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 March 31, 1996
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 April 30, 1996:
7,275,335
Number of shares of Class B Common Stock outstanding at April 30, 1996:
1,708,427
<PAGE>
NACCO INDUSTRIES, INC.
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995
Unaudited Consolidated Statements of
Income for the Three Months Ended
March 31, 1996 and 1995
Unaudited Consolidated Statements of
Cash Flows for the Three Months Ended
March 31, 1996 and 1995
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)
MARCH 31 DECEMBER 31
1996 1995
---------- -----------
(In thousands)
ASSETS
Current Assets
<S> <C> <C>
Cash and cash equivalents ...................... $ 32,898 $ 30,924
Accounts receivable, net ....................... 279,015 284,235
Inventories .................................... 412,878 388,819
Prepaid expenses and other ..................... 22,288 18,027
---------- ----------
747,079 722,005
Other Assets ....................................... 40,434 38,289
Property, Plant and Equipment, Net ................. 534,721 534,477
Deferred Charges
Goodwill, net .................................. 461,964 465,051
Deferred costs and other ....................... 56,625 56,725
Deferred income taxes .......................... 16,401 17,290
---------- ----------
534,990 539,066
---------- ----------
Total Assets ... $1,857,224 $1,833,837
========== ==========
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(Unaudited) (Audited)
MARCH 31 DECEMBER 31
1996 1995
---------- ----------
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
<S> <C> <C>
Accounts payable ................................. $ 257,003 $ 250,662
Revolving credit agreements ...................... 110,125 95,736
Current maturities of long-term obligations ...... 22,490 19,864
Income taxes ..................................... 8,039 4,672
Accrued payroll .................................. 27,730 29,827
Other current liabilities ........................ 118,300 122,961
---------- ----------
543,687 523,722
Notes Payable - not guaranteed by
the parent company ............................. 320,513 320,200
Obligations of Project Mining Subsidiaries -
not guaranteed by the parent company or
its North American Coal subsidiary ............ 341,273 346,472
Self-insurance Reserves and Other .................... 230,569 229,302
Minority Interest .................................... 41,936 44,014
Stockholders' Equity
Common stock:
Class A, par value $1 per share, 7,275,076
shares outstanding (1995 - 7,256,971
shares outstanding) ........................ 7,275 7,257
Class B, par value $1 per share, convertible
into Class A on a one-for-one basis,
1,708,686 shares outstanding
(1995 - 1,709,453 shares outstanding) ...... 1,709 1,709
Capital in excess of par value ................... 4,556 3,591
Retained income .................................. 361,600 350,301
Foreign currency translation adjustment
and other ..................................... 4,106 7,269
---------- ----------
379,246 370,127
---------- ----------
Total Liabilities and Stockholders' Equity .... $1,857,224 $1,833,837
========== ==========
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-----------------------
1996 1995
--------- ---------
(In thousands, except
per share data)
<S> <C> <C>
Net sales ............................................ $ 557,535 $ 499,966
Other operating income ............................... 1,941 2,405
--------- ---------
Total Revenues .............................. 559,476 502,371
Cost of sales ........................................ 452,174 401,618
--------- ---------
Gross Profit ................................ 107,302 100,753
Selling, administrative and general expenses ......... 71,915 63,098
Amortization of goodwill ............................. 3,775 3,422
--------- ---------
Operating Profit ............................ 31,612 34,233
Other income (expense)
Interest income .................................. 302 393
Interest expense ................................. (13,001) (14,023)
Other - net ...................................... 811 288
--------- ---------
(11,888) (13,342)
--------- ---------
Income Before Income Taxes, Minority Interest
and Extraordinary Charge ............................. 19,724 20,891
Provision for income taxes ........................... 6,657 7,878
--------- ---------
Income Before Minority Interest and
Extraordinary Charge .................... 13,067 13,013
Minority interest .................................... (148) (208)
--------- ---------
Income Before Extraordinary Charge .......... 12,919 12,805
Extraordinary charge, net-of-tax ..................... -- (1,280)
--------- ---------
Net Income .................................. $ 12,919 $ 11,525
