 102 0.369698
35 0.001093 69 0.029516 103 0.399202
36 0.001171 70 0.032814 104 0.434608
37 0.001257 71 0.036360 105 0.477745
38 0.001354 72 0.039929 106 0.530596
39 0.001460 73 0.043436 107 0.595125
40 0.001578 74 0.047046 108 0.670666
41 0.001723 75 0.050972 109 0.761543
42 0.001916 76 0.055548 110 0.893672
43 0.002151 77 0.061040 111 0.903405
44 0.002430 78 0.067171 112 0.915467
45 0.002747 79 0.073613 113 0.930337
46 0.003102 80 0.080584 114 0.947837
47 0.003498 81 0.087846 115 0.968937
48 0.003936 82 0.095434 116 1.000000
49 0.004417 83 0.103535
<FN>
* Mortality rates based on the 1971 TPF&C Mortality Table using 80% male rates and 20% female rates.
</TABLE>
VOL402CL Doc: 154112.1
<PAGE> 103
EXHIBIT B
---------
This Exhibit B contains the pension benefit formula from the
Plan prior to its amendment and restatement on January 1, 1989. Words used in
this Exhibit B with initial capital letters are used herein as defined in the
Plan prior to its amendment and restatement on January 1, 1989.
The "Regular Pension" under the Plan shall be a monthly amount
equal to the difference between (a) the sum of:
(1) 1.7% of the Participant's Final Average Monthly Pay times
1/12th of the number of his months of Benefit Service (not in excess of
360 months) at the time of his Qualifying Termination plus
(2) 0.5% of his Final Average Monthly Pay times 1/12th of the
number of months (if any) by which his months of Benefit Service at
the time of his Qualifying Termination exceeds 360 months
and (b) 1.7% of his Social Security Benefit times 1/12th of the number of his
months of Benefit Service (not in excess of 360 months) at the time of his
Qualifying Termination. However, (c) in the case of a Participant whose
Qualifying Termination occurs before his Normal Retirement Date, the amount
specified in Subsection (b) of this Section 4.01 shall not exceed 83-1/3% of
his Social Security Benefit times the Service to Potential Service Ratio and
(d) a Participant's Normal Retirement, Early Retirement or Deferred Vested
Pension is subject to the limitations in Article XI hereof pursuant to Code
Section 415 and in Article XVI hereof.
VOL402CL Doc: 154112.1
<PAGE> 1
Exhibit (lxxii)
AMENDMENT NO. 1
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. 1 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, 1989. Words and phrases used
herein with initial capital letters which are defined in the Plan are used
herein as so defined.
SECTION 1
---------
Section 5.07 of the Plan is hereby deleted from the Plan.
EXECUTED this 6th day of August, 1993, to be effective as stated
herein.
THE NORTH AMERICAN COAL
CORPORATION
By: Thomas A. Koza
-----------------------------
Title: Vice President-
Law and Administration
and Secretary
VOL402CL Doc: 154123.1
<PAGE> 1
Exhibit (lxxiii)
AMENDMENT NO. 2
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. 2 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 the dates indicated herein and, pursuant to
Internal Revenue Service Notice 92-36, shall be combined with the provisions of
all other amendments to the Plan which are effective on or after January 1,
1989 and treated as a single amendment for purposes of the nondiscrimination
requirements of the Internal Revenue Code. Words and phrases used herein with
initial capital letters which are defined in the Plan are used herein as so
defined.
SECTION 1
---------
Effective December 31, 1993, the following new sentence is hereby added to
the end of the Preamble to the Plan:
"Effective December 31, 1993, the NACCO Industries, Inc. Pension Plan for
Salaried Employees was merged into the Plan."
SECTION 2
---------
Effective December 31, 1993, Section 1.10(d) (ii) of the Plan is hereby
amended by adding the phrase "or the Merged Plan" after the phrase "an Other
Group Plan" each tide it appears therein.
SECTION 3
---------
Effective as of January 1, 1989, a new Section 1.10A is hereby added to the
Plan, immediately following Section 1.10, to read as follows:
"1.10A CAPPED PARTICIPANT: A Participant whose Accrued Benefit on December
31, 1988 or December 31, 1993 is based upon Compensation in excess of the limit
contained in Section 401(a) (17) of the Code as in effect on or after such
date(s)."
VOL402CL Doc: 154124.1
<PAGE> 2
2
SECTION 4
---------
Effective as of January 1, 1989, the following sentence is hereby added
after the first sentence of Section 1.14(b) of the Plan to read as follows:
"In applying the Code Section 401(a) (17) limit for the 1989 through (and
including) 1993 Plan Years, the Code Section 401(a) (17) limit in effect
during the Year of calculation shall be applied for all purposes when
calculating a Capped Participant's Accrued Benefit."
SECTION 5
---------
Effective as of January 1, 1989, the second sentence of Section 1.14(b) of
the Plan is hereby amended by deleting the phrase "For purposes of the
preceding sentence" and replacing it with the phrase "For purposes of
calculating the limit contained in Section 401(a) (17) of the Code."
SECTION 6
---------
Effective January 1, 1994, Section 1.18 of the Plan is hereby amended in its
entirety to read as follows:
"1.18 COVERED EMPLOYEE: A salaried Employee of The Falkirk Mining Company,
The Coteau Properties Company, The Sabine Mining Company, Bellaire Corporation,
North American Coal Royalty CoMpany, or The North American Coal Corporation
(including, effective January 1, 1994, a salaried Employee associated with the
Dallas Accounting Division) or a salaried Employee of any other Employer.
Notwithstanding the foregoing, no Employee who is employed in an Excluded
Bargaining Unit or who is a leased employee (as defined in Section 1.24) shall
be a Covered Employee."
SECTION 7
---------
Effective January 1, 1994, Section 1.25 of the Plan is hereby amended in its
entirety to read as follows:
"1.25 EMPLOYER: Any person which adopts the Plan pursuant to Article XIII
hereof. As of January 1, 1994, the Employers under the Plan are The Falkirk
Mining Company, The Coteau Properties Company, The Sabine Mining Company,
Bellaire Corporation, North American Coal Royalty Company, and The North
American Coal Corporation. In the case of any person which adopts the Plan and
which (a) ceases to exist, (b) ceases to be a member of the Controlled Group or
(c) withdraws or is eliminated from the Plan, it shall not thereafter be an
Employer."
VOL402CL Doc: 154124.1
<PAGE> 3
3
SECTION 8
---------
Effective as of January 1, 1989, Section 1.30(a) of the Plan is hereby
amended by deleting the phrase "For a particular Plan Year" in the first line
thereof and replacing it with the phrase "For a particular Plan Year, unless an
Employer elects one of the simplified methods contained in Code Section 414(q)
(12) or Revenue Procedure 93-42,".
SECTION 9
---------
Effective December 31, 1993, a new Section 1.35A is hereby added to the
Plan, immediately following Section 1.35, to read as follows:
"1.35A MERGED PLAN: The NACCO Industries, Inc. Pension Plan for Salaried
Employees, as it existed from December 1, 1986 through December 31, 1993.
Effective December 31, 1993, the Merged Plan was merged into this Plan."
SECTION 10
----------
Effective December 31, 1993, Section 1.36 of the Plan is hereby amended in
its entirety to read as follows:
"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 accrued benefit under such 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
sentences."
SECTION 11
----------
Effective December 31, 1993, Section 1.41 of the Plan is hereby amended in
its entirety to read as follows:
"1.41 OTHER GROUP PLAN: The NACCO Industries, Inc. Pension Plan for
Salaried Employees that was terminated effective November 30, 1986 and The
North American Coal Corporation Pension Plan for Salaried Employees that was
terminated effective December 31, 1989."
VOL402CL Doc: 154124.1
<PAGE> 4
4
SECTION 12
----------
Effective December 31, 1993, Section 1.49 of the Plan is hereby amended by
adding the following sentence at the end thereof:
"Effective December 31, 1993, the Merged Plan was merged into the Plan."
SECTION 13
----------
Effective January 1, 1994, Section 1.58 of the Plan is hereby amended in its
entirety to read as follows:
"1.58 TRUST: The trust created by the Trust Agreement."
SECTION 14
----------
Effective January 1, 1994, Section 1.59 of the Plan is hereby amended in its
entirety to read as follows:
"1.59 TRUST AGREEMENT: The Trust Agreement between the Company and the
Trustee, as such Trust Agreement may be amended or restated from time to time,
or any trust agreement superseding the same. The Trust Agreement is hereby
incorporated in the Plan by reference."
SECTION 15
----------
Effective January 1, 1994, Section 1.60 of the Plan is hereby amended in its
entirety to read as follows:
"1.60 TRUST FUND: The assets held in trust under the provisions of the
Trust Agreement, without distinction as to principal or income."
SECTION 16
----------
Effective January 1, 1994, Section 1.61 of the Plan is hereby amended in its
entirety to read as follows:
"1.61 TRUSTEE: The trustee or trustees under the Trust Agreement or its or
their successor or successors in trust under such Trust Agreement.
SECTION 17
----------
Effective December 31, 1993, Section 3.01 of the Plan is hereby amended by
adding the following sentence to the end thereof:
VOL402CL Doc: 154124.1
<PAGE> 5
5
"Notwithstanding the foregoing, 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."
SECTION 18
----------
Effective December 31, 1993, Section 4.01 of the Plan is hereby amended (1)
by adding the letter "(a)" to the beginning of the first sentence thereof, and
(2) by adding the following new Subsection (b) to the end thereof:
"(b) Notwithstanding the foregoing,the provisions of this Subsection (b)
shall apply to the calculation of a Participant's Normal Retirement Pension
in the event that the amount determined hereunder exceeds the amount
determined under the provisions of Section (a) of this Section. The Normal
Retirement Pension of a Participant under this Subsection (b) shall be a
monthly amount equal to the sum of A plus B, where:
A = the amount determined under Subsection (a) of this Section, taking
into account only the Participant's years of Benefit Service earned on
or after January 1, 1994; and
B = the greater of (i) the SUM OF the Participant's Accrued Benefit under
the Plan (or the Merged Plan) as of December 31, 1988, taking into
account only the Participant's years of Benefit Service earned prior
to January 1, 1989,PLUS the sum of the Participants' Accrued Benefits
earned under the Plan (or the Merged Plan) during the 1989 through
(and including) 1993 Plan Years, OR (ii) the Participant's Accrued
Benefit as of December 31, 1993 under the Plan (or the Merged Plan),
taking into account only years of Benefit Service earned prior to
December 31, 1993.
The total years of Benefit Service taken into account under this Subsection
(b) may not exceed 30. In the event that a Participant has been credited
with years of Benefit Service in excess of 30, such excess years of Benefit
Service shall be subtracted from the portion of the benefit formula described
in Paragraph (A) of this Subsection (b)."
VOL402CL Doc: 154124.1
<PAGE> 6
6
SECTION 19
----------
Effective as of January 1, 1989, Section 4.07 of the Plan is hereby amended
(1) by adding the letter "(b)" before the second sentence of Subsection (a)
thereof and (2) by re-lettering Subsection (b) thereof as Subsection (c)
thereof.
SECTION 20
----------
Effective as of January 1, 1989, Section 4.08(a) of the Plan is hereby
amended by adding the phrase "Subject to the provisions of Sections 4.07(b) and
4.07(c)," at the beginning of the first sentence thereof.
SECTION 21
----------
Effective as of January 1, 1989, Section 4.09((b)(2) of the Plan is hereby
amended by deleting the phrase "within a reasonable period of time before the
Participant's Pension Commencement Date" and replacing it with the phrase "not
more than 90 days nor less than 30 days before the Participant's Pension
Commencement Date."
SECTION 22
----------
Effective as of January 1, 1993, a new Section 5.03(d) is hereby added to
the Plan, immediately following Section 5.03(c), to read as follows:
"(d) Notwithstanding any provision of the Plan to the contrary, to the extent
required under Section 401(a) (31) of the Code, if a Participant or
Beneficiary (provided such Beneficiary is a Spouse) is eligible to receive a
distribution from the Plan that constitutes an "eligible rollover
distribution" (as defined in Section 402(c) (4) of the Code), the Participant
or Beneficiary may elect to directly transfer all or a portion of such
distribution from the Plan to an eligible retirement plan (as defined in
Section 402(c) (8) (B) of the Code). The Committee shall prescribe
reasonable procedures for the elections to be made pursuant to this
Subsection and shall provide written notice to the Participant or Spouse
(within the time period prescribed by treasury regulations or rulings)
describing the rights under this Subsection and such other information
required to be provided under Section 402(f) of the Code."'
VOL402CL Doc: 154124.1
<PAGE> 7
7
SECTION 23
----------
Effective January 1, 1994, Section 6.06 of the Plan is hereby amended in its
entirety to read as' follows:
"6.06 FUNDING POLICY. The Investment Committee shall determine, establish
and carry out a funding policy and method consistent with the objectives of the
Plan and the requirements of Title I of ERISA. Subject to the right to amend'
and/or terminate the Plan, the Company shall contribute (or cause the Employers
to contribute) to the Plan from time to time any amounts that may be required
by applicable law or by any other Section of the Plan."
