SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1995
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 1-9172
NACCO Industries, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 34-1505819
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5875 LANDERBROOK DRIVE, MAYFIELD HEIGHTS, OHIO 44124
(Address of principal executive offices) Zip code
Registrant's telephone number, including area code (216) 449-9600
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the last 90 days.
YES X NO
Number of shares of Class A Common Stock outstanding at October 31, 1995:
7,256,370
Number of shares of Class B Common Stock outstanding at October 31, 1995:
1,709,507
<PAGE>
NACCO INDUSTRIES, INC.
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets - September
30, 1995 and December 31, 1994
Unaudited Consolidated Statements of
Income for the Three and Nine Months
Ended September 30, 1995 and 1994
Unaudited Consolidated Statements of Cash
Flows for the Nine Months Ended September
30, 1995 and 1994
Notes to Unaudited Consolidated Financial
Statements
Item 2 Management's Discussion and Analysis of
Results of Operations and Financial
Condition
Part II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
Exhibit Index
<PAGE>
PART I
Item 1 - Financial Statements
CONSOLIDATED BALANCE SHEETS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(Unaudited) (Audited)
SEPTEMBER 30 DECEMBER 31
1995 1994
---- ----
(In thousands)
Current Assets
<S> <C> <C>
Cash and cash equivalents .................................................................. $ 30,870 $ 19,541
Accounts receivable, net ................................................................... 267,512 236,215
Inventories ................................................................................ 422,479 298,987
Prepaid expenses and other ................................................................. 21,920 31,893
---------- ----------
742,781 586,636
Other Assets ................................................................................... 41,618 41,341
Property, Plant and Equipment, Net ............................................................. 518,392 485,314
Deferred Charges
Goodwill, net .............................................................................. 466,159 471,574
Deferred costs and other ................................................................... 53,585 69,257
Deferred income taxes ...................................................................... 38,202 40,200
---------- ----------
557,946 581,031
---------- ----------
Total Assets ......................................... $1,860,737 $1,694,322
========== ==========
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(Unaudited) (Audited)
SEPTEMBER 30 DECEMBER 31
1995 1994
---- ----
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
<S> <C> <C>
Accounts payable ................................................................... $ 250,964 $ 226,892
Revolving credit agreements ........................................................ 66,106 30,760
Current maturities of long-term obligations ........................................ 14,681 63,509
Income taxes ....................................................................... 11,626 20,356
Accrued payroll .................................................................... 26,505 28,018
Other current liabilities .......................................................... 110,683 111,903
---------- ---------
480,565 481,438
Notes Payable - not guaranteed by
the parent company ................................................................. 390,302 286,717
Obligations of Project Mining Subsidiaries -
not guaranteed by the parent company or
its North American Coal subsidiary ................................................. 344,706 331,876
Obligation to United Mine Workers of America
Combined Benefit Fund .............................................................. 152,153 154,959
Self-insurance Reserves and Other ...................................................... 129,658 119,399
Minority Interest ...................................................................... 42,816 40,542
Stockholders' Equity
Common stock:
Class A, par value $1 per share, 7,256,130
shares outstanding (1994 - 7,228,739
shares outstanding) .......................................................... 7,256 7,229
Class B, par value $1 per share, convertible
into Class A on a one-for-one basis,
1,709,747 shares outstanding
(1994 - 1,722,981 shares outstanding) ........................................ 1,710 1,723
Capital in excess of par value ..................................................... 3,559 2,788
Retained income .................................................................... 295,285 262,226
Foreign currency translation adjustment
and other ....................................................................... 12,727 5,425
---------- ---------
320,537 279,391
---------- ---------
Total Liabilities and Stockholders' Equity ...................................... $1,860,737 $1,694,322
========== ==========
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1995 1994 1995 1994
---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales ........................................... $ 536,414 $ 477,101 $ 1,550,668 $ 1,291,642
Other operating income .............................. 1,916 3,202 7,632 8,816
----------- ----------- ----------- -----------
Total Revenues ........... 538,330 480,303 1,558,300 1,300,458
Cost of sales ....................................... 436,991 384,162 1,256,501 1,037,869
----------- ----------- ----------- ----------
Gross Profit ........... 101,339 96,141 301,799 262,589
Selling, administrative and
general expenses .................................. 63,494 58,455 190,690 167,067
Amortization of goodwill ............................ 3,422 3,427 10,266 10,300
----------- ----------- ----------- ----------
Operating Profit ........... 34,423 34,259 100,843 85,222
Other income (expense)
Interest income ................................. 287 453 2,578 1,215
Interest expense ................................ (13,459) (13,966) (39,866) (42,462)
Other - net ..................................... 1,029 1,026 2,280 (364)
----------- ----------- ----------- ----------
(12,143) (12,487) (35,008) (41,611)
----------- ----------- ----------- ----------
Income Before Income Taxes,
Minority Interest and
Extraordinary Charge ........... 22,280 21,772 65,835 43,611
Provision for income taxes .......................... 7,526 9,852 22,852 19,699
----------- ----------- ----------- ----------
Income Before Minority Interest
and Extraordinary Charge ........... 14,754 11,920 42,983 23,912
Minority interest ................................... (1,096) (906) (1,788) (937)
----------- ----------- ----------- ----------
Income Before Extraordinary Charge ........... 13,658 11,014 41,195 22,975
Extraordinary charge, net-of-tax .................... (2,102) -- (3,382) (3,218)
----------- ----------- ----------- ----------
Net Income ........... $ 11,556 $ 11,014 $ 37,813 $ 19,757
=========== =========== =========== ==========
Per Share:
Income Before Extraordinary Charge $ 1.53 $ 1.23 $ 4.60 $ 2.57
Extraordinary charge, net-of-tax ................ (0.24) -- (0.38) (.36)
----------- ----------- ----------- ----------
Net Income ...................................... $ 1.29 $ 1.23 $ 4.22 $ 2.21
=========== =========== =========== ==========
Cash dividends per share ........................ $ .180 $ .170 $ .530 $ .505
=========== =========== =========== ==========
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1995 1994
---- ----
(In thousands)
Operating Activities
<S> <C> <C>
Net income .................................................................. $ 37,813 $ 19,757
Adjustments to reconcile net income
to net cash provided by operating
activities:
Extraordinary charge, net-of-tax ........................................ 2,161 1,790
Depreciation, depletion and amortization ................................ 59,371 60,273
Deferred income taxes ................................................... 1,013 2,070
Other non-cash items .................................................... 3,255 (5,344)
Working Capital Changes:
Accounts receivable ..................................................... (24,870) (14,136)
Inventories ............................................................. (121,580) (80,810)
Other current assets .................................................... 6,598 2,649
Accounts payable ........................................................ 18,225 31,589
Accrued income taxes .................................................... (6,702) (5,806)
Other liabilities ....................................................... (5,238) (3,114)
--------- ---------
Net cash provided (used) by operating activities ........... (29,954) 8,918
Investing Activities
Expenditures for property, plant and equipment .............................. (55,379) (34,573)
Proceeds from the sale of assets ............................................ 640 2,924
Sale of NMHG bonds .......................................................... 4,394 --
Other investing activities .................................................. (2,375) --
--------- ---------
Net cash used by investing activities ........... (52,720) (31,649)
Financing Activities
Additions to long-term obligations and
revolving credit .......................................................... 392,041 143,477
Reductions of long-term obligations and
revolving credit .......................................................... (310,928) (109,015)
Additions to obligations of project mining subsidiaries...................... 45,033 41,842
Reductions of obligations of project mining subsidiaries..................... (32,203) (53,310)
Cash dividends paid ......................................................... (4,751) (4,518)
Capital grants .............................................................. 2,389 --
Other - net ................................................................. 1,518 4,297
--------- ---------
Net cash provided by financing activities ........... 93,099 22,773
Effect of exchange rate changes on cash ..................................... 904 4,329
--------- ---------
Cash and Cash Equivalents
Increase for the period ..................................................... 11,329 4,371
Balance at the beginning of the period ...................................... 19,541 29,149
--------- ---------
Balance at the end of the period ............................................ $ 30,870 $ 33,520
========= =========
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
(Tabular Dollars in Millions, Except Per Share Data)
Note A - Basis of Presentation
NACCO Industries, Inc. ("NACCO") is a holding company with four operating
subsidiaries: The North American Coal Corporation ("North American Coal"), NACCO
Materials Handling Group, Inc. ("NMHG"), Hamilton Beach/Proctor-Silex, Inc.