========= =========
Per Share:
Income Before Extraordinary Charge ................... $ 1.44 $ 1.43
Extraordinary charge, net-of-tax ..................... -- (.14)
--------- ---------
Net Income ........................................... $ 1.44 $ 1.29
========= =========
Dividends per share .................................. $ .18 $ .17
========= =========
See notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------
1996 1995
--------- ---------
(In thousands)
Operating Activities
<S> <C> <C>
Net income ............................................ $ 12,919 $ 11,525
Adjustments to reconcile net income
to net cash provided by operating activities:
Extraordinary charge, net-of-tax .................. -- 1,280
Depreciation, depletion and amortization .......... 20,844 20,332
Deferred income taxes ............................. (2,787) (574)
Other non-cash items .............................. (411) 691
Working Capital Changes:
Accounts receivable ............................... 2,839 20,545
Inventories ....................................... (25,042) (55,762)
Other current assets .............................. (446) 2,247
Accounts payable .................................. (3,351) 12,525
Accrued income taxes .............................. 5,880 (5,214)
Other liabilities ................................. 1,792 (16,776)
--------- ---------
Net cash provided (used) by operating activities 12,237 (9,181)
Investing Activities
Expenditures for property, plant and equipment ........ (18,086) (12,813)
Proceeds from the sale of assets ...................... 272 313
Additional investment in subsidiary ................... (1,805) --
--------- ---------
Net cash used by investing activities .......... (19,619) (12,500)
Financing Activities
Additions to long-term obligations and
revolving credit .................................... 40,887 162,789
Reductions of long-term obligations and
revolving credit .................................... (25,124) (143,496)
Additions to obligations of project mining
subsidiaries ........................................ 26,409 13,680
Reductions of obligations of project mining
subsidiaries ........................................ (30,808) (16,737)
Cash dividends paid ................................... (1,617) (1,524)
Capital grants ........................................ 377 385
Other - net ........................................... (8) 570
--------- ---------
Net cash provided by financing activities ...... 10,116 15,667
Effect of exchange rate changes on cash ............... (760) 1,723
--------- ---------
Cash and Cash Equivalents
Increase (decrease) for the period .................... 1,974 (4,291)
Balance at the beginning of the period ................ 30,924 19,541
--------- ---------
Balance at the end of the period ...................... $ 32,898 $ 15,250
========= =========
See notes to unaudited consolidated financial statements.
</TABLE>
<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 ("NACoal"), NACCO Materials
Handling Group, Inc. ("NMHG"), Hamilton BeachProctor-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
March 31, 1996 and the results of its operations and cash flows for the three
month periods ended March 31, 1996 and 1995 have been included.
Operating results for the three month period ended March 31, 1996, are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1996. 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, 1995.
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>
March 31 December 31
1996 1995
------ ------
Manufacturing inventories:
Finished goods and service parts
<S> <C> <C>
NACCO Materials Handling Group .. $ 131.1 $ 117.4
Hamilton BeachProctor-Silex ..... 59.2 43.3
------ ------
190.3 160.7
------ ------
Raw materials and work in process
NACCO Materials Handling Group .. 178.7 182.0
Hamilton BeachProctor-Silex ..... 16.4 15.7
------ ------
195.1 197.7
------ ------
LIFO reserve
NACCO Materials Handling Group .. (16.9) (13.3)
Hamilton BeachProctor-Silex ..... (.4) (.3)
------ ------
(17.3) (13.6)
------ ------
Total manufacturing inventories ... 368.1 344.8
North American Coal:
Coal ............................ 10.3 10.6
Mining supplies ................. 18.8 19.1
Retail inventories - Kitchen Collection 15.7 14.3
====== ======
$ 412.9 $ 388.8
====== ======
</TABLE>
The cost of manufacturing inventories has been determined by the last-in,
first-out (LIFO) method for 66 percent of such inventories as of March 31, 1996
and December 31, 1995.
Note C - Extraordinary Charge
The 1995 extraordinary charge, of $1.3 million, net of $0.9 million in tax
benefits, relates to the write off of deferred financing fees associated with
NMHG's former revolving credit facility and senior term loan which was replaced
by a new long-term credit agreement.