SECTION 24
----------
Effective January 1, 1994, Article VIII of the Plan is hereby amended in its
entirety to read as follows:
"ARTICLE VIII - INVESTMENT COMMITTEE
-----------------------------------
8.01 INVESTMENT COMMITTEE: NACCO Industries, Inc. has established a
"Retirement Funds Investment Committee" (the "Investment Committee") pursuant
to the terms of an Instrument of Creation and Delegation dated October 28,
1992, as such Instrument may be amended from time to time. In addition to the
responsibilities specifically given to the Investment Committee under the Plan
and Trust Agreement, the Investment Committee shall have such other
responsibilities with respect to the Plan (and other defined benefit plans and
defined contribution plans of the Controlled Group) as are granted to such
Investment Committee in the Instrument. In the absence of an Investment
Committee, NACCO Industries, Inc. shall perform the duties allocated to such
Committee under the Plan and Trust Agreement."
SECTION 25
----------
Effective January 1, 1994, Sections 13.01, 14.01, 14.02 and 15.01 of the
Plan are hereby amended by deleting the phrase "Board of Directors" and
replacing it with the phrase "the Nominating, Organization and Compensation
Committee of its Board of Directors" each time it appears therein.
SECTION 26
----------
Effective as of January 1, 1989, Section 16.03(b) of the Plan is hereby
amended by deleting the phrase "Proposed Treasury Regulation Section
1.401(a)(4)-5(c)" and replacing it with the phrase "Treasury Regulation Section
1.401(a)(4)-5(b)."
VOL402CL Doc: 154124.1
<PAGE> 8
8
EXECUTED this 29th day of December, 1993, to be effective as stated
herein.
THE NORTH AMERICAN COAL CORPORATION
By Thomas A. Koza
-------------------------------
Title: Vice President-
Law and Administration
and Secretary
VOL402CL Doc: 154124.1
<PAGE> 1
Exhibit 10(lxxxix)
NACCO INDUSTRIES, INC.
1995 ANNUAL INCENTIVE COMPENSATION PLAN
--------------------------------------------------------------------------------
GENERAL
-------
NACCO Industries, Inc. (the "Company") has established an Annual
Incentive Compensation Plan ("Plan") as part of a competitive compensation
program for officers and key management employees of the Company.
PLAN OBJECTIVE
--------------
The Company desires to attract and retain talented employees to enable
the Company to meet its financial and business objectives. The objective of
the Plan is to provide an opportunity to eam amual incentive compensation to
those employees whose performance has a significant impact on the Company's
short-term and long-term profitability.
ADMINISTRATION AND PARTICIPATION
--------------------------------
The Plan is administered by the Nominating, Organization and
Compensation Committee of the Board of Directors of the Company (the
"Committee"). The Committee:
a. May amend, modify, or discontinue the Plan.
b. Will approve participation in the Plan. Participants will
include all executive officers and certain key employees.
However, the Committee may select any employee who has
contributed significantly to the Company's profitability to
participate in the Plan and receive an annual incentive
compensation award.
c. Will determine the annual performance criteria which generate the
incentive compensation pool.
d. Will determine the total amount of both the target and actual
annual incentive compensation pool.
e. Will approve individual incentive compensation awards to officers
and key employees.
f. May delegate to the Chief Executive Officer of the Company the
approval of incentive compensation awards to employees below the
officer level.
<PAGE> 2
g. May consider at the end of each year the award of a discretionary
bonus amount to non-participants as an addition to the regular
incentive compensation pool on a special one-time basis to
motivate individuals not eligible to participate in the Plan.
h. May approve a pro rata incentive compensation award for
participants in the Plan whose employment is terminated (1) due
to death, disability, retirement or facility closure, such award
to be determined pursuant to the provisions of subparagraphs e.
and f. above or (2) under other circumstances at the
recommendation of the Chief Executive Officer of the Company.
DETERMINATION OF CORPORATE INCENTIVE COMPENSATION POOL
------------------------------------------------------
Each participant in the Plan will have an individual target incentive
compensation percentage which is determined by the participant's salary level.
This percentage is multiplied by the mid-point of the participant's salary
range to determine his individual target incentive compensation award. The
total of the target incentive compensation awards of all participants equals
the target corporate incentive compensation pool ("Target Pool"). The Target
Pool is approved each year by the Committee.
The actual corporate incentive compensation pool ("Actual Pool") is
determined at the end of each year based on the Company's actual performance
against specific criteria established in the beginning of the year by the
Committee. The Target Pool is adjusted upwards or downwards by corporate
performance adjustment factors to determine the Actual Pool. In no event will
the Actual Pool exceed 150% of the Target Pool, except to the extent that the
Committee elects to increase the total of all individual incentive compensation
awards to not more than 110% of the Actual Pool, as described below.
It is the intent of the Plan that the Actual Pool, as determined above,
will be the final total corporate incentive compensation pool. However, the
Committee, in its sole discretion, may increase or decrease by up to 10% the
Actual Pool or may approve an incentive compensation pool where there would
normally be no pool due to Company performance which is below the criteria
established for the year.
DETERMINATION OF INDIVIDUAL INCENTIVE COMPENSATION AWARDS
---------------------------------------------------------
Salary grades and the corresponding target incentive percentages for
each participant in the plan will be established at the beginning of each year
and approved by the Committee. Individual target incentive compensation will
then be adjusted by the appropriate pool factor. Such adjusted individual
incentive compensation will then be further modified based on a Participant's
performance as compared to his individual goals for the year.
-2-
<PAGE> 3
The total of all individual incentive compensation awards must not
exceed 110% of the Actual Pool for the year.
a. Example of Calculation for Determination of Actual Pool
<TABLE>
<CAPTION>
Target Actual Achievement Payout
Sub Pool Criteria Weighting Performance Performance Percentage* Percentage
----------------- --------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Intentionally Omitted
<FN>
-------------
* Achievement % is determined by applying a different formula to the Actual
Performance for each Sub Pool Criteria
</TABLE>
b. Example of Calculation for Determination of lndividual lncentive
Compensation Awards
John Doe Base Pay $100,000
Annual Incentive Compensation Percentage 20%
1. Total Payout Percentage: 107.16% of Target
2. Individual Performance factor: 95.0%
3. 107.16% x 95.0% = 101.80%
4. 101.80% x 20% = 20.36% Adjusted Percentage
5. 20.36% x $100,000 = $20,360 Individual Incentive Compensation Award
1995 PERFORMANCE TARGETS
------------------------
See Plan Sumary.
-3-
<PAGE> 1
Exhibit (xc)
AMENDMENT NO. 3
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. 3 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 March 15, 1994. Words and phrases used
herein with initial capital letters which are defined in the Plan are used
herein as so defined.
SECTION 1
---------
Subsection 1.10(d) of the Plan is hereby amended by adding the following new
paragraph (iii) to the end thereof:
"(iii) The provisions of this Subsection shall not apply to any Participant
who first becomes a Covered Employee on or after March 15, 1994."
SECTION 2
---------
Subsection 4.05(a) of the Plan is hereby amended by adding the following
sentence to the end thereof:
"Notwithstanding the foregoing, the provisions of this Subsection (a) shall
not apply to any Participant who first becomes a Covered Employee on or
after March 15, 1994."
SECTION 3
---------
Sections 13.01, 14.01, 14.02 and 15.01 of the Plan are hereby amended by
deleting the phrase "the Nominating, Organization and Compensation Committee of
its Board of Directors" and replacing it with the phrase "its Board of
Directors or the Nominating, Organization and Compensation Committee of the
Board of Directors" each time it appears therein.
EXECUTED this 11th day of March, 1994, to be effective as stated
herein.
THE NORTH AMERICAN COAL CORPORATION
By Thomas A. Koza
---------------------------------
Title: Vice President-
Law and Administration
VOL402CL Doc: 154127.1
<PAGE> 1
Exhibit 10 (xcix)
AMENDMENT NO. 1
TO
THE NORTH AMERICAN COAL CORPORATION
VALUE APPRECIATION PLAN
(AS AMENDED AND RESTATED AS OF MARCH 11, 1992)
----------------------------------------------
The North American Coal Corporation hereby adopts this Amendment No. 1 to The
North American Coal Corporation Value Appreciation Plan (As Amended and
Restated as of March 11, 1992) (the "Plan"). The provisions of this Amendment
shall be effective as of December 7, 1994. Words and phrases used herein with
initial capital letter which are defined in the Plan are used herein as so
defined.
SECTION 1
---------
Section 5.2(a) of the Plan hereby is amended by adding the following
sentence at the end thereof:
"Notwithstanding the foregoing, the Committee may vest a Participant who
retires or whose employment otherwise terminates in such amounts, up to 100
percent of his VAP Account, as the Committee may in its sole discretion
determine".
SECTION 2
---------
Section 9 of the Plan hereby is amended to read in its entirety as follows:
9. Amendment and Termination
-------------------------
The Committee or the Board of Directors of the Company may alter, amend
or terminate this Plan from time to time; provided, however, that no
modification, or amendment of this Plan shall, without the consent of a
Participant, affect the
<PAGE> 2
Participant's rights in an outstanding Award under this Plan; and further
provided, however, that upon termination of this Plan, all outstanding Awards
shall vest 100 percent immediately thereupon, and shall be paid in
accordance with Section 5.2.
EXECUTED this 14th day of December, 1994, to be effective as stated
herein.
Title: Thomas A. Koza
-------------------------------
By: Vice President
-------------------------------
<PAGE> 1
Exhibit 10(xxii)
NACCO MATERIALS HANDLING GROUP, INC.
UNFUNDED BENEFIT PLAN
(As Amended and Restated Effective October 1, 1994)
INSTRUMENT OF ADOPTION AND MERGER
---------------------------------
WHEREAS, NACCO Industries, Inc. ("NACCO") employees became
covered under the profit sharing portion of the NACCO Materials Handling Group,
Inc. Profit Sharing Plan (the "Qualified Plan") and the NACCO Materials
Handling Group, Inc. Unfunded Benefit Plan (the "Plan"), effective December 31,
1993;
WHEREAS, NACCO adopted the Before Tax Contributions and
Matching Employer Contributions portions of the Qualified Plan effective
December 1, 1994; and
WHEREAS, NACCO employees are covered under The North American
Coal Corporation Deferred Compensation Plan for Management Employees (the
"North American Coal Plan") with respect to their excess Before Tax
Contributions and excess Matching Employer Contributions and NACCO desires to
cover such employees under the Plan effective January 1, 1995;
NOW THEREFORE:
NACCO hereby adopts the Plan for the benefit of its employees
who satisfy the requirements of a "Participant" (as defined in Section 2.14 of
the Plan, as amended by Amendment No. 2), effective January 1, 1995. As a
result, effective January 1, 1995, NACCO shall provide excess Before Tax
Contributions and excess Matching Employer Contributions to NACCO 401(k)
Employees through the Plan and the liabilities of NACCO to NACCO 401(k)
Employees shall continue after January 1, 1995 under the Plan. Any such
liabilities of NACCO existing as of December 31, 1994 under the North American
Coal Plan shall be transferred from the North American Coal Plan to the Plan
effective January 1, 1995.
Date: 12/30/94 NACCO INDUSTRIES, INC.
By: Steven M. Billick
------------------
Title: Vice President & Controller
----------------------------
CL Doc: 137632.1
NYMAIN Doc: 93993.1
504810-145-019
<PAGE> 2
This Instrument of Adoption and Merger and the terms and
provisions hereof are hereby consented to by NACCO Materials Handling Group,
Inc., the sponsor of the Plan.
NACCO MATERIALS HANDLING
GROUP, INC.
By: Charles A. Bittenbender
------------------------
Title: Assistant Secretary
---------------------
CL Doc: 137632.1
NYMAIN Doc: 93993.1
504810-145-019
<PAGE> 1
10(cvi)
AMENDMENT NO. 1
TO THE
MASTER TRUST AGREEMENT
BETWEEN
NACCO INDUSTRIES, INC.
AND
STATE STREET BANK AND TRUST COMPANY
-----------------------------------
NACCO Industries, Inc. (the "Company") hereby adopts this Amendment No. 1 to
the Master Trust Agreement (the "Agreement") dated as of October 1, 1992
between the Company and State Street Bank and Trust Company (the "Trustee").
The provisions of this Amendment shall be effective as of January 1, 1993.
Words and phrases used herein with initial capital letters which are defined in
the Agreement are used herein as so defined.
Section 1
---------
The preamble to the Agreement is hereby amended by deleting the seventh
"WHEREAS" clause therefrom and replacing it with the following:
"WHEREAS, the Company and the Subsidiaries have appointed the Trustee
as successor trustee to the trustees under such trust agreements and
the Company and the Subsidiaries and the Trustee desire to amend and
restate such trust agreements in their entirety."
Section 2
---------
Schedule A to the Agreement is hereby amended in its entirety to read as
follows:
"1. The Hyster-Yale Profit Sharing Retirement Plan;
2. The North American Coal Corporation Retirement Savings Plan (formerly
known as The NACCO Industries, Inc. Savings Plan); and
3. The Hamilton Beach/Proctor-Silex, Inc. Employees' Retirement Savings
Plan."
VOL402CL Doc: 154252.1
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers on the dates shown below.
NACCO INDUSTRIES, INC.
Date: 12/15/92 By: Charles Bittenbender
------------------ ---------------------------
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY
Date: 1/7/93 By:
---------------------------
Title: Vice President
VOL402CL Doc: 154252.1 2
<PAGE> 1
10 (cxxxix)
AMENDMENT NO. 1
TO THE
MASTER TRUST AGREEMENT
BETWEEN
NACCO INDUSTRIES, INC.