("HBPS"), and The Kitchen Collection, Inc. ("KCI").
The accompanying unaudited consolidated financial statements include the
accounts of NACCO and its majority owned subsidiaries (NACCO Industries, Inc.
and Subsidiaries - the "Company"). Intercompany accounts have been eliminated.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of the financial position of the Company as of
September 30, 1995 and the results of its operations for the three and nine
month periods and cash flows for the nine month periods ended September 30, 1995
and 1994 have been included.
Operating results for the three and nine month periods ended September 30, 1995,
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1995. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1994.
Certain amounts in the prior periods' unaudited consolidated financial
statements have been reclassified to conform to the current period's
presentation.
<PAGE>
Note B - Inventories
Inventories are summarized as follows:
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
---- ----
Manufacturing inventories:
Finished goods and service parts
<S> <C> <C>
NACCO Materials Handling Group ........................................... $118.6 $ 82.3
Hamilton Beach/Proctor-Silex ............................................. 71.2 32.8
------ ------
189.8 115.1
------ ------
Raw materials and work in process
NACCO Materials Handling Group ........................................... 185.9 137.9
Hamilton Beach/Proctor-Silex ............................................. 16.3 15.9
202.2 153.8
------ ------
LIFO reserve
NACCO Materials Handling Group ........................................... (14.3) (11.4)
Hamilton Beach/Proctor-Silex ............................................. (.6) (.1)
(14.9) (11.5)
------ ------
Total manufacturing inventories .............................................. 377.1 257.4
North American Coal:
Coal ..................................................................... 9.9 8.4
Mining supplies .......................................................... 18.4 18.8
Retail inventories - Kitchen Collection ........................................ 17.1 14.4
------ ------
$422.5 $299.0
====== ======
</TABLE>
The cost of manufacturing inventories has been determined by the last-in,
first-out (LIFO) method for 70 percent and 69 percent of such inventories as of
September 30, 1995 and December 31, 1994, respectively.
Note C - Revolving Credit Agreements and Notes Payable
On February 28, 1995, NMHG entered into a new long-term credit agreement to
replace its previous bank agreement and to refinance the majority of its
existing long-term debt. The new agreement provides NMHG with an unsecured
$350.0 million revolving credit facility to replace its previous senior credit
facility. The new credit facility has a five-year maturity with extension
options and performance-based pricing comparable to its previous senior credit
facility which provides NMHG with reduced interest rates upon achievement of
certain financial performance targets.
Note D - Extraordinary Charge
As previously announced, NMHG retired the remaining $78.5 million outstanding
Hyster-Yale 12 3/8% debentures on August 1, 1995 at a price of 102.5. An
extraordinary charge of $2.1 million was recorded in the third quarter of 1995
when these debentures were retired. In the first quarter of 1995 an
extraordinary charge of $1.3 million, net of $0.9 million in tax benefits, was
recorded relating to the write off of deferred financing fees associated with
NMHG's former revolving credit facility and senior term loan which was replaced
by the new long-term credit agreement discussed in Note C above.
<PAGE>
Item 2 - Management's Discussion and Analysis of Results
of Operations and Financial Condition
(Tabular Dollars in Millions, Except Per Share Data)
FINANCIAL SUMMARY
NACCO's four operating subsidiaries function in distinct business environments,
and the results of operations and financial condition are best discussed at the
subsidiary level as presented below. The results for "North American Coal" have
been adjusted to exclude the previously combined results of Bellaire
Corporation, a non-operating subsidiary of NACCO.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1995 1994 1995 1994
---- ---- ---- ----
REVENUES
<S> <C> <C> <C> <C>
NACCO Materials Handling Group ............................. $349.2 $ 289.7 $1,082.5 $ 825.4
Hamilton Beach/Proctor-Silex ............................... 110.3 106.9 257.0 251.7
North American Coal ........................................ 62.5 68.4 178.3 186.4
Kitchen Collection ......................................... 18.1 17.2 43.7 40.4
Bellaire ................................................... -- .1 .4 .5
Eliminations ............................................... (1.8) (2.0) (3.6) (3.9)
------ -------- -------- --------
$538.3 $ 480.3 $1,558.3 $1,300.5
====== ======== ======== ========
AMORTIZATION OF GOODWILL
NACCO Materials Handling Group ............................. $ 2.7 $ 2.7 $ 8.1 $ 8.1
Hamilton Beach/Proctor-Silex ............................... .7 .7 2.1 2.1
Kitchen Collection ......................................... -- -- .1 .1
------ -------- -------- --------
$ 3.4 $ 3.4 $ 10.3 $ 10.3
====== ======== ======== ========
OPERATING PROFIT (LOSS)
NACCO Materials Handling Group ............................. $ 15.3 $ 14.5 $ 60.9 $ 45.4
Hamilton Beach/Proctor-Silex ............................... 9.5 9.6 14.4 12.7
North American Coal ........................................ 10.8 11.0 31.8 32.3
Kitchen Collection ......................................... .9 1.6 .1 1.7
Bellaire ................................................... -- (.1) (.1) (.1)
NACCO ...................................................... (2.1) (2.4) (6.3) (6.8)
------ -------- -------- --------
$ 34.4 $ 34.2 $ 100.8 $ 85.2
====== ======== ======== ========
OPERATING PROFIT (LOSS) EXCLUDING GOODWILL
AMORTIZATION
NACCO Materials Handling Group ............................. $ 18.0 $ 17.2 $ 69.0 $ 53.5
Hamilton Beach/Proctor-Silex ............................... 10.2 10.3 16.5 14.8
North American Coal ........................................ 10.8 11.0 31.8 32.3
Kitchen Collection ......................................... .9 1.6 .2 1.8