<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
MARCH 31
-------------------
1996 1995
-------- --------
REVENUES
<S> <C> <C>
NACCO Materials Handling Group ...................... $ 420.8 $ 363.2
Hamilton BeachProctor-Silex ......................... 67.9 67.0
North American Coal ................................. 59.1 60.5
Kitchen Collection .................................. 12.9 12.2
NACCO and Other ..................................... .1 --
Eliminations ........................................ (1.3) (.5)
-------- --------
$ 559.5 $ 502.4
======== ========
AMORTIZATION OF GOODWILL
NACCO Materials Handling Group ...................... $ 2.9 $ 2.7
Hamilton BeachProctor-Silex ......................... .9 .7
-------- --------
$ 3.8 $ 3.4
======== ========
OPERATING PROFIT (LOSS)
NACCO Materials Handling Group ...................... $ 26.5 $ 23.7
Hamilton BeachProctor-Silex ......................... (1.0) 1.4
North American Coal ................................. 9.8 11.7
Kitchen Collection .................................. (1.2) (.5)
NACCO and Other ..................................... (2.5) (2.0)
-------- --------
$ 31.6 $ 34.3
======== ========
OPERATING PROFIT (LOSS) EXCLUDING GOODWILL AMORTIZATION
NACCO Materials Handling Group ...................... $ 29.4 $ 26.4
Hamilton BeachProctor-Silex ......................... (.1) 2.1
North American Coal ................................. 9.8 11.7
Kitchen Collection .................................. (1.2) (.5)
NACCO and Other ..................................... (2.5) (2.0)
-------- --------
$ 35.4 $ 37.7
======== ========
INTEREST EXPENSE
NACCO Materials Handling Group ...................... $ (8.1) $ (7.5)
Hamilton BeachProctor-Silex ......................... (1.3) (1.6)
North American Coal ................................. (.1) (.4)
Kitchen Collection .................................. (.1) --
NACCO and Other ..................................... (.2) (.5)
Eliminations ........................................ .2 .6
-------- --------
(9.6) (9.4)
Project mining subsidiaries ......................... (3.4) (4.6)
-------- --------
$ (13.0) $ (14.0)
======== ========
</TABLE>
<PAGE>
FINANCIAL SUMMARY - continued
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
------------------
1996 1995
-------- --------
OTHER-NET, INCOME (EXPENSE)
<S> <C> <C>
NACCO Materials Handling Group ...................... $ .5 $ .2
Hamilton BeachProctor-Silex ......................... (.1) (.1)
North American Coal ................................. .3 .2
NACCO and Other ..................................... .1 --
------- -------
$ .8 $ .3
======= =======
NET INCOME (LOSS)
Before Extraordinary Charge
NACCO Materials Handling Group ...................... $ 12.2 $ 9.7
Hamilton BeachProctor-Silex ......................... (.7) (.2)
North American Coal ................................. 4.8 5.3
Kitchen Collection .................................. (.7) (.3)
NACCO and Other ..................................... (2.5) (1.5)
Minority interest ................................... (.2) (.2)
------- -------
12.9 12.8
Extraordinary charge, net-of-tax .................... -- (1.3)
------- -------
$ 12.9 $ 11.5
======= =======
DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE
NACCO Materials Handling Group ...................... $ 8.2 $ 8.2
Hamilton BeachProctor-Silex ......................... 4.5 4.0
North American Coal ................................. .5 .4
Kitchen Collection .................................. .2 .2
------- -------
13.4 12.8
Project mining subsidiaries ......................... 7.4 7.4
------- -------
$ 20.8 $ 20.2
======= =======
CAPITAL EXPENDITURES
NACCO Materials Handling Group ...................... $ 13.3 $ 8.2
Hamilton BeachProctor-Silex ......................... 1.5 2.0
North American Coal ................................. .2 .1
Kitchen Collection .................................. .9 .4
------- -------
15.9 10.7
Project mining subsidiaries ......................... 2.2 2.0
------- -------
$ 18.1 $ 12.7
======= =======
</TABLE>
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1996 1995
-------- -----------
TOTAL ASSETS
<S> <C> <C>
NACCO Materials Handling Group..................... $1,089.2 $1,052.2
Hamilton BeachProctor-Silex........................ 280.2 288.0
North American Coal................................ 39.8 40.7
Kitchen Collection................................. 25.0 25.1
NACCO and Other.................................... 68.8 62.7
-------- --------
1,503.0 1,468.7
Project mining subsidiaries........................ 428.9 433.3
-------- --------
1,931.9 1,902.0
Consolidating eliminations......................... (74.7) (68.2)
-------- --------
$1,857.2 $1,833.8
======== ========
</TABLE>
<PAGE>
NORTH AMERICAN COAL
NACoal 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 2.1 billion tons with 1.3 billion
tons committed to electric utility customers pursuant to long-term contracts.