AND
STATE STREET BANK AND TRUST COMPANY
FOR
DEFINED BENEFIT PENSION PLANS
NACCO Industries, Inc. (the "Company") hereby adopts this Amendment No. 1 to
the Master Trust Agreement (the "Agreement") dated January 1, 1994 between the
Company and State Street Bank and Trust Company (the "Trustee"). The
provisions of this Amendment shall be effective as of January 1, 1995. Words
and phrases used herein with initial capital letters which are defined in the
Agreement are used herein as so defined.
Section 1
---------
The preamble to the Agreement is hereby amended by adding the following
"WHEREAS" clause following the third "WHEREAS" clause thereof:
"WHEREAS, effective as of the close of business on December 31, 1994,
five of the defined benefit plans of the Company and its Subsidiaries
were merged to form a single plan;"
Section 2
---------
The preamble to the Agreement is hereby amended by deleting the fourth
"WHEREAS" clause therefrom and replacing it with the following:
"WHEREAS, the authority to conduct the general operation and
administration of each of the Plans (or each portion of a Plan, as
applicable) is vested in the Administrative Committee or Committees
appointed under each such Plan, who shall have the authorities and
shall be subject to the duties with respect to the
VOL402CL Doc: 7966.1
<PAGE> 2
2
trust specified in the applicable Plan (or applicable portion thereof)
and in this Trust Agreement."
Section 3
---------
Schedule A to the Agreement is hereby amended in its entirety to read as
follows:
"1. The NACCO Materials Handling Group, Inc. Danville Shop
Employees Pension Plan;
2. The NACCO Materials Handling Group, Inc. Kewanne Shop Employees Pension
Plan;
3. The NACCO Materials Handling Group, Inc. Portland and Branch Store Shop
Employees Pension Plan;
4. The Combined Defined Benefit Plan for NACCO Industries, Inc. and its
Subsidiaries (which is a single Plan consisting of the following Parts:
Part I of the Plan contains the provisions relating to The North
American Coal Corporation Salaried Employees Pension Plan; Part II of
the Plan contains the provisions relating to the Hamilton
Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan, and Part III
of the Plan contains the provisions relating to the combined NACCO
Materials Handling Group, Inc. Cash Balance Plan).
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers on the dates shown below.
NACCO INDUSTRIES, INC.
Date: 3/ /95 By: Charles Bittenbender
------------------ ------------------------------
Title: Vice President
STATE STREET BANK AND TRUST COMPANY
Date: 3/30/95 By:
------------------ ------------------------------
Title: Vice President
VOL402CL Doc: 7966.1
<PAGE> 1
<TABLE>
EXHIBIT 11
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Year Ended December 31
------------------------------------------------
1994 1993 1992
---- ---- ----
(Amounts in thousands except per share data)
<S> <C> <C> <C>
Income (loss):
-------------
Income before extraordinary charge $ 45,272 $ 11,593 $ 22,868
Extraordinary charge, net-of-tax (3,218) (3,292) (110,000)
------------ ------------ -----------
Net income (loss) $ 42,054 $ 8,301 $ (87,132)
============ ============ ===========
Per share amounts reported
to stockholders - Note 1
-----------------------
Income before extraordinary charge $ 5.06 $ 1.30 $ 2.57
Extraordinary charge, net-of-tax (.36) (.37) (12.37)
------------ ----------- ----------
Net income (loss) $ 4.70 $ .93 $ (9.80)
============ =========== ==========
Primary:
-------
Weighted average shares outstanding 8,948 8,938 8,891
Dilutive stock options - Note 2 12 15 33
------------ ------------ -----------
Totals 8,960 8,953 8,924
============ ============ ===========
Per share amounts
Income before extraordinary charge $ 5.05 $ 1.30 $ 2.56
Extraordinary charge, net-of-tax (.35) (.37) (12.32)
------------ ----------- ----------
Net income (loss) $ 4.70 $ .93 $ (9.76)
============ =========== ==========
Fully diluted:
-------------
Weighted average shares outstanding 8,948 8,938 8,891
Dilutive stock options - Note 2 9 17 37
------------ ------------ -----------
Totals 8,957 8,955 8,928
============ ============ ===========
Per share amounts
Income before extraordinary charge $ 5.05 $ 1.30 $ 2.56
Extraordinary charge, net-of-tax (.35) (.37) (12.32)
------------ ------------ -----------
Net income (loss) $ 4.70 $ .93 $ (9.76)
============ ============ ===========
<FN>
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 year-end market price, if higher than the
average market price, is used.
</TABLE>
<PAGE> 1
Exhibit 21
----------
SUBSIDIARIES OF NACCO INDUSTRIES, INC.
As of the date of the Annual Report on Form 10-K to which this is an
Exhibit, the subsidiaries of NACCO Industries, Inc. were as follows:
<TABLE>
<CAPTION>
Name Incorporation
---- -------------
<S> <C>
Bellaire Corporation Ohio
The Coteau Properties Company Ohio
The Falkirk Mining Company Ohio
Hamilton Beach/Proctor-Silex, Inc. Delaware(1)
HBPS Foreign Sales Corp. Virgin Islands
HB-PS Holding Company, Inc. Delaware(1)
Housewares Holding Company Delaware
NACCO Materials Handling Group, Pty. Ltd. Australia
NACCO Materials Handling B.V. Netherlands
Hyster Europe Limited United Kingdom
NACCO Materials Handling Scotland Ltd. United Kingdom
NACCO Materials Handling (N.I.) Ltd. Northern Ireland
NACCO Materials Handling Group Ltd. United Kingdom
Hyster-Yale Materials Handling, Inc. Delaware(2)
The Kitchen Collection, Inc. Delaware
NACCO Materials Handling Group, Inc. Delaware
The North American Coal Corporation Delaware
North American Coal Royalty Company Delaware
Powhatan Corporation Delaware
Proctor-Silex Canada Inc. Ontario (Canada)
Proctor Silex, S.A. de C.V. Mexico
The Sabine Mining Company Texas
Yale Europe Materials Handling Ltd. United Kingdom
<FN>
The Company has omitted the names of its subsidiaries which, considered in the
aggregate as a single subsidiary, would not constitute a "significant
subsidiary" within the meaning of Rule 1-02 contained in Regulation S-X.
----------------
1. NACCO owns 100% of the voting securities of Housewares Holding Company,
Housewares Holding Company owns 80% of the voting securities of HB-PS
Holding Company, Inc., HB-PS Holding Company, Inc. owns 100% of Hamilton
Beach/Proctor-Silex, Inc., and Hamilton Beach/Proctor-Silex Inc. owns 100% of
Proctor-Silex Canada Inc. and Proctor Silex, S.A. de C.V. (except for
directors' qualifying shares).
2. NACCO Industries, Inc. owns 97% of the voting securities of Hyster-Yale
Materials Handling, Inc.
</TABLE>
<PAGE> 1
Exhibit 23(i)
CONSENT OF ARTHUR ANDERSEN LLP
To the Board of Directors of
NACCO Industries, Inc.:
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K, into the Company's previously filed
Registration Statement (No. 33-3422) on Form S-4 and Registration Statement
(No. 33-52660) on Form S-8.
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
March 31, 1995.
<PAGE> 1
Exhibit 24(i)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A.
Bittenbender, and Steven M. Billick, and each of them, as the true and lawful
attorney or attorneys-in-fact, with full power of substitution and revocation,
for the undersigned and in the name, place, and stead of the undersigned, to
sign on behalf of the undersigned as Director of NACCO Industries, Inc., a
Delaware corporation, an Annual Report pursuant to Section 13 of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994,
and to sign any and all amendments to such Annual Report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting to said attorney or
attorneys-in-fact, and each of them, full power and authority to do so and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Owsley Brown, II
----------------------------
Owsley Brown, II
Date: 2-8-95
----------
<PAGE> 1
Exhibit 24(ii)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A.
Bittenbender, and Steven M. Billick, and each of them, as the true and lawful
attorney or attorneys-in-fact, with full power of substitution and revocation,
for the undersigned and in the name, place, and stead of the undersigned, to
sign on behalf of the undersigned as Director of NACCO Industries, Inc., a
Delaware corporation, an Annual Report pursuant to Section 13 of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994,
and to sign any and all amendments to such Annual Report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting to said attorney or
attorneys-in-fact, and each of them, full power and authority to do so and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorney or attorneys-in-fact or any of them or their substitute or substitutes
may lawfully do or cause to be done by virtue hereof.
/s/ John J. Dwyer
----------------------------
John J. Dwyer
Date: Feb. 8, 1995
----------------
<PAGE> 1
Exhibit 24(iii)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A.
Bittenbender, and Steven M. Billick, and each of them, as the true and lawful
attorney or attorneys-in-fact, with full power of substitution and revocation,
for the undersigned and in the name, place, and stead of the undersigned, to
sign on behalf of the undersigned as Director of NACCO Industries, Inc., a
Delaware corporation, an Annual Report pursuant to Section 13 of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994,
and to sign any and all amendments to such Annual Report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting to said attorney or
attorneys-in-fact, and each of them, full power and authority to do so and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Robert M. Gates
----------------------------
Robert M. Gates
Date: 2-8-95
----------
<PAGE> 1
Exhibit 24(iv)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A.
Bittenbender, and Steven M. Billick, and each of them, as the true and lawful
attorney or attorneys-in-fact, with full power of substitution and revocation,
for the undersigned and in the name, place, and stead of the undersigned, to
sign on behalf of the undersigned as Director of NACCO Industries, Inc., a
Delaware corporation, an Annual Report pursuant to Section 13 of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994,
and to sign any and all amendments to such Annual Report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting to said attorney or
attorneys-in-fact, and each of them, full power and authority to do so and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ E. Bradley Jones
----------------------------
E. Bradley Jones
Date: 2/16/95
----------
<PAGE> 1
Exhibit 24(v)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A.
Bittenbender, and Steven M. Billick, and each of them, as the true and lawful
attorney or attorneys-in-fact, with full power of substitution and revocation,
for the undersigned and in the name, place, and stead of the undersigned, to
sign on behalf of the undersigned as Director of NACCO Industries, Inc., a
Delaware corporation, an Annual Report pursuant to Section 13 of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994,
and to sign any and all amendments to such Annual Report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting to said attorney or
attorneys-in-fact, and each of them, full power and authority to do so and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Dennis W. LaBarre
----------------------------
Dennis W. LaBarre
Date: 2/8/95
----------
<PAGE> 1
Exhibit 24(vi)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Chairman,
President and Chief Executive Officer and Director NACCO Industries, Inc.
hereby constitutes and appoints Frank B. O'Brien, Charles A. Bittenbender and
Steven M. Billick, and each of them, as the true and lawful attorney or
attorneys-in-fact, with full power of substitution and revocation, for the
behalf of the undersigned as Chairman, President and Chief Executive Officer
and Director or NACCO Industries, Inc., a Delaware corporation, an Annual
Report pursuant to Section 13 of the Securities Exchange Act of 1934 on Form
10-K for the fiscal year ended December 31, 1994, and to sign any and all
amendments to such Annual Report, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting to said attorney or attorneys-in-fact, and each
of them, full power and authority to do so and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorney or attorneys-in-fact or any of
them or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Date March 24, 1995 /s/ Alfred M. Rankin, Jr.
-------------- ---------------------
Alfred M. Rankin, Jr.
<PAGE> 1
Exhibit 24(vii)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A.
Bittenbender, and Steven M. Billick, and each of them, as the true and lawful
attorney or attorneys-in-fact, with full power of substitution and revocation,
for the undersigned and in the name, place, and stead of the undersigned, to
sign on behalf of the undersigned as Director of NACCO Industries, Inc., a
Delaware corporation, an Annual Report pursuant to Section 13 of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994,
and to sign any and all amendments to such Annual Report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting to said attorney or
attorneys-in-fact, and each of them, full power and authority to do so and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ John C. Sawhill
----------------------------
John C. Sawhill
Date: 2/8/95
----------
<PAGE> 1
Exhibit 24(viii)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, lnc. hereby constitutes and appoints Frank B. O'Brien, Charles A.
Bittenbender, and Steven M. Billick, and each of them, as the true and lawful
attorney or attorneys-in-fact, with full power of substitution and revocation,
for the undersigned and in the name, place, and stead of the undersigned, to
sign on behalf of the undersigned as Director of NACCO Industries, Inc., a
Delaware corporation, an Annual Report pursuant to Section 13 of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994,
and to sign any and all amendments to such Annual Report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting to said attorney or
attorneys-in-fact, and each of them, full power and authority to do so and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Britton T. Taplin
----------------------------
Britton T. Taplin
Date: 2-14-95
-----------
<PAGE> 1
Exhibit 24(ix)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A.
Bittenbender, and Steven M. Billick, and each of them, as the true and lawful
attorney or attorneys-in-fact, with full power of substitution and revocation,
for the undersigned and in the name, place, and stead of the undersigned, to
sign on behalf of the undersigned as Director of NACCO Industries, Inc., a
Delaware corporation, an Annual Report pursuant to Section 13 of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994,
and to sign any and all amendments to such Annual Report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting to said attorney or
attorneys-in-fact, and each of them, full power and authority to do so and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Frank E. Taplin, Jr.
----------------------------
Frank E. Taplin, Jr.
Date: 3/10/95
-----------
<PAGE> 1
Exhibit 24(x)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Vice President and
Controller of NACCO Industries, Inc. hereby constitutes and appoints Frank B.