Bellaire ................................................... -- (.1) (.1) (.1)
NACCO ...................................................... (2.1) (2.4) (6.3) (6.8)
------ -------- -------- --------
$ 37.8 $ 37.6 $ 111.1 $ 95.5
====== ======== ======== ========
INTEREST INCOME
NACCO Materials Handling Group ............................. $ .1 $ .3 $ .7 $ .6
North American Coal ........................................ .6 .8 2.1 2.1
Bellaire ................................................... .2 .3 1.1 .9
NACCO ...................................................... -- .4 1.1 .9
Eliminations ............................................... (.6) (1.3) (2.4) (3.3)
------ -------- -------- --------
$ .3 $ .5 $ 2.6 $ 1.2
====== ======== ======== ========
</TABLE>
<PAGE>
FINANCIAL SUMMARY - continued
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1995 1994 1995 1994
---- ---- ---- ----
INTEREST EXPENSE
<S> <C> <C> <C> <C>
NACCO Materials Handling Group ................................... $ (7.5) $ (8.2) $(22.9) $(26.2)
Hamilton Beach/Proctor-Silex ..................................... (1.9) (2.2) (5.2) (5.2)
North American Coal .............................................. (.4) (.5) (1.1) (1.5)
Kitchen Collection ............................................... (.2) (.1) (.4) (.2)
NACCO ............................................................ (.6) (.9) (2.3) (2.4)
Eliminations ..................................................... .6 1.3 2.4 3.3
------ ------ ------ ------
(10.0) (10.6) (29.5) (32.2)
Project mining subsidiaries ...................................... (3.5) (3.4) (10.4) (10.3)
------ ------ ------ ------
$(13.5) $(14.0) $(39.9) $(42.5)
====== ====== ====== ======
OTHER-NET, INCOME (EXPENSE)
NACCO Materials Handling Group ................................... .9 $ .8 $ 2.0 $ .3
Hamilton Beach/Proctor-Silex ..................................... (.2) -- (.4) (.4)
North American Coal .............................................. .2 .1 .4 (.8)
Bellaire ......................................................... -- -- -- .2
NACCO ............................................................ .1 .1 .3 .3
------ ------ ------ ------
$ 1.0 $ 1.0 $ 2.3 $ (.4)
====== ====== ====== ======
NET INCOME (LOSS)
Before Extraordinary Charge
NACCO Materials Handling Group ................................... $ 6.0 $ 3.5 $ 24.6 $ 9.7
Hamilton Beach/Proctor-Silex ..................................... 4.9 4.0 5.8 3.7
North American Coal .............................................. 5.4 5.2 16.0 14.6
Kitchen Collection ............................................... .5 .9 (.1) .9
Bellaire ......................................................... .1 .2 .7 .6
NACCO ............................................................ (2.1) (1.9) (4.0) (5.6)
Minority interest ................................................ (1.1) (.9) (1.8) (.9)
------ ------ ------ ------
13.7 11.0 41.2 23.0
Extraordinary charge,
net-of-tax ................................................... (2.1) -- (3.4) (3.2)
------ ------ ------ ------
$ 11.6 $ 11.0 $ 37.8 $ 19.8
====== ====== ====== ======
DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE
NACCO Materials Handling Group ................................... $ 24.4 $ 24.6
Hamilton Beach/Proctor-Silex ..................................... 11.9 11.5
North American Coal .............................................. 1.2 1.2
Kitchen Collection ............................................... .7 .7
NACCO ............................................................ .2 .2
------ ------
38.4 38.2
Project mining subsidiaries ...................................... 21.0 22.1
------ ------
$ 59.4 $ 60.3
====== ======
CAPITAL EXPENDITURES
NACCO Materials Handling Group ................................... $ 28.2 $ 18.7
Hamilton Beach/Proctor-Silex ..................................... 7.4 8.4
North American Coal .............................................. 2.5 .3
Kitchen Collection ............................................... 1.3 .8
------ ------
39.4 28.2
Project mining subsidiaries ...................................... 16.0 6.4
------ ------
$ 55.4 $ 34.6
====== ======
</TABLE>
<PAGE>
FINANCIAL SUMMARY - continued
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
---- ----
TOTAL ASSETS
<S> <C> <C>
NACCO Materials Handling Group ........................................... $1,021.5 $ 906.2
Hamilton Beach/Proctor-Silex ............................................. 330.7 289.6
North American Coal ...................................................... 47.8 49.0
Kitchen Collection ....................................................... 25.9 26.0
Bellaire ................................................................. 83.9 87.1
NACCO .................................................................... 8.5 26.6
-------- --------
1,518.3 1,384.5
Project mining subsidiaries .............................................. 419.7 412.3
-------- --------
1,938.0 1,796.8
Consolidating eliminations ............................................... (77.3) (102.5)
-------- --------
$1,860.7 $1,694.3
======== ========
</TABLE>
NORTH AMERICAN COAL
North American Coal mines and markets lignite for use primarily as fuel for
power generation by electric utilities. The lignite is surface mined in North
Dakota, Texas and Louisiana. Total coal reserves approximate 2.2 billion tons
with 1.4 billion tons committed to electric utility customers pursuant to
long-term contracts.
FINANCIAL REVIEW
North American Coal's three project mining subsidiaries (Coteau, Falkirk and
Sabine) mine lignite for utility customers pursuant to long-term contracts at a
price based on actual cost plus an agreed pretax profit per ton. Due to the
cost-plus nature of these contracts, revenues and operating profits are impacted
by increases and decreases in operating costs, as well as by sales tons. Net
income of these project mines, however, is not significantly affected by changes
in such operating costs, which include costs of operations, interest expense and
certain other income and expense items. Because of the nature of the contracts
at these mines, operating results are best analyzed in terms of income before
taxes and net income.
North American Coal's results for 1995 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.