In November 1995, NACoal began providing dragline mining services ("Florida
dragline operations") for a limerock quarry near Miami, Florida. The operating
results for the Florida dragline operations are included in other mining
operations.
FINANCIAL REVIEW
NACoal'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 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.
Tons sold by NACoal's four operating lignite mines were as follows for the three
months ended March 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Coteau Properties ............................ 4.2 4.1
Falkirk Mining ............................... 1.9 1.9
Sabine Mining ................................ .9 .9
Red River Mining ............................. .1 .1
--- ---
7.1 7.0
=== ===
</TABLE>
Revenues, income before taxes, provision for taxes and net income were as
follows for the three months ended March 31:
<TABLE>
<CAPTION>
1996 1995
----- -----
Revenues
<S> <C> <C>
Project mines .............................. $54.6 $54.9
Other mining operations .................... 3.6 3.3
----- -----
58.2 58.2
Royalties and other ........................ .9 2.3
----- -----
$59.1 $60.5
===== =====
Income before taxes
Project mines .............................. $6.4 $6.4
Other mining operations .................... .5 .2
----- -----
Total from operating mines ..................... 6.9 6.6
Royalty and other income, net .................. 1.5 2.7
Headquarters expense ........................... (1.4) (1.7)
----- -----
7.0 7.6
Provision for taxes ............................ 2.2 2.3
----- -----
Net income ................................. $4.8 $5.3
===== =====
</TABLE>
<PAGE>
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
First Quarter of 1996 Compared with First Quarter of 1995
The following schedule details the components of the changes in revenues, income
before taxes and net income for the three months ended March 31:
<TABLE>
<CAPTION>
Income
Before Net
Revenues Taxes Income
-------- --------- --------
<S> <C> <C> <C>
1995 $60.5 $7.6 $5.3
Increase (decrease) in 1996 from:
Project mines
Tonnage volume ........................ 1.0 .1 --
Pass-through costs .................... (1.3) -- --
Other mining operations
Tonnage volume ........................ .1 .7 .5
Mix of tons sold ...................... .2 .2 .1
Operating costs ....................... -- (.8) (.5)
Other income (expense) ................ -- .1 .1
----- ---- ----
Changes from operating mines ............. -- .3 .2
Royalties and other income, net .......... (1.4) (1.2) (.8)
Headquarters expense ..................... -- .3 .2
Differences between effective and
statutory tax rates ................... -- -- (.1)
----- ---- ----
1996 $59.1 $7.0 $4.8
===== ==== ====
</TABLE>
The volume variance at the other mining operations was due to the Florida
dragline operations which began production in November of 1995, somewhat offset
by reduced volume at Red River. The Florida dragline operations generated the
increase in operating costs at the other mining operations. The reduction in
royalties and other income was due to the receipt of the final management fee
relating to the Trinity project in 1995 along with the lower level of royalties
received relating to former coal properties.
<PAGE>
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
Other Income and Expense and Income Taxes
Items of other income (expense) for the three months ended March 31:
<TABLE>
<CAPTION>
1996 1995
------ ------
Interest income
<S> <C> <C>
Project mining subsidiaries .................... $ .2 $ .3
Other mining operations ........................ .2 .3
------ ------
$ .4 $ .6
====== ======
Interest expense
Project mining subsidiaries .................... $ (3.4) $ (4.6)
Other mining operations ........................ (.1) (.4)
------ ------
$ (3.5) $ (5.0)
====== ======
Other-net
Project mining subsidiaries .................... $ -- $ .1
Other mining operations ........................ .3 .1
------ ------
$ .3 $ .2
====== ======
Effective tax rate ............................. 31.9% 30.6%
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
NACoal 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 NACoal and the
bank group. NACoal had $46.2 million of its revolving credit facility available
at March 31, 1996.