O'Brien and Charles A. Bittenbender, and each of them, as the true and lawful
attorney or attorneys-in-fact, with full power of substitution and revocation,
for the undersigned and in the name, place and stead of the undersigned, to
sign on behalf of the undersigned as Vice President and Controller of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K fur the fiscal year
ended December 31, 1994, and to sign any and all amendments to such Annual
Report, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting to
said attorney or attorneys-in-fact, and each of them, full power and authority
to do so and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Steven M. Billick
Date: March 24, 1995 ----------------------------
Steven M. Billick
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 19,541
<SECURITIES> 0
<RECEIVABLES> 246,855
<ALLOWANCES> 10,640
<INVENTORY> 298,987
<CURRENT-ASSETS> 586,636
<PP&E> 825,121
<DEPRECIATION> 339,807
<TOTAL-ASSETS> 1,694,322
<CURRENT-LIABILITIES> 481,438
<BONDS> 78,524
<COMMON> 8,952
0
0
<OTHER-SE> 270,439
<TOTAL-LIABILITY-AND-EQUITY> 1,694,322
<SALES> 1,853,479
<TOTAL-REVENUES> 1,864,887
<CGS> 1,487,447
<TOTAL-COSTS> 1,729,791
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60,400
<INCOME-PRETAX> 78,496
<INCOME-TAX> 30,730
<INCOME-CONTINUING> 45,272
<DISCONTINUED> 0
<EXTRAORDINARY> (3,218)
<CHANGES> 0
<NET-INCOME> 42,054
<EPS-PRIMARY> 4.70
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99 (i)
Audited Consolidated Financial Statements
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
As of December 31, 1994 and 1993
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . 1
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Stockholder's Equity . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . 7
<PAGE> 2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
The North American Coal Corporation:
We have audited the accompanying consolidated balance sheets of The North
American Coal Corporation and subsidiaries as of December 31, 1994 and 1993,
and the related consolidated statements of income, stockholder's equity and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The North American Coal
Corporation and subsidiaries as of December 31, 1994 and 1993, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Dallas, Texas,
February 9, 1995
<PAGE> 3
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE> 4
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 1994 and 1993
(Amounts in Thousands)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,562 $ 6,157
Note receivable from parent Company 22,709 36,459
Accounts receivable 23,801 21,281
Inventories 27,211 23,813
Other current assets 2,052 3,144
-------- --------
81,335 90,854
OTHER ASSETS:
Notes receivable 3,790 4,343
Costs recoverable under sales contracts 6,945 8,435
Other investments and receivables 13,715 12,225
-------- --------
24,450 25,003
Coal lands and real estate 68,527 67,889
Plant and equipment 422,061 414,305
Construction in progress 2,737 3,972
-------- --------
493,325 486,166
Less allowance for depreciation, depletion
and amortization (192,307) (168,827)
-------- --------
301,018 317,339
DEFERRED CHARGES:
Deferred financing costs 6,672 7,325
Prepaid royalties 5,943 5,521
Deferred lease costs 33,154 31,198
Deferred leasehold costs 6,812 3,255
Other 1,913 -
-------- --------
54,494 47,299
-------- --------
$461,297 $480,495
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-2-
<PAGE> 5
<TABLE>
<CAPTION>
1994 1993
LIABILITIES AND STOCKHOLDER'S EQUITY -------- --------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 10,461 $ 9,673
Payable to affiliated companies 3,887 1,576
Accrued liabilities 21,580 22,874
Revolving credit agreements 15,000 16,000
Current maturities of long-term obligations 17,841 16,060
-------- --------
68,769 66,183
NON-CURRENT LIABILITIES:
Advances from customers 135,973 133,347
Deferred income taxes 17,896 18,092
Pension compensation and other accrued liabilities 22,140 17,455
-------- --------
176,009 168,894
LONG-TERM OBLIGATIONS:
Subsidiaries' liabilities--(not guaranteed by the
Company or the parent Company):
Notes payable 55,967 60,430
Notes payable to affiliated company 145 406
Capitalized lease obligations 140,091 145,126
-------- --------
196,203 205,962
MINORITY INTEREST 5,191 5,694
STOCKHOLDER'S EQUITY:
Common Stock, par value $1 a share:
Authorized 750 shares; issued and
outstanding 500 shares 1 1
Capital in excess of par value 15,124 32,390
Retained income - 1,371
-------- --------
15,125 33,762
-------- --------
$461,297 $480,495
======== ========
</TABLE>
-3-
<PAGE> 6
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
As of December 31, 1994 and 1993
(Amounts in Thousands)
<TABLE>
<CAPTION> 1994 1993
-------- --------
<S> <C> <C>
TONS OF COAL SOLD 27,183 26,538
======== ========
INCOME:
Net sales $239,391 $225,770
Royalties, rental and other operating income 10,788 6,532
Interest, gain on sale of assets and miscellaneous income 4,312 2,325
-------- --------
254,491 234,627
COSTS AND EXPENSES:
Cost of sales 161,814 150,416
Depreciation, depletion and amortization 30,856 29,397
Selling, administrative and general expenses 9,560 8,837
Interest expense of subsidiaries 19,321 18,761
-------- --------
221,551 207,411
-------- --------
Income before income taxes and minority interest 32,940 27,216
INCOME TAXES:
Current 9,690 7,495
Deferred (209) 2,363
-------- --------
9,481 9,858
Minority interest in income of consolidated subsidiary 2,484 1,326
-------- --------
Net Income $ 20,975 $ 16,032
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE> 7
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
For the Years Ended December 31, 1994 and 1993
(Amounts in Thousands)
<TABLE>
<CAPTION>
Capital In Retained
Common Excess of Income
Stock Par Value (Deficit) Total
-------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Balance at January 1, 1993 $ 1 $ 32,390 $ 6,910 $ 39,301
Net income - - 16,032 16,032
Cash dividends - - (21,571) (21,571)
-------- ---------- --------- ---------
Balance at December 31, 1993 $ 1 $ 32,390 $ 1,371 $ 33,762
Net Income - - 20,975 20,975
Cash dividends - (20,654) (22,346) (43,000)
Contribution from affiliate - 3,388 - 3,388
-------- ---------- --------- ---------
Balance at December 31, 1994 $ 1 $ 15,124 $ - $ 15,125
======== ========== ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE> 8
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1994 and 1993
(Amounts in Thousands)
<TABLE>
<CAPTION>
OPERATING ACTIVITIES: 1994 1993
-------- --------
<S> <C> <C>
Net income $ 20,975 $ 16,032
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 30,856 29,397
Gain on sale of assets (136) (133)
Costs recovered under sales contracts 1,490 1,507
Deferred lease costs (1,956) (2,830)
Deferred leasehold costs (3,557) (3,255)
Development revenue receivable 549 567
Deferred income taxes (209) 2,363
Pensions and other accruals 3,918 1,885
Prepaid royalties (539) (371)
Deferred financing costs 657 607
-------- --------
52,048 45,769
Working capital changes:
Increase in accounts receivable and other assets (3,567) (1,632)
Increase in inventories (3,398) (2,927)
Increase (decrease) in accounts payable and other liabilities 1,809 (2,747)
-------- --------
(5,156) (7,306)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 46,892 38,463
INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (12,136) (24,011)
Proceeds from property disposals 2,804 21,640
Additions to (repayment of) note receivable from parent
Company, net 17,138 (18,466)
Reduction in notes receivable 1,412 4,664
Other - net (2,385) 21
-------- --------
NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES 6,833 (16,152)
FINANCING ACTIVITIES:
Additions to lines of credit, net 305 7,482
Additions to (repayment of) advances from customers, net 2,626 (7,208)
Additions to long-term obligations 53,768 51,517
Repayment of long-term obligations (68,019) (60,283)
Cash dividends (43,000) (21,571)
-------- --------
NET CASH USED BY FINANCING ACTIVITIES (54,320) (30,063)
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (595) (7,752)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 6,157 13,909
-------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,562 $ 6,157
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE> 9
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994 and 1993
NOTE A--ORGANIZATION
The North American Coal Corporation ("Company") is a wholly-owned subsidiary of
NACCO Industries, Inc. ("parent Company"). The Company is the owner of The
Coteau Properties Company ("Coteau"), The Falkirk Mining Company ("Falkirk"),
The Sabine Mining Company ("Sabine"), Red River Mining Company, its joint
venture, ("Red River Mining"), and North American Coal Royalty Company.
Three of the Company's consolidated coal mining subsidiaries (surface mines)
were organized to assume sales agreements with public utilities. All of the
coal of these subsidiaries is sold to these public utilities pursuant to
long-term contracts that extend up to 20 years with extensions at the buyer's
option. The sales prices provided by such contracts are based on cost plus a
profit per ton.
In December 1994, the Company recorded a contribution from a subsidiary of the
parent Company. This contribution represented royalty revenue received in
prior years by the subsidiary on a mine previously held by the Company. The
contribution was funded by a note receivable from the parent Company.
NOTE B--ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include the
accounts of the Company, its wholly-owned subsidiaries and its joint venture.
Intercompany accounts have been eliminated.
Cash and Cash Equivalents: Cash equivalents are investments purchased with an
original maturity of three months or less.
Inventories: Inventories are stated at the lower of cost or market.
Costs Recoverable Under Sales Contracts: The coal sales agreements
("Agreements") of three subsidiaries provided for selling prices which allowed
a profit during the defined development period of the mines. Production costs
incurred during the development period in excess of the established selling
price, as set forth in the Agreements, were deferred and are being recovered as
a cost of coal tonnage sold after the development period. Recoveries of these
costs amounted to approximately $1,490,000 and $1,507,000 in 1994 and 1993,
respectively, and are included in net sales in the accompanying consolidated
statements of income.
Depreciation, Depletion and Amortization: Depreciation, depletion and
amortization are provided in amounts sufficient to amortize the cost of related
assets (including assets recorded under capitalized lease obligations) over
their estimated range of useful lives and are calculated by the following
methods: equipment and certain mine plant--straight-line method; remaining
mine plant, coal lands and related leaseholds--units-of-production method based
on estimated recoverable tonnage.
-7-
<PAGE> 10
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
December 31, 1994 and 1993
NOTE B--ACCOUNTING POLICIES--continued
Reclamation Costs: Under certain federal and state regulations, the Company's
subsidiaries are required to reclaim land disturbed as a result of mining.
Reclamation of disturbed land is a continuous process throughout the term of
the related Agreements. Current reclamation costs are being recovered as a
cost of coal tonnage sold. Costs to complete reclamation after mining has been
completed are reimbursed under the Agreements.
Prior Year Financial Statements: Certain reclassifications have been made to
the 1993 financial statements to conform to the 1994 presentation.
Financial Instruments and Derivative Financial Instruments: The fair values of
financial instruments have been determined through information obtained from
quoted market sources and management estimates. The Company does not hold or
issue financial instruments or derivative financial instruments for trading
purposes.
The Company enters into interest rate swap agreements and interest rate cap
agreements with terms ranging from two to four years. The differential between
the floating interest rate and the fixed interest rate which is to be paid or
received is recognized in interest expense as the floating interest rate
changes over the life of the agreement.
NOTE C--ACCOUNTS RECEIVABLE
Accounts receivable are summarized as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1994 1993
-------- --------
<S> <C> <C>
Accounts receivable $ 17,799 $ 15,568
Accounts receivable from affiliated companies 5,520 5,617
Refundable income taxes 482 96
-------- --------
$ 23,801 $ 21,281
======== ========
</TABLE>
NOTE D--INVENTORIES
Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1994 1993
-------- --------
<S> <C> <C>
Coal $ 8,404 $ 7,619
Mining supplies 18,807 16,194
-------- --------
$ 27,211 $ 23,813
======== ========
</TABLE>
-8-
<PAGE> 11
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
December 31, 1994 and 1993
NOTE E--ADVANCES FROM CUSTOMERS
Advances from customers represent amounts advanced to Coteau and Falkirk from
public utilities to develop, operate and provide working capital for the mines.
These advances are without recourse to the Company and the parent Company.
These advances are non-interest bearing and are secured by all owned assets and
assignment of all rights under the Agreements of Coteau and Falkirk. No
repayment schedules for these advances have been established due to the funding
agreements with the customers of Coteau and Falkirk. Payments estimated to be
made in 1995 of $8,535,000 are included in accrued liabilities in the
accompanying balance sheets.
NOTE F--NOTES PAYABLE
The promissory notes represent borrowings which the public utility arranged for
Sabine. The note payable at Coteau represents financing for leaseholds on coal
lands received from an affiliate of Coteau's buyer. Neither the Company nor
the parent Company have guaranteed these borrowings. Notes payable, less
current maturities, consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1994 1993
THE SABINE MINING COMPANY -------- --------
<S> <C> <C>
Promissory notes with an average interest
rate of 4.385% in 1994, guaranteed by a $9.25
million irrevocable letter of credit issued by a
bank pursuant to a credit agreement with banks
which expires February 15, 1997. Under the
terms of such agreement, substantially all
assets of Sabine are pledged and all rights
under a mining agreement are assigned. $ 1,250 $ 4,550
Promissory note payable to a bank under an
agreement providing for borrowings up to
$20 million. Interest is based on the bank's
daily cost of funds plus .45% (average
interest rate of 4.7216% for 1994). 11,610 10,365
</TABLE>
-9-
<PAGE> 12
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
December 31, 1994 and 1993
NOTE F--NOTES PAYABLE--continued
<TABLE>
<CAPTION>
December 31,
------------------
1994 1993
-------- --------
<S> <C> <C>
Secured note payable due June 1, 2001, with a
fixed interest rate of 8.65% per annum on the
unpaid balance. Under the terms of such
agreement, substantially all assets of Sabine are
pledged and all rights under a mining agreement
are assigned. 5,500 6,500
THE COTEAU PROPERTIES COMPANY
Mortgage note to an affiliate of Coteau's customer with
an interest rate of 10.94%. The note requires a
minimum payment of $19,700,000 before 1998 and
other minimum payments due in various years up to
2013 with final payment by 2019. Payments are
based upon coal mined from the lands covered by
the mortgage note. 37,297 38,466
Other 310 549
-------- --------
$ 55,967 $ 60,430
======== ========
</TABLE>
<TABLE>
<CAPTION>
Note maturities for the next five years, including current maturities, are as follows (in thousands):
<S> <C>
1995 $ 8,288
1996 4,393
1997 1,915
1998 3,205
1999 3,148
Thereafter 43,306
----------
$ 64,255
==========
</TABLE>
Commitment fees paid to banks were approximately $55,000 and $82,000 in 1994
and 1993, respectively and are included in interest expense in the accompanying
consolidated statements of income.