<PAGE>
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
Tons sold by North American Coal's four operating mines were as follows for the
three and nine month periods ended September 30:
<TABLE>
<CAPTION>
Three Months Nine Months
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Coteau Properties ............................... 3.8 3.9 11.2 11.6
Falkirk Mining .................................. 1.8 1.8 5.3 5.3
Sabine Mining ................................... 1.1 .9 2.7 2.4
Red River Mining ................................ .3 .2 .7 .6
--- ---- ---- ----
7.0 6.8 19.9 19.9
=== ==== ==== ====
</TABLE>
Revenues, income before taxes, provision for taxes and net income were as
follows for the three and nine months ended September 30:
<TABLE>
<CAPTION>
Three Months Nine Months
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues from operating mines ........................... $60.7 $ 65.5 $171.9 $179.1
Royalties and other ..................................... 1.8 2.9 6.4 7.3
----- ------ ------ ------
$62.5 $ 68.4 $178.3 $186.4
===== ====== ====== ======
Income before tax from
operating mines ..................................... $ 6.8 $ 6.4 $ 19.5 $ 18.7
Royalty and other income, net ........................... 2.1 3.6 7.5 7.8
Headquarters expense .................................... (1.2) (2.0) (4.2) (4.4)
----- ------ ------ ------
7.7 8.0 22.8 22.1
Provision for taxes ..................................... 2.3 2.8 6.8 7.5
----- ------ ------ ------
Net income .......................................... $ 5.4 $ 5.2 $ 16.0 $ 14.6
===== ====== ====== ======
</TABLE>
<PAGE>
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
Third Quarter of 1995 Compared with Third Quarter of 1994
The following schedule details the components of the changes in revenues, income
before taxes and net income for the three months ended September 30:
<TABLE>
<CAPTION>
Income
Before Net
Revenues Taxes Income
-------- ------ ------
<S> <C> <C> <C>
1994.................................................................. $68.4 $ 8.0 $5.2
Increase (decrease) in 1995 from:
Project mining subsidiaries
Tonnage volume ................................................ 3.3 .1 .1
Agreed profit per ton ......................................... .2 .2 .1
Pass-through costs ............................................ (8.7) -- --
Other Mining Operations
Tonnage volume ................................................ .5 .2 .1
Mix of tons sold .............................................. .8 .8 .6
Average selling price ......................................... (.9) (.9) (.6)
----- ----- ----
Variances from operating mines ................................... (4.8) .4 .3
Royalties and other income, net .................................. (1.1) (1.5) (.9)
Headquarters expense ............................................. .8 .5
Differences between effective and
statutory tax rates ........................................... .3
----- ----- ----
1995.................................................................. $62.5 $ 7.7 $5.4
===== ===== ====
</TABLE>
The favorable volume variance at the project mines relates primarily to
increased customer requirements at Sabine. The favorable volume at Sabine was
somewhat offset by reduced shipments to Coteau's customer because of shut-downs
at its customer's generating plants due to upgrades and maintenance. The
decrease in revenues due to pass through costs at the project mines relates to
the implementation of cost reduction programs at Sabine. Increased customer
requirements at Red River caused the favorable volume variance for other mining
operations. Increased sales of base tons at Red River which yield a higher price
as specified in the supply contract resulted in a favorable mix variance at
other mining operations. In addition, Red River has a new agreement with its
customer that extends the contract term nine years to 2010 in exchange for a
lower sales prices per ton, resulting in the unfavorable price variance at other
mining operations.
The reduction in royalty income in 1995 results from decreased activity at the
eastern underground properties formerly owned by North American Coal to which
royalties pertain. The favorable headquarters expense variance results from the
non-recurrence of a third quarter 1994 charge relating to the consolidation of
administrative support activities.
<PAGE>
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
First Nine Months of 1995 Compared with First Nine Months of 1994
The following schedule details the components of the changes in revenues, income
before taxes and net income for the nine months ended September 30:
<TABLE>
<CAPTION>
Income
Before Net
Revenues Taxes Income
-------- ------ ------
<S> <C> <C> <C>
1994................................................................ $186.4 $22.1 $14.6
Increase (decrease) in 1995 from:
Project mining subsidiaries
Tonnage volume ............................................... 1.7 .1 .1
Mix of tons sold ............................................. .3 .3 .2
Agreed profit per ton ........................................ .4 .4 .3
Pass-through costs ........................................... (9.9) -- --
Other Mining Operations
Tonnage volume ............................................... .9 .3 .2
Mix of tons sold ............................................. 3.5 3.5 2.3
Average selling price ........................................ (4.1) (4.1) (2.7)
Operating costs .............................................. .1 --
Other income (expense) ....................................... .2 .1
----- ----- -----
Variances from operating mines ................................... (7.2) .8 .5
Royalties and other income, net .................................. (.9) (.3) (.1)
Headquarters expense ............................................. .2 .1
Differences between effective and
statutory tax rates .......................................... .9
----- ----- -----
1995................................................................ $178.3 $22.8 $16.0
====== ===== =====
</TABLE>
Higher shipments at Sabine and at Falkirk were due to increased customer
requirements. These increases were partially offset by a reduction in customer
demand at Coteau. The favorable mix variance at other mining operations during
the first nine months of 1995 results from increased sales of base tons at Red
River, which yield a higher price as specified in the supply contract. The
unfavorable price variance at other mining operations relates to the new
agreement Red River signed with its customer. In addition, increased customer
requirements at Red River resulted in a favorable volume variance at other
mining operations. Decreased activity at the eastern underground properties
formerly owned by North American Coal resulted in reduced royalty income in
1995.
<PAGE>
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
Other Income and Expense
Items of other income (expense) for the three and nine months ended September
30:
<TABLE>
<CAPTION>
Three Months Nine Months
1995 1994 1995 1994
---- ---- ---- ----
Interest income
<S> <C> <C> <C> <C>
Project mining subsidiaries ........................... $ .2 $ .2 $ .8 $ .5
Other mining operations ............................... .4 .6 1.3 1.6
---- ----- ----- -----
$ .6 $ .8 $ 2.1 $ 2.1
==== ===== ===== =====
Interest expense
Project mining subsidiaries ........................... $(3.5) $ (3.4) $(10.4) $(10.3)
Other mining operations ............................... (.4) (.5) (1.1) (1.5)
---- ----- ----- -----
$(3.9) $ (3.9) $(11.5) $(11.8)
==== ===== ===== =====
Other-net
Project mining subsidiaries ........................... $ .1 -- $ .2 $ .5
Other mining operations ............................... .1 .1 .2 (1.3)
---- ----- ----- -----
$ .2 $ .1 $ .4 $ (.8)
==== ===== ===== =====
</TABLE>
Provision for Income Taxes
North American Coal's effective tax rate for the quarter ended September 30,
1995 and 1994 was 31.0 percent and 35.0 percent, respectively. The lower
effective tax rate in the third quarter of 1995 compared with 1994 results from
certain state tax impacts. North American Coal's effective tax rate for the nine
months ended September 30, 1995 and 1994 was 30.0 percent and 33.7 percent,
respectively. The reduction in the effective tax rate in the first nine months
of 1995 compared with 1994 is due to the recognition of an income tax refund of
approximately $0.1 million (net of approximately $0.1 million in taxes on
related interest) from prior tax years in the second quarter of 1995 and certain
state tax impacts.
LIQUIDITY AND CAPITAL RESOURCES
North American Coal has in place a $50.0 million revolving credit facility. The
expiration date of this facility (which currently is September 2000) 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 $40.0 million of
its revolving credit facility available at September 30, 1995.
The financing of the project mining subsidiaries, which is guaranteed by the
utility customers, comprises long-term equipment leases, notes payable and
non-interest-bearing advances from customers. The obligations of the project
mining subsidiaries do not impact the short- or long-term liquidity of the
company and are without recourse to NACCO or North American Coal. These
arrangements allow the project mining subsidiaries to pay dividends in amounts
equal to their retained earnings.