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 NACoal. These arrangements allow
the project mining subsidiaries to pay dividends in amounts equal to their
retained earnings.
NACoal's capital structure, excluding the project mining subsidiaries, is
presented below:
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
-------- -----------
<S> <C> <C>
Investment in Project Mining Subsidiaries .......... $ 2.5 $ 3.3
Other Net Tangible Assets .......................... (.4) (2.8)
------- -------
Total Tangible Assets .......................... 2.1 .5
Advances to Parent Company ......................... 17.0 14.9
Debt Related to Parent Advances .................... (3.8) --
Other Debt ......................................... (.2) (.3)
------- -------
Total Debt ..................................... (4.0) (.3)
------- -------
Stockholder's Equity ............................... $ 15.1 $ 15.1
======= =======
Debt to Total Capitalization ....................... 21% 2%
</TABLE>
<PAGE>
NACCO MATERIALS HANDLING GROUP
NMHG, 98 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 months ended
March 31:
<TABLE>
<CAPTION>
1996 1995
-------- ---------
Revenues
<S> <C> <C>
Americas ...................................... $ 272.2 $ 249.5
Europe, Africa and Middle East ................ 121.3 95.8
Asia-Pacific .................................. 27.3 17.9
-------- ---------
$ 420.8 $ 363.2
======== =========
Operating profit
Americas ...................................... $ 16.1 $ 16.9
Europe, Africa and Middle East ................ 10.9 5.8
Asia-Pacific .................................. (.5) 1.0
-------- ---------
$ 26.5 $ 23.7
======== =========
Operating profit excluding
goodwill amortization
Americas ...................................... $ 18.2 $ 18.8
Europe, Africa and Middle East ................ 11.7 6.5
Asia-Pacific .................................. (.5) 1.1
-------- ---------
$ 29.4 $ 26.4
======== =========
Net income before extraordinary charge ............ $ 12.2 $ 9.7
Extraordinary charge .............................. -- (1.3)
-------- ---------
Net income .................................... $ 12.2 $ 8.4
======== =========
</TABLE>
<PAGE>
NACCO MATERIALS HANDLING GROUP - continued
FINANCIAL REVIEW - continued
First Quarter of 1996 Compared With First Quarter of 1995
The following schedule details the components of the changes in revenues,
operating profit and net income for the first quarter of 1996 compared with
1995:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
-------- ------- --------
1995 $ 363.2 $ 23.7 $ 8.4
Increase (decrease) in 1996 from:
<S> <C> <C> <C>
Unit volume ................................. 41.2 7.4 4.8
Sales mix ................................... 6.6 (4.2) (2.7)
Average sales price ......................... 4.7 4.7 3.1
Service parts ............................... 4.7 1.7 1.1
Foreign currency ............................ .4 2.8 1.8
Manufacturing cost .......................... -- (2.9) (1.9)
Other operating expense ..................... -- (6.7) (4.4)
Other income and expense .................... -- -- (.4)
Differences between effective
and statutory tax rates ................... -- -- 1.1
Extraordinary charge recorded in 1995 ....... -- -- 1.3
-------- ------- --------
1996 $ 420.8 $ 26.5 $ 12.2
======== ======= ========
</TABLE>
Unit volumes in the first quarter of 1996 increased 7.2 percent in the Americas,
29.8 percent in Europe and 47.9 percent in Asia-Pacific compared with the same
period in 1995. While industry demand is down in the Americas, increased market
share and reduced backlog resulted in increased unit shipments. In Europe, the
growth in shipments resulted from increased market share and market size. NMHG's
backlog of orders at March 31, 1996 was approximately 17,300 forklift truck
units compared to the 21,200 forklift truck units at December 31, 1995. Sales
mix favorably impacted revenues due to increased sales of higher value product
classes, primarily in the Americas. These higher value products however, carry
lower margins which along with a shift in sales to lower margin countries in
Europe, resulted in a negative impact on operating profit due to sales mix. The
two price increases which became effective late in the first quarter of 1995 and
in the fourth quarter of 1995 favorably impacted operating results, more than
offsetting increases in manufacturing costs. The improvement in service parts
sales was primarily from sales in the Americas of service parts for competitors'
lift trucks.