-10-
<PAGE> 13
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
December 31, 1994 and 1993
NOTE G--REVOLVING CREDIT AGREEMENT
<TABLE>
<CAPTION>
During 1994, the Company had a revolving credit agreement which is summarized
as follows:
<S> <C>
Amount of revolving credit agreement $50,000,000
Amount available at December 31, 1994 $35,000,000
Stated interest rate LIBOR +.4375%
Average interest rate during 1994 4.819%
Commitment and facility fee .25% per annum
Expiration date (with annual renewal option) September 27, 1997
</TABLE>
The Company enters into interest rate swap agreements which allows the Company
to enter into long-term credit arrangements that have performance based,
floating rates of interest and then swap them into fixed rates as opposed to
entering into higher cost fixed-rate credit arrangements. These agreements are
with major commercial banks; therefore, the risk of credit loss from
nonperformance by the banks is minimal. The Company evaluates its exposure to
floating rate debt on an ongoing basis. The following table summarizes the
notional amounts and related rates on interest rate swap agreements and
interest rate cap agreements outstanding at December 31, 1994:
<TABLE>
<CAPTION>
Notional Variable
Amount Rate Fixed Rate
---------- -------- ----------
<S> <C> <C> <C>
Swaps 14,000,000 6.017% 6.642%
Cap 3,000,000 6.125% 4.000%
</TABLE>
NOTE H--POSTRETIREMENT PLANS
The Company and its affiliates, representing the mining operations of the
parent Company, sponsor defined benefit pension plans which cover substantially
all salaried employees of the Company and its subsidiaries. Benefits under the
plans are based on years of service and average compensation during certain
periods. The Company's funding policy is to contribute within the range
allowed by the applicable regulations. Plan assets are primarily listed stocks
and U.S. bonds.
-11-
<PAGE> 14
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
December 31, 1994 and 1993
NOTE H--POSTRETIREMENT PLANS--continued
The following is a detail of net periodic pension expense for all mining
operations of the parent Company (in thousands):
<TABLE>
<CAPTION>
December 31,
-------------------
1994 1993
-------- --------
<S> <C> <C>
Service cost $ 2,440 $ 2,132
Interest cost on projected benefit obligation 2,528 2,182
Actual return on plan assets 638 (1,792)
Net amortization and deferral (2,886) (312)
-------- --------
Net periodic pension expense $ 2,720 $ 2,210
======== ========
</TABLE>
The following sets forth the funded status of the plans (in thousands):
Actuarial present value of benefit obligation:
<TABLE>
<CAPTION>
December 31,
-------------------
1994 1993
-------- --------
<S> <C> <C>
Vested accumulated benefit obligation $ 12,816 $ 12,460
Nonvested accumulated benefit obligation 1,509 1,464
-------- --------
Total accumulated benefit obligation 14,325 13,924
Value of future salary projections 13,306 16,937
-------- --------
Total projected benefit obligation 27,631 30,861
Fair value of plan assets 22,915 23,320
-------- --------
Projected benefit obligation in excess of plan assets (4,716) (7,541)
Amounts not recognized:
Unrecognized net transition asset (1,005) (1,173)
Unrecognized net gain (10,430) (4,350)
Prior service cost 762 822
-------- --------
Pension obligation recognized $(15,389) $(12,242)
======== ========
</TABLE>
-12-
<PAGE> 15
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
December 31, 1994 and 1993
NOTE H--POSTRETIREMENT PLANS--continue
Assumptions used in accounting for the defined benefit plans:
<TABLE>
<CAPTION>
December 31,
--------------------
1994 1993
-------- --------
<S> <C> <C>
Weighted average discount rates 8.50% 7.50%
Rate of increase in compensation levels 5.50% 6.00%
Expected long-term rate of return on assets 9.00% 9.00%
</TABLE>
The Company and its subsidiaries participate in a defined contribution plan
sponsored by the Company which covers substantially all salaried employees.
The plan provides for employee contributions to be matched, by the respective
company, up to a limit of 5% of the employee's salary. Company contributions
to the plan were approximately $2,387,000 and $2,345,000 in 1994 and 1993,
respectively.
NOTE I--OTHER RETIREMENT BENEFIT PLANS
The Company has adopted Statement of Financial Accounting Standards No. 106
(SFAS 106) "Accounting for Postretirement Benefits Other Than Pensions". In
accordance with SFAS 106, the expected cost of retirement benefits other than
pensions is charged to expense during the years that the employees render
service. Under the provisions of the Agreements of three subsidiaries, costs
will be recovered as a cost of coal tonnage sold. These amounts have no
material effect on net income.
Because SFAS 106 is not material to the Company's results of operations and
financial condition, the detailed disclosures required by SFAS 106 have not
been presented.
Coteau and Sabine established Voluntary Employees' Beneficiary Association
(VEBA) trusts in 1993 to provide for such future retirement benefits. Coteau
and Sabine made cash contributions of $496,000 to the VEBA trusts during 1994.
Coteau and Sabine have requested, but have not yet received, a determination
letter from the Internal Revenue Service (IRS) regarding recognition of the
tax-exempt status of each of the VEBA trusts. Contributions made to an IRS
approved VEBA trust are irrevocable and must be used for employee benefits.
NOTE J--COMMITMENTS
Certain mining equipment leased by Coteau, Falkirk, and Sabine and certain
office and other equipment leased by the Company are capitalized for financial
statement purposes. The parent Company is not obligated under capital or
operating lease agreements of the Company. Under the provisions of the
Agreements, the customer is required to pay, as part of the cost of coal
purchased, an amount equal to the annual lease payments. For mining equipment,
interest expense and amortization in excess of annual lease payments are
deferred and are recognized in years when annual lease payments exceed interest
expense and amortization.
-13-
<PAGE> 16
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
December 31, 1994 and 1993
NOTE J--COMMITMENTS--continued
Interest paid on notes and capitalized lease obligations amounted to
approximately $18,949,000 and $18,480,000 in 1994 and 1993, respectively.
Assets recorded under capitalized lease obligations are included with property,
plant and equipment and consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
-------------------
1994 1993
-------- --------
<S> <C> <C>
Plant and equipment $188,149 $187,006
Accumulated amortization (71,655) (63,711)
-------- --------
$116,494 $123,295
======== ========
</TABLE>
Capitalized lease obligations are renewable for additional periods at terms
based upon fair market value of the leased items at the renewal dates.
During 1994 and 1993, subsidiaries of the Company incurred capitalized lease
obligations of approximately $5,157,000 and $22,429,000, respectively, in
connection with lease agreements to acquire plant and equipment.
Future minimum lease payments as of December 31, 1994 for all capitalized lease
obligations are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1995 $ 20,666
1996 19,619
1997 18,765
1998 18,042
1999 17,706
Thereafter 150,312
---------
Total minimum lease payments 245,110
Amounts representing interest (95,466)
---------
Present value of net minimum lease payments 149,644
Current maturities (9,553)
---------
$ 140,091
=========
</TABLE>
-14-
<PAGE> 17
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
December 31, 1994 and 1993
NOTE J--COMMITMENTS--continued
The Company is committed under non-cancelable operating leases, with minimum
lease payments as of December 31, 1994 as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1995 $ 989
1996 794
1997 790
1998 672
1999 138
Thereafter -
------------
$ 3,383
============
</TABLE>
Rental expenses for all operating leases amounted to approximately $1,168,000
and $1,133,000 during 1994 and 1993, respectively.
At December 31, 1994, the unexpended portion of capital expenditures authorized
by the respective boards of directors, and customers where required, of the
Company and its subsidiaries approximated $49,052,000 of which $46,741,000 is
being financed under the arrangements with public utilities served by the
subsidiaries.
NOTE K--INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS
109 requires, among other things, the measurement of deferred tax assets or
liabilities based on the difference between the financial statement and income
tax bases of assets and liabilities using the enacted marginal tax rate.
Deferred income tax expense or benefit is based on the changes in the assets or
liabilities from period to period.
The Company and its subsidiaries are included in the consolidated federal
income tax return filed by the parent Company. The Company and each of its
subsidiaries entered into a tax-sharing agreement with the parent Company under
which federal income taxes are computed by the Company and each of its
subsidiaries on a separate return basis. The current portion of such tax is
paid to the parent Company. During 1994 and 1993, the federal and state income
taxes paid by the Company were approximately $7,099,000 and $7,555,000,
respectively.
The Company's effective tax rate differs from the federal statutory rate
primarily due to state income taxes and percentage depletion.
-15-
<PAGE> 18
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
December 31, 1994 and 1993
NOTE K--INCOME TAXES--continued
For state income tax purposes (computed on a separate return basis), a certain
subsidiary has operating loss carryforward of approximately $1,142,000 which
expires in 2006 through 2007.
Provision (benefit) for income taxes consists of the following (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1994 1993
---------- ----------
<S> <C> <C>
Federal $ 9,609 $ 6,609
State 81 886
---------- ----------
Total current tax expense $ 9,690 7,495
========== ==========
Federal $ (237) $ 1,758
State 28 605
---------- ----------
Total deferred tax expense $ (209) $ 2,363
========== ==========
</TABLE>
A summary of components of the net deferred tax asset (liability) included in
the accompanying consolidated balance sheets resulting from differences in the
book and tax bases of assets and liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
---------------------
1994 1993
-------- --------
<S> <C> <C>
Current portion:
Accrued expenses and reserves $ 470 $ 457
Inventory (37) (37)
-------- --------
Total current $ 433 $ 420
======== ========
Long-term portion:
Depreciation, depletion and amortization $(20,395) $(16,379)
Pensions 5,476 3,037
Installment sales (1,404) (3,986)
Partnership investment (1,818) (1,330)
Deferred compensation 814 602
Other - Net (569) (36)
-------- --------
$(17,896) $(18,092)
======== ========
</TABLE>
The current portion of deferred income taxes shown above, a net deferred tax
asset, is included in other current assets in the accompanying consolidated
balance sheets.
-16-
<PAGE> 19
THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
December 31, 1994 and 1993
NOTE L--DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments", requires disclosure about the fair value of
financial instruments. Carrying amounts for cash and cash equivalents and
revolving credit approximate fair value. The fair value of notes receivable
and payable is estimated based on the discounted value of the future cash flows
using borrowing rates currently available to the Company for bank loans with
similar terms and average maturities. The estimated fair value of the
Company's notes receivable was approximately $5,322,000 and $6,112,000 in 1994
and 1993, respectively, while the estimated fair value of notes payable was
approximately $62,468,000 and $68,866,000 in 1994 and 1993, respectively.
NOTE M--TRANSACTIONS WITH AFFILIATED COMPANIES
Costs and expenses include net receipts from the parent Company and other
subsidiaries of the parent Company. These receipts approximated $1,384,000 in
1994 and $2,136,000 in 1993 for administrative and other services.
The note receivable from parent Company of $22,709,000 in 1994 and $36,459,000
in 1993 is a demand note, with interest of 5.87% at December 31, 1994 and 3.64%
at December 31, 1993.
NOTE N--POSTEMPLOYMENT BENEFIT PLANS
In 1994 the Company adopted, Statement of Financial Accounting Standards No.
112 (SFAS 112) "Employers' Accounting for Postemployment Benefits". SFAS No.
112 requires, among other things, that the expected cost of benefits paid to
former or inactive employees after employment but before retirement be
recognized when they are earned or become payable when certain conditions are
met. The adoption of this standard did not have a material effect on the
Company's financial condition or its results of operations.
-17-
<PAGE> 1
EXHIBIT 99 (ii)
HAMILTON BEACH/PROCTOR-SILEX, INC.,
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1994 AND 1993,
TOGETHER WITH AUDITORS' REPORT
<PAGE> 2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Hamilton Beach/Proctor-Silex, Inc.:
We have audited the accompanying consolidated balance sheets of Hamilton
Beach/Proctor-Silex, Inc. (a Delaware Corporation), and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements of
operations, changes in stockholder's equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hamilton Beach/Proctor-Silex,
Inc., and subsidiaries as of December 31, 1994 and 1993, and the results of
their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.