<PAGE>
NORTH AMERICAN COAL - continued
LIQUIDITY AND CAPITAL RESOURCES - continued
North American Coal's capital structure, excluding the project mining
subsidiaries, is presented below:
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
---- ----
<S> <C> <C>
Investment in Project Mining Subsidiaries .................................... $ 2.5 $ 5.3
Other Net Tangible Assets .................................................... 8.8 4.2
------ ------
Total Net Tangible Assets ................................................. 11.3 9.5
Parent Company Advances ...................................................... 15.1 22.7
Debt Related to Parent Advances .............................................. (10.0) (16.7)
Other Debt ................................................................... (.3) (.4)
------ ------
Total Debt ............................................................... (10.3) (17.1)
------ ------
Stockholder's Equity ......................................................... $ 16.1 $ 15.1
====== ======
Debt to Total Capitalization ................................................. 39% 53%
</TABLE>
<PAGE>
NACCO MATERIALS HANDLING GROUP
NMHG, 97 percent-owned by NACCO, designs, manufactures and markets forklift
trucks and related service parts under the Hyster(R) and Yale(R) brand names.
FINANCIAL REVIEW
The results of operations for NMHG were as follows for the three and nine months
ended September 30:
<TABLE>
<CAPTION>
Three Months Nine Months
1995 1994 1995 1994
---- ---- ---- ----
Revenues
<S> <C> <C> <C> <C>
Americas ............................................ $240.5 $ 204.8 $ 730.5 $582.0
Europe, Africa and Middle East ...................... 89.4 65.3 292.4 194.7
Asia-Pacific ........................................ 19.3 19.6 59.6 48.7
------ -------- -------- ------
$349.2 $ 289.7 $1,082.5 $825.4
====== ======== ======== ======
Operating profit
Americas ............................................ $ 10.4 $ 11.5 $ 40.5 $ 35.7
Europe, Africa and Middle East ...................... 6.3 1.0 20.3 5.0
Asia-Pacific ........................................ (1.4) 2.0 .1 4.7
------ -------- -------- ------
$ 15.3 $ 14.5 $ 60.9 $ 45.4
====== ======== ======== ======
Operating profit excluding
goodwill amortization
Americas ............................................ $ 12.3 $ 13.4 $ 46.2 $ 41.6
Europe, Africa and Middle East ...................... 7.0 1.7 22.4 7.1
Asia-Pacific ........................................ (1.3) 2.1 .4 4.8
------ -------- -------- ------
$ 18.0 $ 17.2 $ 69.0 $ 53.5
====== ======== ======== ======
Net income before extraordinary charge .................. $ 6.0 $ 3.5 $ 24.6 $ 9.7
Extraordinary charge, net-of-tax ........................ (2.1) -- (3.4) (3.2)
------ -------- -------- ------
Net income .......................................... $ 3.9 $ 3.5 $ 21.2 $ 6.5
====== ======== ======== ======
</TABLE>
<PAGE>
NACCO MATERIALS HANDLING GROUP - continued
FINANCIAL REVIEW - continued
Third Quarter of 1995 Compared With Third Quarter of 1994
The following schedule details the components of the changes in revenues,
operating profit and net income for the third quarter of 1995 compared with
1994:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
-------- --------- ------
<S> <C> <C> <C>
1994................................................................ $289.7 $14.5 $ 3.5
Increase (Decrease) in 1995 from:
Unit volume .................................................... 40.9 6.8 4.4
Sales mix ...................................................... (4.0) (4.6) (3.0)
Average sales price ............................................ 16.2 16.2 10.5
Service parts .................................................. 1.7 .2 .1
Foreign currency ............................................... 4.7 (3.7) (2.4)
Manufacturing cost ............................................. (14.5) (9.4)
Other operating expense ........................................ .4 .3
Differences between effective
and statutory tax rates ...................................... 2.0
Extraordinary charge ........................................... (2.1)
------ ----- -----
1995................................................................ $349.2 $15.3 $ 3.9
====== ===== =====
</TABLE>
Unit volumes in the third quarter increased 13 percent in the Americas, 27
percent in Europe and 32 percent in Asia-Pacific. The lift truck market size in
North America remains steady at historically high levels, while market size in
Europe and Asia-Pacific continue to improve. In addition, increased factory
production rates improved unit volumes. The price increases announced in
mid-1994 favorably impacted results of operations, primarily in the Americas and
Europe. NMHG announced additional price increases in the spring of 1995 which
had a slight impact on third quarter results, but will reach full impact during
the fourth quarter of 1995. These price increases were enacted in order to
offset the adverse affects of higher raw material costs and the strength of the
yen relative to the dollar which increased the cost of purchases sourced from
Japan. Manufacturing inefficiencies, due to vendor parts shortages, and higher
raw material costs, resulted in an unfavorable manufacturing cost variance.
<PAGE>
NACCO MATERIALS HANDLING GROUP - continued
FINANCIAL REVIEW - continued
First Nine Months of 1995 Compared With First Nine Months of 1994
The following schedule details the components of the changes in revenues,
operating profit and net income for the first nine months of 1995 compared with
1994:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
-------- --------- ------
<S> <C> <C> <C>
1994............................................................. $ 825.4 $ 45.4 $ 6.5
Increase (Decrease) in 1995 from:
Unit volume ................................................. 182.4 32.6 21.2
Sales mix ................................................... (9.2) (11.8) (7.7)
Average sales price ......................................... 45.5 45.5 29.6
Service parts ............................................... 14.2 6.3 4.1
Foreign currency ............................................ 24.2 (7.5) (4.9)
Manufacturing cost .......................................... (34.1) (22.2)
Other operating expense ..................................... (15.5) (10.1)
Other income and expense .................................... 2.0
Differences between effective ............................... 2.9
and statutory tax rates
Extraordinary charge ........................................ (.2)
-------- ------ ------
1995............................................................. $1,082.5 $ 60.9 $21.2
======== ====== =====
</TABLE>
Unit volumes during the first nine months of 1995 increased 23 percent in the
Americas, 39 percent in Europe and 46 percent in Asia-Pacific when compared with
1994. The price increases announced in mid-1994 and, to a lesser degree, the
increases announced in the spring of 1995 favorably impacted operating results
during the first nine months of 1995. These price increases were enacted to
offset the raw material cost increases and currency impacts noted below.
The negative impact on operating profit from currency results primarily from the
strength of the yen relative to the dollar, which increased the cost of
purchases sourced from Japan. This unfavorable effect is partially offset by the
favorable impact, primarily on revenues, resulting from the strength of certain
European currencies relative to the dollar. The unfavorable impact from
manufacturing costs is due to increased material prices and manufacturing
inefficiencies caused by vendor parts shortages. Increases in volume related
customer service costs, new product introduction and marketing programs and
general inflation resulted in higher other operating expenses.
NMHG's backlog of orders at September 30, 1995 was approximately 24,800 forklift
truck units compared to the 24,600 forklift truck units at December 31, 1994.
The continued high order rate, coupled with the vendor parts shortages, have
caused backlog to increase from December 31, 1994. The company is working to
resolve its vendor parts supply problems by the end of 1995. As these supply
problems are resolved the company will begin to work down its backlog.