Operating profit was positively affected by the strength of the dollar and pound
sterling relative to the yen. Manufacturing costs increased in the first quarter
of 1996 compared with 1995 due to higher product costs and inflation partially
offset by higher factory throughput in the Americas. Other operating expenses
increased in 1996 due primarily to expenditures related to new product launches
and marketing programs.
<PAGE>
NACCO MATERIALS HANDLING GROUP- continued
FINANCIAL REVIEW - continued
Other Income and Expense and Income Taxes
Below is a detail of other income (expense) for the three months ended March 31:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Interest income .......................... $ .1 $ .2
Interest expense ......................... (8.1) (7.5)
Other-net ................................ .5 .2
------- -------
$ (7.5) $ (7.1)
======= =======
Effective tax rate ....................... 35.7% 41.4%
</TABLE>
The higher interest expense in 1996 is due to increased levels of debt to
support working capital needs. The improvement in other-net in 1996 results from
the Sumitomo-NACCO joint venture which experienced higher earnings in 1996
compared with 1995. During the first quarter of 1996 NMHG recorded a favorable
income tax adjustment resulting from the resolution of tax issues from prior
years resulting in a reduction of the effective tax rate.
Extraordinary Charge
The 1995 extraordinary charge of $1.3 million, net of $0.9 million in tax
benefits, relates to the write off of deferred financing fees associated with
NMHG's former revolving credit facility and senior term loan which was replaced
by a new long-term credit agreement.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $13.3 million during the
first three months of 1996. It is estimated that NMHG's capital expenditures for
the remainder of 1996 will be approximately $43.5 million. The principal sources
of financing for these capital expenditures are internally generated funds, bank
borrowings and government assistance grants.
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 March 31, 1996 NMHG had available $60.0 million
of its $350.0 million revolving credit facility. In addition, NMHG has separate
facilities totalling $30.9 million, of which $13.4 million was available at
March 31, 1996.
NMHG's capital structure is presented below:
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1996 1995
-------- -----------
<S> <C> <C>
Total Tangible Assets ................................ $ 335.5 $ 305.2
Goodwill at Cost ..................................... 439.6 438.9
-------- --------
Total Assets Before Goodwill Amortization ....... 775.1 744.1
Accumulated Goodwill Amortization .................... (74.1) (71.2)
Total Debt ........................................... (351.1) (331.9)
-------- --------
Stockholders' Equity ................................. $ 349.9 $ 341.0
======== ========
Debt to Total Capitalization ......................... 50% 49%
</TABLE>
<PAGE>
HAMILTON BEACHPROCTOR-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 months ended
March 31:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Revenues ......................................... $ 67.9 $ 67.0
Operating profit (loss) .......................... $ (1.0) $ 1.4
Operating profit (loss) excluding
goodwill amortization ......................... $ (.1) $ 2.1
Net loss ......................................... $ (.7) $ (.2)
</TABLE>
First Quarter of 1996 Compared With First Quarter of 1995
The following schedule details the components of the changes in revenues,
operating profit (loss) and net loss for the first quarter of 1996 compared with
1995:
<TABLE>
<CAPTION>
Operating
Profit Net
Revenues (Loss) Loss
-------- ------ -----
<S> <C> <C> <C>
1995 $ 67.0 $ 1.4 $ (.2)
Increase (decrease) in 1996 from:
Unit volume and sales mix ................ 1.9 -- --
Average sales price ...................... (1.0) (1.0) (.6)
Manufacturing cost ....................... -- (.1) (.1)
Other operating expense .................. -- (1.3) (.8)
Other income and expense ................. -- -- .2
Differences between effective
and statutory tax rates
-- -- .8
------- ------ -----
1996 $ 67.9 $ (1.0) $ (.7)
======= ====== =====
</TABLE>
<PAGE>
HAMILTON BEACHPROCTOR-SILEX - continued
FINANCIAL REVIEW - continued
The increase in revenues from unit volume is due mainly to higher sales of
blenders, coffeemakers and blender accessories somewhat offset by reduced sales
of toasters, irons, and toaster ovens. The volume increases were driven by
higher sales of products in the "better" product category offset by reduced
sales in the "good" and "best" product categories resulting in a minimal
improvement in operating profit related to volume. A weak retail environment
caused competitive pricing resulting in the unfavorable effect on operating
results due to price. The unfavorable variance from other operating expenses was
primarily caused by higher selling and engineering expenses and increased
amortization related to the 1995 acquisition of SOTEC, S.A. de C.V..