Arthur Andersen LLP
Richmond, Virginia,
January 27, 1995
<PAGE> 3
THIS PAGE LEFT BLANK INTENTIONALLY
<PAGE> 4
HAMILTON BEACH/PROCTOR-SILEX, INC.,
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND 1993
(Dollars in Thousands)
ASSETS
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,039 $ 2,673
Accounts receivable, net 76,279 79,247
Inventories, net 48,557 51,781
Deferred income taxes 1,492 1,578
Prepaid expenses and other 6,013 6,545
-------- --------
Total current assets 135,380 141,824
PROPERTY, PLANT AND EQUIPMENT, net 54,258 52,781
DEFERRED CHARGES AND INTANGIBLE ASSETS, net 96,244 102,599
DEFERRED INCOME TAXES 3,646 3,051
OTHER ASSETS 29 36
-------- --------
Total assets $289,557 $300,291
======== ========
</TABLE>
<PAGE> 5
LIABILITIES AND STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
CURRENT LIABILITIES:
Revolving credit agreements $ 12,640 $ 11,325
Current maturities of other long-term obligations 90 10,068
Accounts payable 32,447 35,117
Other current liabilities 30,417 27,272
-------- --------
Total current liabilities 75,594 83,782
-------- --------
OTHER LIABILITIES 12,998 12,179
-------- --------
LONG-TERM OBLIGATIONS:
Revolving credit agreements 70,000 37,000
Notes payable - 28,145
Capital leases 596 625
-------- --------
Total long-term obligations 70,596 65,770
-------- --------
STOCKHOLDER'S EQUITY:
Common stock and paid-in capital, 100 shares
authorized, issued and outstanding at $0.01
par value 149,268 149,268
Retained deficit (14,568) (7,085)
Minimum pension liability (2,357) (2,265)
Cumulative translation adjustment (1,974) (1,358)
-------- --------
Total stockholder's equity 130,369 138,560
-------- --------
Total liabilities and stockholder's equity $289,557 $300,291
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated balance sheets.
<PAGE> 6
HAMILTON BEACH/PROCTOR-SILEX, INC.,
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(Dollars in Thousands)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Net sales $377,517 $356,332
Cost of sales 317,509 311,736
-------- --------
Gross profit 60,008 44,596
Selling, administrative and general expenses 31,491 29,495
-------- --------
Operating profit 28,517 15,101
Other expense:
Interest 6,681 6,570
Amortization 4,018 4,408
Other, net 328 4,102
-------- --------
Total other expense 11,027 15,080
-------- --------
Income before income taxes 17,490 21
Provision for income taxes 7,293 993
-------- --------
Net income (loss) $ 10,197 $ (972)
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE> 7
HAMILTON BEACH/PROCTOR-SILEX, INC.,
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(Dollars in Thousands, Other Than Par Value)
<TABLE>
<CAPTION>
Common
Common Stock Stock
------------------ and Minimum Cumulative Total
Shares Par Paid-in Retained Pension Translation Stockholder's
Outstanding Value Capital Deficit Liability Adjustment Equity
----------- ----- -------- -------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, December 31, 1992 100 $1 $149,268 $ (6,113) $ (437) $ (962) $141,756
Minimum pension liability - - - - (1,828) - (1,828)
Net loss - - - (972) - - (972)
Translation adjustment - - - - - (396) (396)
--- -- -------- -------- ------- ------- --------
BALANCES, December 31, 1993 100 1 149,268 (7,085) (2,265) (1,358) 138,560
Minimum pension liability - - - - (92) - (92)
Net income - - - 10,197 - - 10,197
Cash dividends - - - (15,000) - - (15,000)
Translation adjustment - - - - - (616) (616)
Indemnity settlement and other - - - (2,680) - - (2,680)
--- -- -------- -------- ------- ------- --------
BALANCES, December 31, 1994 100 $1 $149,268 $(14,568) $(2,357) $(1,974) $130,369
=== == ======== ======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE> 8
HAMILTON BEACH/PROCTOR-SILEX, INC.,
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(Dollars in Thousands)
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $10,197 $ (972)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities-
Depreciation 11,494 10,857
Loss on disposal of fixed assets 187 274
Amortization 4,018 4,408
Deferred income taxes (509) (2,400)
Changes in assets and liabilities-
(Increase) decrease in:
Accounts receivable, net 2,968 (9,803)
Inventories, net 3,224 (337)
Prepaid expenses and other 539 132
Increase (decrease) in:
Accounts payable (2,670) 2,348
Other liabilities 3,891 (867)
------- -------
Net cash provided by operating activities 33,339 3,640
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,387) (12,240)
Proceeds from sale of fixed assets 229 228
------- -------
Net cash used in investing activities (13,158) (12,012)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term obligations and revolving
credit agreements (86,209) (39,842)
Borrowings under long-term obligations and revolving
credit agreements 82,372 43,404
Dividends paid (15,000) -
Deferred financing costs paid (362) -
------- -------
Net cash (used in) provided by financing activities (19,199) 3,562
------- -------
Effect of exchange rate changes on cash (616) (396)
------- -------
Net increase (decrease) in cash and cash equivalents 366 (5,206)
CASH AND CASH EQUIVALENTS, beginning of year 2,673 7,879
------- -------
CASH AND CASH EQUIVALENTS, end of year $ 3,039 $ 2,673
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE> 9
HAMILTON BEACH/PROCTOR-SILEX, INC.,
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(Dollars in Thousands)
1. ORGANIZATION AND BUSINESS:
Hamilton Beach/Proctor-Silex, Inc. (the "Company"), designs, manufactures and
sells small consumer electric appliances. The Company is a wholly owned
subsidiary of HB/PS Holdings, Inc. HB/PS Holdings, Inc. is owned 80 percent by
NACCO Industries, Inc. ("NACCO"), and 20 percent by Glen Dimplex.
2. SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries. All intercompany transactions and balances have
been eliminated in consolidation.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks and highly liquid investments
with initial maturities of three months or less.
Inventories, net
Inventories are stated at the lower of cost or market. Cost has been
determined by the last-in, first-out ("LIFO") method for inventories accounted
for in the United States and under the first-in, first-out method for all other
inventories.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. All property, plant and
equipment is depreciated on a straight-line basis over estimated useful lives
of 40 years for buildings and 4 to 6 years for machinery and equipment. Assets
recorded under capital leases and leasehold improvements are amortized over the
lesser of their estimated useful lives or remaining lease terms on a
straight-line basis.
<PAGE> 10
- 2 -
Goodwill
Goodwill is being amortized on a straight-line basis over 40 years. The
Company continually evaluates whether events and circumstances have occurred
subsequent to its acquisitions that indicate the remaining estimated useful
life of goodwill may warrant revision or that the remaining balance of goodwill
may not be recoverable. When factors indicate that goodwill should be
evaluated for possible impairment, the Company uses an estimate of the
Company's undiscounted net income over the remaining life of the goodwill in
measuring whether the goodwill is recoverable.
Product Development Costs
Costs associated with the development of new products and changes to existing
products are charged to operations as incurred. These costs amounted to $2,742
and $2,706 for 1994 and 1993, respectively.
Foreign Currency Translation
Assets and liabilities of the Company's foreign subsidiaries are translated at
current exchange rates, while income and expense items are translated at
average rates for the period. Translation gains and losses are reported as a
component of stockholder's equity.
Product Liability
The Company is insured for product liability claims for amounts in excess of
established self-insured retention limits. Costs estimated to be incurred with
respect to product liability claims are accrued based on experience factors.
Self-Insurance
The Company maintains a self-insurance program for health claims and a high
deductible insurance program for workers' compensation claims of all covered
employees. The Company accrues estimated future costs that will be incurred
for existing employee claims.
Financial Instruments and
Derivative Financial Instruments
The fair value of financial instruments have been determined through
information obtained from quoted market sources and management estimates. The
Company does not hold or issue financial instruments or derivative financial
instruments for trading purposes.
The Company enters into forward foreign exchange contracts in order to hedge
certain foreign currency commitments. Gains and losses from these contracts
are deferred and recognized as part of the cost of the underlying transaction
being hedged.
<PAGE> 11
- 3 -
The Company also enters into interest rate swap agreements with various terms
and maturity dates. The differential between the floating interest rate and
the fixed interest rate which is to be paid or received is recognized in
interest expense on a current basis.
Reclassifications
Certain amounts in the 1993 financial statements have been reclassified to
conform to the current year's presentation.
3. MERGER:
In 1990, Hamilton Beach, Inc., and Proctor-Silex, Inc., merged to form Hamilton
Beach/Proctor-Silex, Inc. Certain of the assets acquired and liabilities
assumed were subject to indemnification under the merger agreement. In March
1994, all outstanding claims for indemnification under the merger agreement
were resolved. The resolution of these matters resulted in a reduction of
goodwill and retained earnings of $2,676.
4. ACCOUNTS RECEIVABLE, NET:
At December 31, accounts receivable consist of the following.
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Accounts receivable $83,642 $85,451
Less- Allowance for returns, discounts
and adjustments (6,168) (5,397)
Allowance for doubtful accounts (1,195) (807)
------- -------
Accounts receivable, net $76,279 $79,247
======= =======
</TABLE>
5. INVENTORIES, NET:
At December 31, inventories consist of the following.
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Raw materials $12,261 $11,850
Work in process 3,657 3,462
Finished goods 32,748 36,029
------- -------
48,666 51,341
LIFO allowance (109) 440
------- -------
Inventories, net $48,557 $51,781
======= =======
</TABLE>
<PAGE> 12
- 4 -
As a result of changes in prices and liquidation of certain LIFO inventories,
operating profit decreased $(549) for 1994 and increased $324 for 1993. The
cost of inventories stated under the LIFO method was 92 and 90 percent of the
value of total inventories at December 31, 1994 and 1993, respectively.
6. PROPERTY, PLANT AND EQUIPMENT, NET:
At December 31, property, plant and equipment (including capital leases)
includes the following.
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Land, buildings and improvements $16,727 $16,071
Machinery and equipment 83,910 76,982
Construction work in process 5,652 1,756
------- -------
106,289 94,809
Less- Accumulated depreciation and amortization (52,031) (42,028)
------- -------
Property, plant and equipment, net $54,258 $52,781
======= =======
</TABLE>
7. DEFERRED CHARGES AND INTANGIBLE ASSETS, NET:
Goodwill amounted to $94,651 at December 31, 1994, net of accumulated
amortization, and is being amortized over 40 years on a straight-line basis.
Goodwill amortization expense amounted to $2,756 and $2,827 for 1994 and 1993,
respectively. Patents, trademarks, and other at December 31, 1994, amounted to
$232, net of accumulated amortization, and are being amortized on a
straight-line basis over their remaining lives. Total amortization for 1994
and 1993, amounted to $437 annually. Deferred financing costs at December 31,
1994, amounted to $1,361, net of accumulated amortization, and are being
amortized on a straight- line basis over the life of the amended and restated
credit agreement (see Note 8). Amortization expense related to deferred
financing costs for 1994 and 1993, was $825 and $1,144, respectively.
8. REVOLVING CREDIT AGREEMENTS AND NOTES PAYABLE:
The Company has a bank credit facility (the "Agreement"),which includes a
revolving credit line and letter-of-credit facility of up to $135,000 through
May 1997. In May 1994, the Company amended and restated the Agreement
providing more favorable terms and conditions which included, among other
things, an extension of the maturity date to May 1997 (and upon mutual consent,
extending the maturity date annually for an additional year), elimination of
the term note, elimination and modification of covenants,
<PAGE> 13
- 5 -
provision for the payment of dividends, and reduction in borrowing costs. As
amended, the Agreement allows borrowings to be made at either, (i) lender's
prime rate plus 0.25 percent or (ii) LIBOR plus 1.25 percent. Commitment fees
are 0.50 percent of the unused portion of the revolving credit line. The
borrowing margins and commitment fee rates are subject to reductions based upon
the Company achieving certain predetermined interest coverage ratios. During
1994, the Company received an average reduction of 0.47 percent in the
borrowing rate and 0.11 percent in the commitment fee rate. The Agreement
includes certain covenants requiring, among other things, maintenance of
certain levels of (i) net worth, (ii) debt to total capital, and (iii) interest
coverage.
The Agreement is secured by substantially all of the Company's assets. At
December 31, 1994, the Company was in compliance with all financial covenants
of the Agreement. The Company also has in place a master borrowing note, which
is secured through and subject to the Agreement and which allows for borrowings
of up to $5,000 on a daily basis.
During 1994 and 1993, total average borrowings outstanding under the Agreement
and master borrowing note were $93,220 and $56,620 at a weighted-average
interest rate of 6.31 percent and 5.84 percent, respectively. In addition, at
December 31, 1994 and 1993, outstanding obligations under letters of credit
were $3,167 and $5,450, respectively.
At the option of Housewares Holding Company ("Housewares"), a wholly owned
subsidiary of NACCO, the Company may, subject to certain terms and conditions
of the Agreement, borrow up to $35,000 from Housewares. No borrowings were
outstanding during 1994 or 1993.
9. FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS:
Interest Rate Derivatives
The primary objective of interest rate risk management is to minimize the
impact of interest rate fluctuations on the Company's cash flow and financial
results. The Company has entered into certain interest rate swap agreements to
swap floating rate for fixed rate interest payments. At December 31, 1994, the
notional amount on interest rate swap agreements expiring in June 1997 and
March 1999 was $10 million and $50 million, respectively; with the average
variable rate received and the average fixed rate paid during 1994 being 6.5
percent and 5.9 percent, respectively. At December 31, 1994, the aggregate
fair market value of the Company's interest rate swap agreements was $4,481,
based on quoted market prices received from the Company's swap agreement
counter parties.
<PAGE> 14
- 6 -
Foreign Currency Derivatives
The Company enters into forward foreign exchange contracts for purposes of
hedging its exposure to foreign currency exchange rate fluctuations. These
contracts hedge primarily firm commitments, and relate to the Canadian dollar
and the Mexican peso. At December 31, 1994, the Company had foreign currency
contracts totaling $1,000. The amount of deferred loss associated with these
contracts was not material.