<PAGE>
NACCO MATERIALS HANDLING GROUP - continued
FINANCIAL REVIEW - continued
Other Income and Expense
Below is the detail of other income (expense) for the three and nine months
ended September 30:
<TABLE>
<CAPTION>
Three Months Nine Months
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income .............................. $ .1 $ .3 $ .7 $ .6
Interest expense ............................. $(7.5) $(8.2) $(22.9) $(26.2)
Other-net .................................... $ .9 $ .8 $ 2.0 $ .3
</TABLE>
The lower interest expense in 1995 is primarily due to the retirements in 1995
and 1994 of the Hyster-Yale 12 3/8% subordinated debentures. The improvement in
other-net in 1995 results primarily from dividend income received from NMHG's
unconsolidated Brazilian subsidiary and improved earnings in 1995 at the
company's Sumitomo-NACCO joint venture.
Provision for Income Taxes
NMHG's effective tax rate for the quarter ended September 30, 1995 and 1994 was
32.2 percent and 52.0 percent, respectively. NMHG's effective tax rate for the
first nine months of 1995 and 1994 was 39.5 percent and 52.0 percent,
respectively. The higher level of pretax earnings in 1995 reduced the effect of
nondeductible goodwill amortization resulting in a lower effective tax rate in
1995. In addition, the recognition in 1995 of income tax refunds of
approximately $1.6 million (net of approximately $0.5 million in taxes on
related interest) from prior tax years also lowered the effective tax rate
during the first nine months of 1995.
Extraordinary Charge
As previously announced, NMHG retired the remaining $78.5 million outstanding
Hyster-Yale 12 3/8% debentures on August 1, 1995 at a price of 102.5. An
extraordinary charge of $2.1 million was recorded in the third quarter of 1995
when these debentures were retired.
In the first quarter of 1995 an extraordinary charge of $1.3 million, net of
$0.9 million in tax benefits, was recognized relating to the write off of
deferred financing fees associated with NMHG's former revolving credit facility
and senior term loan which was replaced by the new long-term credit agreement
discussed in the following section. The 1994 extraordinary charge, recognized in
the second quarter, of $3.2 million, net of $2.0 million in tax benefits,
reflects the write-off of premiums and unamortized debt issuance costs
associated with the retirement of the Hyster-Yale 12 3/8% subordinated
debentures.
<PAGE>
NACCO Materials Handling Group - continued
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $28.2 million during the
first nine months of 1995. The increased demand for lift trucks has required
NMHG to invest in its productive capacity. NMHG is investing to break
bottlenecks at all of its plants and has undertaken expansion of its Craigavon,
Northern Ireland and Irvine, Scotland production facilities. It is estimated
that NMHG's capital expenditures for the remainder of 1995 will be approximately
$17.3 million. The principal sources of financing for these capital expenditures
are internally generated funds, bank borrowings and government assistance
grants.
On February 28, 1995, the company entered into a new long-term credit agreement
to replace its previous bank agreement and to refinance the majority of its
existing long-term debt. The new agreement provides the company with an
unsecured $350.0 million revolving credit facility to replace its previous
senior credit facility. The new credit facility has a five-year maturity with
extension options and performance-based pricing comparable to its previous
senior credit facility which provides the company with reduced interest rates
upon achievement of certain financial performance targets.
The company believes it can meet all of its current and long-term commitments
and operating needs from operating cash flows and funds available under
revolving credit agreements. At September 30, 1995 NMHG had available $39.0
million of its $350.0 million revolving credit facility.
NMHG's capital structure is presented below:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
---- ----
<S> <C> <C>
Total Net Tangible Assets .................................................. $ 285.0 $ 192.9
Goodwill at Cost ........................................................... 438.3 433.5
------- -------
Total Assets Before Goodwill Amortization .............................. 723.3 626.4
Accumulated Goodwill Amortization .......................................... (68.5) (60.4)
Total Debt ................................................................. (321.4) (260.1)
------- -------
Stockholders' Equity ....................................................... $ 333.4 $ 305.9
======= =======
Debt to Total Capitalization ............................................... 49% 46%
</TABLE>
<PAGE>
HAMILTON BEACH/PROCTOR-SILEX
HBPS, 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 HBPS were as follows for the three and nine months
ended September 30:
<TABLE>
<CAPTION>
Three Months Nine Months
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues ........................................... $110.3 $106.9 $257.0 $251.7
Operating profit ................................... $ 9.5 $ 9.6 $ 14.4 $ 12.7
Operating profit excluding
goodwill amortization .......... ............... $ 10.2 $ 10.3 $ 16.5 $ 14.8
Net income ......................................... $ 4.9 $ 4.0 $ 5.8 $ 3.7
</TABLE>
Third Quarter of 1995 Compared With Third Quarter of 1994
The following schedule details the components of the changes in revenues,
operating profit and net income for the third quarter of 1995 compared with
1994:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
-------- --------- ------
<S> <C> <C> <C>
1994............................................................... $106.9 $9.6 $4.0
Increase (Decrease) in 1995 from:
Unit volume .................................................. 4.1 2.6 1.6
Average sales price .......................................... (.7) (.7) (.4)
Manufacturing cost ........................................... (.6) (.4)
Other operating expense ...................................... (1.4) (.9)
Other income and expense ..................................... .1
Differences between effective
and statutory tax rates .................................... .9
------ ---- ----
1995............................................................... $110.3 $9.5 $4.9
====== ==== ====
</TABLE>
<PAGE>
HAMILTON BEACH/PROCTOR-SILEX - continued
FINANCIAL REVIEW - continued
Increased sales of irons, indoor steam grills, roasters, blenders and
canopeners, slightly offset by reductions in toaster and toaster oven sales,
resulted in a favorable impact from volume on results in the third quarter of
1995. In addition, a shift in sales within certain product lines from the good
to the best category and favorable mix shifts to higher margin product lines
favorably impacted operating profit and net income. Increased raw materials
costs were the primary factor causing the unfavorable manufacturing cost
variance. An increase in the bad debt reserve resulting from the bankruptcy of
Caldors, a large regional retailer, and higher marketing and selling
expenditures caused the unfavorable variance in other operating expenses.
First Nine Months of 1995 Compared with First Nine Months of 1994
The following schedule details the components of the changes in the revenues,
operating profit and net income for the first nine months of 1995 compared with
1994:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
-------- --------- ------
<S> <C> <C> <C>
1994.............................................................. $251.7 $12.7 $3.7
Increase (Decrease) in 1995 from:
Unit volume ................................................. 5.7 5.6 3.6
Average sales price ......................................... (.3) (.3) (.2)
Foreign currency translation ................................ (.1) (.1) (.1)
Manufacturing cost .......................................... (.9) (.6)
Other operating expense ..................................... (2.6) (1.7)
Other income and expense .................................... .2
Differences between effective
and statutory tax rates .................................. .9
------ ----- ----
1995.............................................................. $257.0 $14.4 $5.8
====== ===== ====
</TABLE>
The favorable volume variance relates to increased sales of irons, canopeners,
coffeemakers, slowcookers, indoor steam grills and roasters partially offset by
reduced toaster, toaster oven and blender sales. Sales mix shifts to higher
margin product lines and an overall shift in sales to the better and best
product category resulted in improved profitability during the first nine months
of 1995. Increased raw materials costs partially offset by the favorable impact
on costs of the devalued peso resulted in an unfavorable variance from
manufacturing costs. An increase in the bad debt reserve resulting from the
bankruptcy of Caldors, a large regional retailer, and higher marketing and
selling expenditures caused the unfavorable variance in other operating
expenses.