Other Income and Expense and Income Taxes
Below is a detail of other income (expense) for the three months ended March 31:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Interest expense ......................... $ (1.3) $ (1.6)
Other-net ................................ (.1) (.1)
------- -------
$ (1.4) $ (1.7)
======= =======
Effective tax rate ....................... 69.6% 43.1%
</TABLE>
In 1996, HBPS's effective tax rate benefit increased due to the favorable impact
of federal income tax adjustments relating to the resolution of tax issues from
prior years.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $1.5 million during the
first three months of 1996 and are estimated to be $19.4 million for the
remainder of 1996. The primary purpose of these expenditures is to increase
manufacturing capacity and efficiency and to acquire tooling for new and
existing products. In April 1996, HBPS announced plans to build a new facility
in Mexico to increase manufacturing capacity for new and existing products.
Construction of the new plant is scheduled to begin in the second quarter of
1996 with production scheduled to begin in the first quarter of 1997. An exact
location for the new facility has not yet been determined. 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 March 31, 1996, HBPS had $66.5
million available under this Facility. The expiration date of this Facility
(which currently is May 1999) may be extended annually for one additional year
upon the mutual consent of HBPS and the bank group. At March 31, 1996, HBPS also
had $18.5 million available under separate facilities.
<PAGE>
HAMILTON BEACHPROCTOR-SILEX - continued
LIQUIDITY AND CAPITAL RESOURCES - continued
HBPS's capital structure is presented below:
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1996 1995
-------- -----------
<S> <C> <C>
Total Net Tangible Assets ............................ $ 112.6 $ 131.7
Goodwill at Cost ..................................... 112.3 112.0
-------- --------
Total Assets Before Goodwill Amortization ........ 224.9 243.7
Accumulated Goodwill Amortization .................... (19.5) (18.6)
Total Debt ........................................... (73.7) (82.8)
-------- --------
Stockholders' Equity ................................. $ 131.7 $ 142.3
======== ========
Debt to Total Capitalization ......................... 36% 37%
</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
First Quarter of 1996 Compared With First Quarter of 1995
The following schedule details the components of the changes in revenues,
operating loss and net loss for the first quarter of 1996 compared with 1995:
<TABLE>
<CAPTION>
Operating Net
Revenues Loss Loss
------- ------ -----
<S> <C> <C> <C>
1995 $ 12.2 $ (.5) $ (.3)
Increase (decrease) in 1996 from:
Stores opened in 1995 .................... 1.3 -- --
Comparable stores ........................ (.6) (.3) (.2)
Other .................................... -- (.4) (.2)
------- ------ -----
1996 $ 12.9 $ (1.2) $ (.7)
======= ====== =====
</TABLE>
KCI operated 134 stores at March 31, 1996 compared with 120 stores at the end of
the first quarter of 1995. KCI did not open any new stores during the first
quarter of 1996. A full quarter's results from stores opened in 1995 contributed
favorably to revenues in 1996. The results at comparable stores were adversely
affected by the continuing difficult retail environment evidenced by lower
levels of customer traffic in factory outlet malls. The unfavorable other
variance is primarily due to higher payroll and store rent costs.
Provision for Income Taxes
Kitchen Collection's effective tax rate for the three months ended March 31,
1996 and 1995 was 41.5 percent and 40.8 percent, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $0.9 million during the
first three months of 1996. The expenditures during the first quarter included
$0.4 million related to an expansion of KCI's headquarters building. These
expenditures will be recovered in the second quarter as part of a sale-leaseback
of that building. Estimated capital expenditures for the remainder of 1996 are
$0.9 million. The principal source of funds for these capital expenditures is
short term borrowings. At March 31, 1996, KCI had available $3.0 million of its
$5.0 million line of credit.