All interest rate and foreign currency derivative agreements are with major
commercial banks; therefore, the risk of credit loss from nonperformance by the
banks is minimal. The Company evaluates its exposure to credit loss on an
ongoing basis.
10. LEASES:
The Company leases certain facilities under noncancelable leases expiring at
various dates through 2021.
Plant and equipment under capital leases has been recorded as property, plant
and equipment in the consolidated balance sheet, and the related amortization
is included with depreciation expense. At December 31, property, plant and
equipment includes the following amounts relating to capital leases.
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Plant and equipment $9,261 $9,199
Less- Accumulated amortization (3,299) (2,787)
------ ------
$5,962 $6,412
====== ======
</TABLE>
Future minimum lease payments for capital leases as of December 31, 1994, are
as follows: 1995 - $149; 1996 - $137; 1997 - $103; 1998 - $77; 1999 - $72; and
thereafter - $832, and have a net present value of $686.
Future minimum lease payments for operating leases are as follows: 1995 -
$3,502; 1996 - $2,649; 1997 - $1,914; 1998 - $1,181; 1999 - $568; and
thereafter - $1,377.
Rental expenses for operating leases amounted to $4,891 and $4,526 for 1994 and
1993, respectively.
11. INCOME TAXES:
The Company is included in the consolidated Federal income tax return filed by
NACCO. The Company's tax sharing agreement with NACCO provides that Federal
income taxes are computed by the Company on a separate return basis, except
that net operating loss and tax credit carryovers which benefit the
consolidated tax return are advanced to the Company and are repaid as utilized
on a separate return basis. To the extent that these loss carryovers are not
used on a separate return basis, the Company is required, under conditions
pursuant to the tax sharing agreement, to refund to NACCO the balance of
carryovers advanced and not used by the Company.
<PAGE> 15
- 7 -
The provision for income taxes consists of the following amounts.
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Current:
Federal $5,915 $ 793
State 348 67
Foreign 1,287 1,034
------ ------
Total current provision 7,550 1,894
------ ------
Deferred:
Federal (840) (912)
State 371 (27)
Foreign 212 38
------ ------
Total deferred benefit (257) (901)
------ ------
Total provision for income taxes $7,293 $ 993
====== ======
</TABLE>
A reconciliation of Federal statutory and effective income tax follows.
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Statutory taxes at 35% $6,122 $ 8
Effect of:
State taxes 467 34
Foreign taxes 368 322
Acquisition accounting adjustments 965 989
Change in statutory rates - (200)
General business credits (240) (20)
Other (389) (140)
------ ------
Provision for income taxes $7,293 $ 993
====== ======
Effective rate 41.7% *
====== ======
</TABLE>
* - not meaningful
<PAGE> 16
- 8 -
A summary of the deferred tax assets and (liabilities) which comprise the net
deferred tax balances in the accompanying consolidated balance sheets resulting
from differences in the book and tax bases of assets and liabilities are as
follows.
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Deferred tax liabilities:
Advertising, sales, and inventory
related reserves $(3,399) $(3,433)
Accelerated depreciation (5,668) (6,763)
------- -------
Total deferred tax liabilities (9,067) (10,196)
------- -------
Deferred tax assets:
Employee benefits 3,698 3,270
Plant restructuring reserve 530 530
Environmental reserve 2,441 2,467
Product liability reserve 1,495 1,488
Net operating loss and tax credit
carryovers 4,639 5,840
Other 1,402 1,230
------- -------
Total deferred tax assets 14,205 14,825
------- -------
Net deferred tax assets $ 5,138 $ 4,629
======= =======
</TABLE>
The Company fully expects to realize its deferred tax assets. The Company has
no valuation allowances as of December 31, 1994 and 1993. As of December 31,
1994, the Company had state net operating loss carryovers available for use
on future returns of approximately $6,100. The Company also had Federal net
operating loss carryovers of approximately $11,200 at December 31, 1994,
related to Hamilton Beach, Inc. For Federal tax purposes, the utilization of
acquired net operating loss carryovers is limited to $1,953 on an annual basis,
with any unused limitation available for carryover to subsequent years. The
Company utilized $1,953 of the Federal net operating loss carryovers related
to Hamilton Beach, Inc., in 1994. Federal carryovers are scheduled to expire
in the years 2000 to 2004, and state carryovers will expire in the years 1995
to 2004.
No provision has been made for Federal income taxes on undistributed earnings
of foreign subsidiaries of approximately $11,848 as of December 31 1994, as any
future remittances are expected to be substantially tax free.
<PAGE> 17
- 9 -
12. RETIREMENT BENEFIT PLANS:
The Company sponsors a defined benefit plan, the Hamilton Beach/Proctor-Silex,
Inc., Profit Sharing Retirement Plan (the "Plan"). All full-time hourly and
salaried U.S. employees are eligible to participate in the Plan. The Plan
provides that participants accrue benefits annually based on age and annual
earnings. Upon retirement, participants will receive their account balance
under the Plan plus all frozen accrued benefits earned under previous benefit
plans. Benefits will be paid upon retirement at age 65 or at age 55 if the
employee has at least ten years of service. Participants become fully vested
after five years of service. The Company's funding policy is to contribute
each year an amount which satisfies the minimum required contribution but does
not exceed the maximum tax deductible contribution. Also, the Company may make
additional contributions to the Plan, dependent upon the Company achieving
certain profit and performance objectives. In 1994, the Company accrued $293,
representing the estimated amount of profit sharing to be contributed to the
Plan in 1995. The Company contributed $1,234 and $1,043 to the Plan for the
plan years ended December 31, 1994 and 1993, respectively. Assets held by the
Plan consist mainly of common stocks, corporate and government bonds, and cash
and cash equivalents.
The details of the components of net pension expense for the years ended
December 31, 1994 and 1993, are as follows.
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Service cost $1,249 $1,167
Interest cost on projected benefit
obligation 2,366 2,208
Actual return on assets 340 (1,730)
Net amortization and deferral (2,481) (500)
------ ------
Net pension expense $1,474 $1,145
====== ======
</TABLE>
Actuarial factors used in accounting for the Plan as of December 31, 1994 and
1993, are as follows.
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Weighted-average discount rate 8.50% 7.50%
Long-term rate of return on assets 9.00% 9.00%
Rate of increase in compensation levels:
Salaried 5.50% 4.75%
Hourly 5.00% 4.00%
</TABLE>
<PAGE> 18
- 10 -
The funded status of the Plan and amounts recognized in the Company's
consolidated balance sheets as of December 31, 1994 and 1993, are as follows.
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested accumulated benefit obligation $27,768 $28,175
Nonvested accumulated benefit obligation 1,019 1,604
------- -------
Total accumulated benefit obligation 28,787 29,779
Value of future salary projections 758 437
------- -------
Total projected benefit obligation 29,545 30,216
Fair value of plan assets 24,162 25,570
------- -------
Projected benefit obligation in excess of plan
assets (5,383) (4,646)
Unrecognized net transition asset (6) (8)
Unrecognized net loss 4,383 3,916
Unrecognized prior service cost 39 66
Unrecognized basis change (20) (23)
Additional minimum liability (3,846) (3,719)
------- -------
Pension liability recognized in balance
sheet at December 31, 1994 and 1993 $(4,833) $(4,414)
======= =======
</TABLE>
Statement of Financial Accounting Standards No. 87 "Employers' Accounting for
Pensions" ("SFAS 87"), requires the Company to recognize a minimum pension
liability equal to the unfunded accumulated benefit obligation ("ABO"). At
December 31, 1994 and 1993, the cumulative unfunded ABO was $4,833 and $4,414,
respectively. The Company recorded an adjustment which recognized an
additional minimum liability equal to the unfunded ABO. In accordance with
SFAS 87, the portion of the unfunded ABO in excess of unrecognized prior
service cost was charged directly to stockholder's equity and is separately
presented in the consolidated statements of changes in stockholder's equity.
The Company also has a defined contribution retirement savings plan (401(k))
covering substantially all of its full-time, United States employees, which is
limited to employee contributions only.
The Company provides retirement health care for all retirees who retired prior
to October 1, 1992. In addition, the Company provides life insurance benefits
to all retirees who retired prior to October 1, 1992, assuming they reached
certain age and service requirements while working for the Company.
<PAGE> 19
- 11 -
13. POSTEMPLOYMENT BENEFIT PLANS:
Statement of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits," issued in November 1992, requires that benefits paid
to former or inactive employees after employment but before retirement be
recognized when they are earned or become payable when certain conditions are
met rather than recognizing these costs when they are paid. Adoption of this
standard in 1994 did not have a material impact on the Company's financial
position or results of operations.
14. RELATED-PARTY TRANSACTIONS:
The Company sells merchandise to The Kitchen Collection, Inc. ("Kitchen
Collection"), a wholly owned subsidiary of Housewares. The Company's sales to
Kitchen Collection were $5,907 and $5,223, respectively, for 1994 and 1993.
Accounts receivable due from Kitchen Collection at December 31, 1994 and 1993,
amounted to $1,151 and $1,014, respectively, and are included in accounts
receivable.
NACCO incurs certain administrative and other expenses directly related to the
operation of the Company. These expenses are reimbursed to NACCO. The Company
expensed and paid $494 and $763 of these administrative expenses to NACCO in
1994 and 1993, respectively. The related payable to NACCO was $61 and $82 at
December 31, 1994 and 1993, respectively.
15. CONTINGENCIES:
In 1992, a former distributor for the Company filed suit seeking to recover
damages for alleged breach of contract by the Company. In the fourth quarter
of 1994, a judgment was entered against the Company. The Company intends to
vigorously defend itself in this action and is moving to either have the
judgment disregarded, arranging for a new trial or appealing the judgment.
The ultimate outcome of the litigation is unknown, accordingly, no provision
for any liability that may result has been made in the accompanying financial
statements.
In July 1992, an action alleging patent infringement was commenced against the
Company. In this action, the plaintiff alleged that the Company had infringed
on a U.S. patent related to an automatic shut-off feature incorporated into
certain irons manufactured by the Company. In August 1993, the Company reached
an agreement settling this action. The settlement amount was accrued and
recorded in 1993 and is reflected as other expense in the consolidated
statements of operations.
<PAGE> 20
- 12 -
Various legal proceedings and claims have been or may be asserted against the
Company relating to the conduct of its business, including product liability
and environmental claims. These proceedings and claims are incidental to the
Company's ordinary course of business. Management believes that it has
meritorious defenses and will vigorously defend itself in these actions. Any
costs that management estimates may be paid as a result of these proceedings
or claims are accrued when the liability is considered probable and the amount
can be reasonably estimated. Although the ultimate disposition of these
proceedings and claims is not presently determinable, management believes,
after consultation with its General Counsel, the likelihood that material
costs will be incurred in excess of accruals already recognized is remote.
16. INDUSTRY SEGMENT AND FOREIGN OPERATIONS:
The Company designs, manufactures and sells small consumer electric appliances.
Net sales to one major customer totaled 18.1 percent in 1994 and 14.3 percent
in 1993.
The following table presents sales, operating profit and other financial
information by geographic area for 1994 and 1993.
<TABLE>
<CAPTION>
United
States Canada Eliminations Consolidated
-------- ------- ------------ ------------
<S> <C> <C> <C> <C>
1994:
Net sales $334,496 $43,021 $ - $377,517
Sales and transfers
between geographic
areas 35,006 - (35,006) -
Operating profit 26,314 2,551 (348) 28,517
Depreciation 11,442 52 - 11,494
Identifiable assets 276,964 14,124 (1,531) 289,557
Capital expenditures 13,367 20 - 13,387
1993:
Net sales $315,631 $40,701 $ - $356,332
Sales and transfers
between geographic
areas 36,228 - (36,228) -
Operating profit 13,165 2,294 (358) 15,101
Depreciation 10,770 87 - 10,857
Identifiable assets 286,705 15,085 (1,499) 300,291
Capital expenditures 12,224 16 - 12,240
</TABLE>
<PAGE> 21
- 13 -
The Company has operations in the United States, Mexico and Canada. Products
are transferred between these geographic areas on a basis intended to reflect
as nearly as possible the market value of the products. Identifiable assets
are those assets identified with the operations in each geographic area at
year-end. All deferred charges and intangible assets are attributed to the
United States.
Eliminations include amounts for intercompany sales, intercompany profits in
inventory, and intercompany investments.
17. SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments during 1994 and 1993, included interest of $6,523 and $6,865 and
income taxes of $2,138 and $2,360, respectively.
<PAGE> 1
EXHIBIT 99 (iii)
THE KITCHEN COLLECTION, INC.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1994 AND 1993
TOGETHER WITH AUDITORS' REPORT
<PAGE> 2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholder of
The Kitchen Collection, Inc.:
We have audited the accompanying balance sheets of THE KITCHEN COLLECTION, INC.
(a Delaware corporation) as of December 31, 1994 and 1993, and the related
statements of income, changes in stockholder's equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Kitchen Collection, Inc. as
of December 31, 1994 and 1993, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Columbus, Ohio,
January 26, 1995.