<PAGE>
HAMILTON BEACH/PROCTOR-SILEX - continued
FINANCIAL REVIEW - continued
Other Income and Expense
Below is the detail of other income (expense) for the three and nine months
ended September 30:
<TABLE>
<CAPTION>
Three Months Nine Months
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest expense ................................... $(1.9) $(2.2) $(5.2) $(5.2)
Other-net .......................................... $(.2) -- $(.4) $(.4)
</TABLE>
Provision for Income Taxes
HBPS's effective tax rate for the quarter ended September 30, 1995 and 1994 was
33.5 percent and 45.9 percent, respectively. HBPS's effective tax rate for the
first nine months of 1995 and 1994 was 33.5 percent and 46.0 percent,
respectively. The reduction in HBPS's effective tax rate in 1995 is due to the
utilization of foreign tax credits received as a result of the repatriation of
foreign earnings previously taxed at a rate in excess of the U.S. statutory tax
rate.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $7.4 during the first nine
months of 1995 and are estimated to be $5.8 million for the remainder of 1995.
The primary purpose of these expenditures is to increase manufacturing
efficiency and to acquire tooling for new and existing products. These
expenditures are funded primarily from internally generated funds and short term
borrowings.
HBPS's credit agreement provides for a revolving credit facility ("Facility")
that permits advances up to $135.0 million. At September 30, 1995, HBPS had
$14.6 million available under this Facility. The expiration date of this
Facility (which currently is May 1998) may be extended annually for one
additional year upon the mutual consent of HBPS and the bank group. In April,
1995 this Facility was amended to provide a lower interest rate if HBPS achieves
a certain interest coverage ratio and to allow for interest rates quoted under a
competitive bid option. At September 30, 1995, HBPS also had $25.0 million
available under separate facilities.
<PAGE>
HAMILTON BEACH/PROCTOR-SILEX - continued
FINANCIAL REVIEW - continued
LIQUIDITY AND CAPITAL RESOURCES - continued
HBPS's capital structure is presented below:
<TABLE>
<CAPTION>
September 30 DECEMBER 31
1995 1994
---- ----
<S> <C> <C>
Total Net Tangible Assets .............................................. $ 164.4 $118.3
Goodwill at Cost ....................................................... 110.5 110.5
------- ------
Total Assets Before Goodwill Amortization ........................... 274.9 228.8
Accumulated Goodwill Amortization ...................................... (17.9) (15.8)
Total Debt ............................................................. (120.7) (82.6)
------- ------
Stockholders' Equity ................................................... $ 136.3 $130.4
======= ======
Debt to Total Capitalization ........................................... 47% 39%
</TABLE>
<PAGE>
KITCHEN COLLECTION
KCI is a national specialty retailer of kitchenware, tableware, small electric
appliances and related accessories. The specialty retail business is seasonal
with the majority of its revenues and operating profit generated in the fourth
quarter during the fall holiday selling season.
FINANCIAL REVIEW
Third Quarter of 1995 Compared With Third Quarter of 1994
The following schedule details the components of the changes in revenues,
operating profit and net income for the third quarter of 1995 compared with
1994:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
-------- --------- ------
<S> <C> <C> <C>
1994................................................................ $17.2 $1.6 $ .9
Increase (decrease) in 1995 from:
Stores opened in 1995 ......................................... 1.3 -- --
Stores opened in 1994 ......................................... .4 (.1) --
Comparable stores ............................................. (.8) (.4) (.2)
Other ......................................................... (.2) (.2)
----- ---- ----
1995................................................................ $18.1 $ .9 $ .5
===== ==== ====
</TABLE>
First Nine Months of 1995 Compared With First Nine Months of 1994
The following schedule details the components of the changes in revenues,
operating profit and net income (loss) for the first nine months of 1995
compared with 1994:
<TABLE>
<CAPTION>
Net
Operating Income
Revenues Profit (Loss)
-------- ------ ------
<S> <C> <C> <C>
1994................................................................ $40.4 $1.7 $ .9
Increase (decrease) in 1995 from:
Stores opened in 1995 ......................................... 1.6 (.1) (.1)
Stores opened in 1994 ......................................... 3.5 (.1) --
Comparable stores ............................................. (1.8) (.9) (.5)
Other ......................................................... -- (.5) (.4)
----- ---- ----
1995................................................................ $43.7 $ .1 $(.1)
===== ==== ====
</TABLE>
<PAGE>
KITCHEN COLLECTION - continued
FINANCIAL REVIEW - continued
Provision for Income Taxes
KCI'S effective tax rate for the quarter ended September 30, 1995 and 1994 was
40.4 percent and 40.7 percent, respectively. KCI's effective tax rate for the
first nine months of 1995 and 1994 was 42.3 percent and 40.8 percent,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $1.3 million during the
first nine months of 1995. Estimated capital expenditures for the remainder of
1995 are $0.6 million. These expenditures are primarily for new store openings
and improvements to existing facilities. The principal source of funds for these
capital expenditures is internally generated funds. In May, Kitchen Collection
entered into a new $5.0 million revolving credit facility which replaced the
previous $2.5 million line of credit. This new facility has performance based
pricing which provides for reduced interest rates based on achievement of
certain financial performance measures. At September 30, 1995, KCI had $2.7
million available under this facility.
KCI's capital structure is presented below:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
---- ----
<S> <C> <C>
Total Net Tangible Assets .................................................. $13.5 $11.3
Goodwill at Cost ........................................................... 4.6 4.6
----- -----
Total Assets Before Goodwill Amortization .............................. 18.1 15.9
Accumulated Goodwill Amortization .......................................... (.8) (.8)
Total Debt ................................................................. (7.3) (5.0)
----- -----
Stockholder's Equity ....................................................... $10.0 $10.1
===== =====
Debt to Total Capitalization ............................................... 42% 33%
</TABLE>
<PAGE>
NACCO AND OTHER
FINANCIAL REVIEW
Third Quarter of 1995 Compared with Third Quarter of 1994
The following schedule details the components of the changes in parent company
operating loss and net loss for the third quarter of 1995 compared with 1994:
<TABLE>
<CAPTION>
Operating Net
Loss Loss
--------- ------
<S> <C> <C>
1994.............................................................................. $(2.4) $(1.9)
Administrative and general expenses ........................................ .3 --
Interest income ............................................................ -- (.2)
Interest expense ........................................................... -- .2
Consolidating and other tax adjustments .................................... -- (.2)
----- -----
1995.................................................................................. $(2.1) $(2.1)
===== =====
</TABLE>
First Nine Months of 1995 Compared With First Nine Months of 1994
The following schedule details the components of the changes in parent company
operating loss and net loss for the first nine months of 1995 compared with
1994:
<TABLE>
<CAPTION>
Operating Net
Loss Loss
--------- -----
<S> <C> <C>
1994 ............................................................................. $(6.8) $(5.6)
Administrative and general expenses ........................................ .5 .3
Interest income ............................................................ - .1
Interest expense ........................................................... - .1
Consolidating and other tax adjustments .................................... - 1.1
--- ----
1995.............................................................................. $(6.3) $(4.0)
===== =====
</TABLE>
The favorable impact from interest income and tax adjustments is primarily due
to the recognition in the second quarter of 1995 of an income tax refund and
related interest income resulting from prior tax years.