<PAGE>
KITCHEN COLLECTION - continued
LIQUIDITY AND CAPITAL RESOURCES - continued
KCI's capital structure is presented below:
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1996 1995
------- ----------
<S> <C> <C>
Total Net Tangible Assets ............................ $ 14.3 $ 13.1
Goodwill at Cost ..................................... 4.6 4.6
------- -------
Total Assets Before Goodwill Amortization ........ 18.9 17.7
Accumulated Goodwill Amortization .................... (.9) (.9)
Total Debt ........................................... (7.0) (5.0)
------- -------
Stockholder's Equity ................................. $ 11.0 $ 11.8
======= =======
Debt to Total Capitalization ..................... 39% 30%
</TABLE>
<PAGE>
NACCO AND OTHER
FINANCIAL REVIEW
NACCO and Other includes the parent company operations and Bellaire Corporation
("Bellaire"), a non-operating subsidiary of NACCO. While Bellaire's operations
are minor, it has significant long-term liabilities related to closed mine
activities, primarily from former eastern U.S. underground coal-mining
activities. Cash payments related to Bellaire's obligations, net of internally
generated cash, are funded by NACCO and are anticipated to be $3.8 million for
the remainder of 1996.
The results of operations at NACCO and Other were as follows for the three
months ended March 31:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Revenues ....................................... $ .1 $ --
Operating loss ................................. $ (2.5) $ (2.0)
Other income (expense), net .................... $ (.1) $ (.4)
Net loss ....................................... $ (2.5) $ (1.5)
</TABLE>
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 credit agreement at NMHG allows the transfer of up to
$25.0 million to NACCO; there have not yet been any such transfers. There are no
restrictions for NACoal, 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 and the utility customers' funding of the project
mining subsidiaries.
<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 25 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 May 13, 1996 Frank B. O'Brien
Frank B. O'Brien
Senior Vice President - Corporate
Development and Chief Financial
Officer
Date May 13, 1996 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 Ended March 31
---------------------------
1996 1995
------------- -----------
(Amounts in thousands except
per share data)
Income (loss):
<S> <C> <C>
Income before extraordinary charge .............. $ 12,919 $ 12,805
Extraordinary charge, net-of-tax ................ -- (1,280)
------------- ----------
Net income ...................................... $ 12,919 $ 11,525
============= ==========
Per share amounts reported to stockholders - Note 1:
Income before extraordinary charge .............. $ 1.44 $ 1.43
Extraordinary charge, net-of-tax ................ -- (.14)
------------- ----------
Net income ...................................... $ 1.44 $ 1.29
============= ==========
Primary:
Weighted average shares outstanding ............. 8,975 8,958
Dilutive stock options - Note 2 ................. 11 9
------------- ----------
Totals .................................... 8,986 8,967
============= ==========
Per share amounts
Income before extraordinary charge ........ $ 1.44 $ 1.43
Extraordinary charge, net-of-tax .......... -- (.14)
------------- ----------
Net income ................................ $ 1.44 $ 1.29
============= ==========
Fully diluted:
Weighted average shares outstanding ............. 8,975 8,958
Dilutive stock options - Note 2 ................. 12 11
------------- ----------
Totals .................................... 8,987 8,969
============= ==========
Per share amounts
Income before extraordinary charge ........ $ 1.44 $ 1.43
Extraordinary charge, net-of-tax .......... -- (.14)
------------- ----------
Net income ................................ $ 1.44 $ 1.29
============= ==========
</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.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000789933
<NAME> NACCO Industries
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 32,898
<SECURITIES> 0
<RECEIVABLES> 279,015
<ALLOWANCES> 9,045
<INVENTORY> 412,878
<CURRENT-ASSETS> 747,079
<PP&E> 534,721
<DEPRECIATION> 398,928
<TOTAL-ASSETS> 1,875,224
<CURRENT-LIABILITIES> 543,687
<BONDS> 0
0
0
<COMMON> 8,984
<OTHER-SE> 370,262
<TOTAL-LIABILITY-AND-EQUITY> 1,857,224
<SALES> 557,535
<TOTAL-REVENUES> 559,476
<CGS> 452,174
<TOTAL-COSTS> 527,864
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,001
<INCOME-PRETAX> 19,724
<INCOME-TAX> 6,657
<INCOME-CONTINUING> 12,919
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,919
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.44
</TABLE>