<PAGE> 3
THE KITCHEN COLLECTION, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
ASSETS 1994 1993
------ ----------- -----------
<S> <C> <C>
Current assets:
Cash $ 170,305 $ 10,096
Miscellaneous receivables 227,706 78,176
Accounts receivable - affiliate 3,125,000 4,000,000
Inventories 14,389,205 11,358,350
Prepaid expenses and other 1,434,092 1,207,442
----------- -----------
Total current assets 19,346,308 16,654,064
----------- -----------
Property, plant and equipment:
Land 61,300 61,300
Building and leasehold improvements 816,693 754,839
Furniture and fixtures 5,170,775 4,361,992
----------- -----------
6,048,768 5,178,131
Less: Accumulated depreciation and amortization (3,330,760) (2,660,450)
----------- -----------
Property, plant and equipment, net 2,718,008 2,517,681
Goodwill, net of accumulated amortization 3,846,648 3,961,760
----------- -----------
Total assets $25,910,964 $23,133,505
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt $ - $ 500,000
Accounts payable and miscellaneous accrued liabilities
7,565,527 5,176,386
Accounts payable - affiliates 207,221 429,621
Income taxes payable to affiliate 1,077,360 871,540
Accrued salaries and benefits 1,148,298 918,334
Other accrued taxes 771,570 712,064
----------- -----------
Total current liabilities 10,769,976 8,607,945
Long-term debt, less current maturities 5,000,000 1,900,000
----------- -----------
Total liabilities 15,769,976 10,507,945
----------- -----------
Stockholder's equity:
Common stock; $.01 par value; 100,000 shares authorized;
10,500 shares issued and outstanding 105 105
Additional paid-in capital 4,999,890 4,999,890
Retained earnings 5,140,993 7,625,565
----------- -----------
Total stockholder's equity 10,140,988 12,625,560
----------- -----------
Total liabilities and stockholder's equity $25,910,964 $23,133,505
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral
part of these balance sheets.
<PAGE> 4
THE KITCHEN COLLECTION, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Net sales $63,870,305 $53,748,681
Cost of sales 36,253,909 30,618,244
----------- -----------
Gross margin 27,616,396 23,130,437
Selling, general, administrative and other expenses 22,091,402 18,284,419
----------- -----------
Operating income 5,524,994 4,846,018
Interest expense 204,623 102,979
Amortization expense 125,943 115,112
----------- -----------
Income before provision for income taxes 5,194,428 4,627,927
Provision for income taxes 2,079,000 1,879,000
----------- -----------
Net income $ 3,115,428 $ 2,748,927
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
<PAGE> 5
THE KITCHEN COLLECTION, INC.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION> Additional Total
Number of Common Paid-in Retained Stockholder's
Shares Stock Capital Earnings Equity
------- ------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992, as restated 10,500 $ 105 $ 4,999,890 $6,626,638 $11,626,633
Net income - - - 2,748,927 2,748,927
Dividend to stockholder - - - (1,750,000) (1,750,000)
------ ----- ----------- ---------- -----------
Balance, December 31, 1993 10,500 105 4,999,890 7,625,565 12,625,560
Net income - - - 3,115,428 3,115,428
Dividend to stockholder - - - (5,600,000) (5,600,000)
------ ----- ----------- ---------- -----------
Balance, December 31, 1994 10,500 $ 105 $ 4,999,890 $5,140,993 $10,140,988
====== ===== =========== ========== ===========
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
<PAGE> 6
THE KITCHEN COLLECTION, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,115,428 $2,748,927
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 899,510 835,356
Loss on the disposal of assets 12,249 8,063
Increase in miscellaneous receivables (149,530) (25,747)
Increase in inventories (3,030,855) (2,887,225)
Increase in prepaid expenses and other (226,650) (326,201)
Increase in accounts payable and miscellaneous accrued
liabilities 2,389,141 2,210,827
Increase (decrease) in accounts payable - affiliates (222,400) 210,308
Increase in income taxes payable to affiliate 205,820 167,529
Increase in accrued salaries and benefits 229,964 75,908
Increase in other accrued taxes other than income 59,506 116,372
---------- ----------
Net cash provided by operating activities 3,282,183 3,134,117
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (1,016,915) (1,049,832)
Proceeds from disposal of assets 19,941 9,127
---------- ----------
Net cash used in investing activities (996,974) (1,040,705)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (2,400,000) (500,000)
Borrowings of long-term debt 5,000,000 -
Dividend to stockholder (5,600,000) (1,750,000)
Net (borrowings) repayments on loan to affiliate 875,000 (4,000,000)
---------- ----------
Net cash used in financing activities (2,125,000) (6,250,000)
---------- ----------
NET INCREASE (DECREASE) IN CASH 160,209 (4,156,588)
CASH, beginning of the year 10,096 4,166,684
---------- ----------
CASH, end of the year $ 170,305 $ 10,096
========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest $ 210,593 $ 138,441
Income taxes $1,969,894 $1,807,711
</TABLE>
The accompanying notes to financial statements are an integral
part of these statements.
<PAGE> 7
THE KITCHEN COLLECTION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
(1) ORGANIZATION
The Kitchen Collection, Inc. (the Company) is a specialty retailer of
kitchenware, tableware, small electrical appliances and related
accessories. The Company operates a chain of 119 retail and factory
outlet stores and is a wholly-owned subsidiary of NACCO Industries, Inc.
(NII).
(2) SIGNIFICANT ACCOUNTING POLICIES
Inventories
Inventories are stated at the lower of cost or market as determined by
the retail inventory method.
Building, Leasehold Improvements, Furniture and Fixtures
Building, leasehold improvements, furniture and fixtures are stated at
cost. Expenditures for maintenance and repairs are charged to operations
as incurred. For financial reporting purposes, depreciation and
amortization is provided using the straight-line method based upon the
estimated useful lives of the related assets, as follows:
<TABLE>
<S> <C>
Building and leasehold improvements 5-20 years
Furniture and fixtures 5 years
</TABLE>
Goodwill
Goodwill associated with the purchase of the Company by NII has been
capitalized and is being amortized over forty years on a straight-line
basis. Accumulated amortization was $757,822 and $642,710 at December 31,
1994 and 1993, respectively, with related amortization expense of
$115,112 for the years ended December 31, 1994 and 1993, respectively.
<PAGE> 8
- 2 -
Income Taxes
Deferred tax assets or liabilities are based on the difference between
the financial statement and income tax bases of assets and liabilities
using the enacted marginal tax rate. Deferred income tax expense or
benefit is based on the changes in the assets or liabilities from period
to period. Refer to Note 6 "Income Taxes" for additional information.
Fair Value of Financial Instruments
The fair values of financial instruments have been determined through
information obtained from quoted market sources and management estimates.
The fair value of the financial instruments approximated their carrying
values at December 31, 1994. The Company does not hold or issue financial
instruments or derivative financial instruments for trading purposes.
The Company enters into interest rate swap agreements with terms that run
concurrent with the related debt. The differential between the floating
interest rate and the fixed interest rate, which is to be paid or
received, is recognized in interest expense as interest rates change over
the life of the agreement.
(3) LINE-OF-CREDIT AGREEMENT
The Company has a line-of-credit agreement with a commercial bank for
$2,500,000. Upon renewal of the line on May 31, 1994, the rate was
reduced from the bank's prime rate or 1.50% over LIBOR to the bank's
prime rate or LIBOR plus a base rate margin of .75% to 1.75%, determined
by certain performance measures. The line-of-credit is unsecured. The
Company had no funds drawn against the available balance at December 31,
1994 or 1993. The credit agreement expires on May 31, 1995. The Company
has annually renewed this agreement in the past and expects to again
renew it under similar arrangements prior to its expiration.
<PAGE> 9
- 3 -
(4) LONG-TERM DEBT
Long-term debt consists of the following, as of December 31:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Note payable to bank at 7.56% (LIBOR plus 0.75%)
at December 31, 1994 and 5.5625% (LIBOR plus 1.50%)
at December 31, 1993
$5,000,000 $2,400,000
Less: current maturities - (500,000)
---------- ----------
$5,000,000 $1,900,000
========== ==========
</TABLE>
On May 10, 1994, the Company entered a term note agreement with a
commercial bank for $5,000,000, the proceeds from which were used to
retire the previously existing note. Interest is payable quarterly at
6.81%, plus a base rate margin between .75% and 1.75%, determined by
certain performance measures. The note is unsecured, and is payable in
two annual installments beginning January 15, 1999.
The note contains restrictive covenants regarding maintenance of minimum
net worth, interest coverage and leverage. The Company was in compliance
with all covenants as of December 31, 1994 and 1993.
Aggregate maturities of the note are as follows:
<TABLE>
<S> <C>
1995 $ -
1996 -
1997 -
1998 -
1999 2,500,000
Thereafter 2,500,000
----------
$5,000,000
==========
</TABLE>
<PAGE> 10
- 4 -
(5) INTEREST RATE RISK MANAGEMENT
The Company entered into an interest rate swap agreement with a six year
term during 1994. The use of this agreement allowed the Company to enter
into a long-term credit agreement with a performance based, floating rate
of interest and then swap it for a fixed rate as opposed to entering into
a higher cost fixed-rate credit agreement. This agreement is with a major
commercial bank; therefore, the risk of credit loss from nonperformance
by the bank is minimal. The following summarizes the notional amount and
related rates on this interest rate swap agreement at December 31, 1994:
<TABLE>
<S> <C>
Notional amount $5,000,000
Average variable rate received 5.81%
Average fixed rate paid 7.56%
</TABLE>
(6) INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Currently payable:
Federal $1,779,000 $1,538,000
State and local 383,000 347,000
---------- ----------
2,162,000 1,885,000
---------- ----------
Deferred:
Federal (78,000) (1,000)
State and local (5,000) (5,000)
---------- ----------
(83,000) (6,000)
---------- ----------
Total provision $2,079,000 $1,879,000
========== ==========
</TABLE>
The components of the net deferred income tax benefit are as follows:
<TABLE>
<CAPTION>
1994 1993
----------- ---------
<S> <C> <C>
Store closing reserve $ (14,000) $ 1,600
Uniform capitalization of inventory (54,000) (26,000)
Tax over book depreciation 49,000 4,700
Vacation pay (14,000) (14,700)
Medical cost (59,000) (10,000)
State income taxes 18,000 19,300
Other (9,000) 19,100
----------- --------
Total deferred income tax benefit, net $ (83,000) $ (6,000)
=========== ========
</TABLE>
<PAGE> 11
-5-
Reconciliation of the Federal statutory and effective income tax rates is
as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Federal statutory rate 35.0% 35.0%
Amortization of goodwill 0.8 0.8
State and local income tax, net of Federal income 4.8 4.8
tax effect
Other (0.6) -
---- ----
Effective tax rate 40.0% 40.6%
==== ====
</TABLE>
A summary of the components of the net deferred tax asset balances,
included in the accompanying balance sheet in prepaid expenses and other,
are as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Inventories $ 188,000 $ 158,000
Accrued expenses and reserves 149,000 35,000
State income taxes 1,000 21,000
Depreciation (214,000) (173,000)
--------- ---------
Deferred tax asset, net $ 124,000 $ 41,000
========= =========
</TABLE>
(7) RELATED PARTY TRANSACTIONS
Net purchases of inventories from HBPS during the years ended December
31, 1994 and 1993 were $6,083,151 and $5,005,846, respectively. HBPS is
80% owned by NII. At December 31, 1994 and 1993, the Company owed HBPS
$196,421 and $408,621, respectively, for these purchases.
The Company incurred $19,600 and $12,000 for miscellaneous services
provided by NII for the years ended December 31, 1994 and 1993,
respectively. The Company had payables for such services at December 31,
1994 and 1993 of $11,828 and $21,000, respectively.
The Company paid dividends to NII during 1994 and 1993 of $5,600,000 and
$1,750,000, respectively.
The Company has an agreement with NII to loan NII up to $15,000,000.
Outstanding amounts are collectible on demand. Interest is payable
quarterly at the Applicable Federal Rate. The Company has receivables due
from NII at December 31, 1994 and 1993 of $3,125,000 and $4,000,000,
<PAGE> 12
-6-
respectively. The Company recorded related interest income of $71,036
during 1994 and $11,000 during 1993.
The Company has a Tax Sharing Agreement with NII as NII and the Company
are included in the same consolidated group for Federal tax purposes. The
Company files separate tax returns for state and local tax purposes. The
Company has taxes payable to NII at December 31, 1994 and 1993 of
$1,077,360 and $871,540, respectively.
(8) LEASES
The Company leases retail stores, warehouse space and equipment under
noncancellable operating leases which expire at various dates through
2003. Future minimum lease payments are as follows:
<TABLE>
<S> <C>
1995 $ 5,047,000
1996 4,989,000
1997 4,409,000
1998 3,726,000
1999 2,754,000
Thereafter 3,163,000
-----------
Total minimum payments $24,088,000
===========
</TABLE>
The Company has leases with percentage of sales clauses in all but two of
its store locations. Percentage of sales rent expense amounted to
$443,072 for the year ended December 31, 1994 and $395,960 for the year
ended December 31, 1993. The Company's total rent expense for the years
ended December 31, 1994 and 1993 was $6,429,710 and $5,191,258,
respectively.
(9) RETIREMENT INCOME PLAN
In 1987, the Company established a defined contribution savings plan for
employees who have completed one year of service and are at least 21
years of age. Employees can elect to defer and contribute a portion of
their salary, following the guidelines established in the plan. The
Company makes matching contributions of 50% of the employee's
contribution. In addition, the Company can make an annual profit sharing
contribution at its discretion. The matching contribution, limited to 3%
of the employee's compensation, and the Company's profit sharing
contribution amounted to $319,958 and $291,205 for the years ended
December 31, 1994 and 1993, respectively.
(10) SUBSEQUENT EVENTS
Through January 26, 1995, the Company made additional advances to NII of
$1,060,000 and received payments of $3,420,000, for a net receivable
balance of $765,000 at January 26, 1995.