<PAGE>
NACCO AND OTHER - continued
LIQUIDITY AND CAPITAL RESOURCES
Although the subsidiaries have entered into substantial debt agreements, NACCO
has not guaranteed the long-term debt or any borrowings of its subsidiaries.
The debt agreements at HBPS and KCI allow for the payment of dividends under
certain circumstances. The revised credit agreement entered into on February 28,
1995 at NMHG will allow the transfer of up to $25.0 million to NACCO.
There are no restrictions for North American Coal, and its dividends and
advances are the primary source of cash for NACCO.
The Company believes it can adequately meet all of its current and long-term
commitments and operating needs. This outlook is supported by the amounts
available under revolving credit facilities and the utility customers' funding
of the project mining subsidiaries.
BELLAIRE CORPORATION
Bellaire Corporation ("Bellaire") is a non-operating subsidiary of NACCO.
Bellaire's results primarily include mine closing activities related to the
Indian Head Mine, which ceased mining operations in April 1992. Bellaire's
results for 1995 have been adjusted to remove certain royalty and other payments
that are more appropriately classified with North American Coal's results. Cash
payments related to Bellaire's obligations, net of internally generated cash,
are funded by NACCO and amounted to $1.1 million and $2.5 million during the
first nine months of 1995 and 1994, respectively.
The results of operations were as follows for the three and nine months ended
September 30:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues ........................................... - $ .1 $ .4 $ .5
Operating loss ..................................... - $(.1) $(.1) $(.1)
Net income ......................................... $.1 $ .2 $ .7 $ .6
</TABLE>
<PAGE>
NACCO AND OTHER - continued
BELLAIRE CORPORATION - continued
The condensed balance sheets for Bellaire were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
---- ----
<S> <C> <C>
Net current assets ...................................................... $ 13.2 $ 13.1
Property, plant and equipment, net ...................................... .5 .5
Deferred taxes and other assets ......................................... 62.9 64.1
Obligation to United Mine Workers of
America Combined Benefit Fund ........................................ (152.2) (155.0)
Other liabilities ....................................................... (25.0) (24.0)
------- -------
Deficit ................................................................. $(100.6) $(101.3)
======= =======
</TABLE>
<PAGE>
Part II
Item 1 Legal Proceedings
None
Item 2 Change in Securities
None
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits. See Exhibit Index on page 33 of this
quarterly report on Form 10-Q.
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NACCO Industries, Inc.
(Registrant)
Date November 13, 1995 Frank B. O'Brien
Frank B. O'Brien
Senior Vice President - Corporate
Development and Chief Financial
Officer
Date November 13, 1995 Steven M. Billick
Steven M. Billick
Vice President and Controller
(Principal Accounting Officer)
<PAGE>
Exhibit Index
Exhibit
Number* Description of Exhibit
(11) Computation of Earnings Per Common Share
(27) Financial Data Schedule
* Numbered in accordance with Item 601 of Regulation S-K.
<PAGE>
Exhibit 11
NACCO Industries, Inc. And Subsidiaries
Form 10-Q
Computation of Earnings per Share
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
1995 1994 1995 1994
---- ---- ---- ----
(Amounts in thousands except per share data)
Income:
<S> <C> <C> <C> <C>
Income before extraordinary charge ............................. $ 13,658 $ 11,014 $ 41,195 $22,975
Extraordinary charge, net-of-tax ............................... (2,102) -- (3,382) (3,218)
-------- -------- -------- -------
Net income .................................................... $ 11,556 $ 11,014 $ 37,813 $19,757
======== ======== ======== =======
Per share amounts reported to stockholders - Note 1:
Income before extraordinary charge ............................. $ 1.53 $ 1.23 $ 4.60 $ 2.57
Extraordinary charge, net-of-tax ............................... (.24) -- (.38) (.36)
-------- -------- -------- -----
Net income ..................................................... $ 1.29 $ 1.23 $ 4.22 $ 2.21
======== ======== ======== =====
Primary:
Weighted average shares outstanding ............................ 8,966 8,951 8,962 8,947
Dilutive stock options - Note 2 ................................ 13 12 12 13
-------- -------- -------- -----
Totals ................................................... 8,979 8,963 8,974 8,960
======== ======== ======== =====
Per share amounts
Income before extraordinary charge ....................... $ 1.52 $ 1.23 $ 4.59 $ 2.56
Extraordinary charge, net-of-tax ......................... (.23) -- (.38) (.35)
-------- -------- -------- -----
Net income ............................................... $ 1.29 $ 1.23 $ 4.21 $ 2.21
======== ======== ======== =====
Fully diluted - Note 3:
Weighted average shares outstanding ............................ 8,951 8,962 8,947
Dilutive stock options - Note 2 ................................ 13 13 14
-------- -------- -----
Totals ................................................... 8,964 8,975 8,961
======== ======== =====
Per share amounts
Income before extraordinary charge ....................... $ 1.23 $ 4.59 $ 2.56
Extraordinary charge, net-of-tax ......................... -- (.38) (.35)
-------- -------- -----
Net income ............................................... $ 1.23 $ 4.21 $ 2.21
======== ======== =====
</TABLE>
<PAGE>
EXHIBIT 11 - continued
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 period-end market price, if higher than
the average market price, is used.
Note 3 -- Fully diluted per share earnings for the three months ended
September 30, 1995 are not disclosed because the quarter-end market price did
not exceed the average market price for the three month period in 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000789933
<NAME> NACCO Industries
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 30,870
<SECURITIES> 0
<RECEIVABLES> 267,512
<ALLOWANCES> 0
<INVENTORY> 422,479
<CURRENT-ASSETS> 742,781
<PP&E> 518,392
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,860,737
<CURRENT-LIABILITIES> 480,565
<BONDS> 0
<COMMON> 8,966
0
0
<OTHER-SE> 311,571
<TOTAL-LIABILITY-AND-EQUITY> 1,860,737
<SALES> 1,550,668
<TOTAL-REVENUES> 1,558,300
<CGS> 1,256,501
<TOTAL-COSTS> 1,457,457
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,866
<INCOME-PRETAX> 65,835
<INCOME-TAX> 22,852
<INCOME-CONTINUING> 41,195
<DISCONTINUED> 0
<EXTRAORDINARY> 3,382
<CHANGES> 0
<NET-INCOME> 37,813
<EPS-PRIMARY> $4.21
<EPS-DILUTED> $4.21
</TABLE>
