SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 July 31, 1996:
7,277,460
Number of shares of Class B Common Stock outstanding at July 31, 1996:
1,707,066
<PAGE>
NACCO INDUSTRIES, INC.
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets - June 30, 1996 and
December 31, 1995
Unaudited Consolidated Statements of Income for
the Three Months Ended and Six Months Ended June
30, 1996 and 1995
Unaudited Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 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)
JUNE 30 DECEMBER 31
1996 1995
--------- -----------
ASSETS (In thousands)
Current Assets
<S> <C> <C>
Cash and cash equivalents ...................... $ 29,817 $ 30,924
Accounts receivable, net ....................... 268,094 284,235
Inventories .................................... 411,970 388,819
Prepaid expenses and other ..................... 24,139 18,027
---------- ----------
734,020 722,005
Other Assets ....................................... 39,166 38,289
Property, Plant and Equipment, Net ................. 541,379 534,477
Deferred Charges
Goodwill, net .................................. 458,188 465,051
Deferred costs and other ....................... 57,617 56,725
Deferred income taxes .......................... 14,980 17,290
---------- ----------
530,785 539,066
---------- ----------
Total Assets ... $1,845,350 $1,833,837
========== ==========
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(Unaudited) (Audited)
JUNE 30 DECEMBER 31
1996 1995
---------- ----------
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
<S> <C> <C>
Accounts payable ................................. $ 249,687 $ 250,662
Revolving credit agreements ...................... 101,373 95,736
Current maturities of long-term obligations ...... 20,245 19,864
Income taxes ..................................... -- 4,672
Accrued payroll .................................. 27,094 29,827
Other current liabilities ........................ 122,923 122,961
---------- ----------
521,322 523,722
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 ............ 341,775 346,472
Self-insurance Reserves and Other .................... 229,697 229,302
Minority Interest .................................... 40,793 44,014
Stockholders' Equity
Common stock:
Class A, par value $1 per share, 7,277,063
shares outstanding (1995 - 7,256,971
shares outstanding) ........................ 7,277 7,257
Class B, par value $1 per share, convertible
into Class A on a one-for-one basis,
1,707,463 shares outstanding
(1995 - 1,709,453 shares outstanding) ...... 1,707 1,709
Capital in excess of par value ................... 4,600 3,591
Retained income .................................. 370,196 350,301
Foreign currency translation adjustment
and other ..................................... 7,470 7,269
---------- ----------
391,250 370,127
---------- ----------
Total Liabilities and Stockholders' Equity .... $1,845,350 $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 SIX MONTHS ENDED
JUNE 30 JUNE 30
============================ ============================
1996 1995 1996 1995
----------- ----------- ----------- -----------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales ...................................................... $ 560,535 $ 514,288 $ 1,118,069 $ 1,014,254
Other operating income ......................................... 356 3,311 2,299 5,716
----------- ----------- ----------- -----------
Total Revenues ........................................ 560,891 517,599 1,120,368 1,019,970
Cost of sales .................................................. 452,558 417,890 904,731 819,510
----------- ----------- ----------- -----------
Gross Profit .......................................... 108,333 99,709 215,637 200,460
Selling, administrative and
general expenses ........................................... 69,820 64,099 141,737 127,201
Amortization of goodwill ....................................... 3,776 3,422 7,551 6,845
----------- ----------- ----------- -----------
Operating Profit ...................................... 34,737 32,188 66,349 66,414
Other income (expense)
Interest income ............................................ 383 1,898 684 2,291
Interest expense ........................................... (12,991) (12,385) (25,991) (26,407)
Other - net ................................................ 3,409 963 4,220 1,257
----------- ----------- ----------- -----------
(9,199) (9,524) (21,087) (22,859)
----------- ----------- ----------- -----------
Income Before Income Taxes,
Minority Interest and
Extraordinary Charge .......................... 25,538 22,664 45,262 43,555
Provision for income taxes ..................................... 10,946 7,448 17,603 15,326
----------- ----------- ----------- -----------
Income Before Minority
Interest and Extraordinary Charge ................. 14,592 15,216 27,659 28,229
Minority interest .............................................. (580) (484) (728) (692)
----------- ----------- ----------- -----------
Income Before Extraordinary Charge .................... 14,012 14,732 26,931 27,537
Extraordinary charge, net-of-tax ............................... -- -- -- (1,280)
----------- ----------- ----------- -----------
Net Income ............................................ $ 14,012 $ 14,732 $ 26,931 $ 26,257
=========== =========== =========== ===========
Per Share:
Income Before Extraordinary Charge ......................... $ 1.56 $ 1.64 $ 3.00 $ 3.07
Extraordinary charge, net-of-tax ........................... -- -- -- (0.14)
----------- ----------- ----------- -----------
Net Income ................................................. $ 1.56 $ 1.64 $ 3.00 $ 2.93
=========== =========== =========== ===========
Dividends per share ........................................ $ 0.1875 $ 0.1800 $ 0.3675 $ 0.3500
=========== =========== =========== ===========
See notes to unaudited consolidated financial statements .......
</TABLE>
<PAGE>
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
----------------------
1996 1995
--------- ---------
(In thousands)
Operating Activities
<S> <C> <C>
Net income ............................................ $ 26,931 $ 26,257
Adjustments to reconcile net income
to net cash provided (used) by operating activities:
Extraordinary charge, net-of-tax .................. -- 1,280
Depreciation, depletion and amortization .......... 41,756 39,603
Deferred income taxes ............................. (3,338) 443
Other non-cash items .............................. (1,687) 4,328
Working Capital Changes:
Accounts receivable ............................... 15,111 (167)
Inventories ....................................... (23,530) (92,597)
Other current assets .............................. 73 3,014
Accounts payable .................................. 1,628 22,071
Accrued income taxes .............................. (4,197) (9,275)
Other liabilities ................................. (7,488) (13,143)
--------- ---------
Net cash provided (used) by operating activities 45,259 (18,186)
Investing Activities
Expenditures for property, plant and equipment ........ (41,803) (33,801)
Proceeds from the sale of assets ...................... 687 422
Additional investment in subsidiary ................... (1,805) --
--------- ---------
Net cash used by investing activities .......... (42,921) (33,379)
Financing Activities
Additions to long-term obligations and
revolving credit .................................... 55,459 236,915
Reductions of long-term obligations and
revolving credit .................................... (51,500) (177,061)
Additions to obligations of project mining
subsidiaries ........................................ 38,939 26,855
Reductions of obligations of project mining
subsidiaries ........................................ (43,152) (25,892)
Cash dividends paid ................................... (3,301) (3,137)
Capital grants ........................................ 1,461 1,863
Other - net ........................................... (508) 1,159
--------- ---------
Net cash provided (used) by financing activities (2,602) 60,702
Effect of exchange rate changes on cash ............... (843) 1,681
--------- ---------
Cash and Cash Equivalents
Increase (decrease) for the period .................... (1,107) 10,818
Balance at the beginning of the period ................ 30,924 19,541
--------- ---------
Balance at the end of the period ...................... $ 29,817 $ 30,359
========= =========
</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 ("NACoal"), 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
June 30, 1996 and the results of its operations for the three and six month
periods and cash flows for the six month periods ended June 30, 1996 and 1995
have been included.
Operating results for the six month period ended June 30, 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.
<PAGE>
Note B - Inventories
<TABLE>
<CAPTION>
Inventories are summarized as follows:
June 30 December 31
1996 1995
-------- --------
Manufacturing inventories:
Finished goods and service parts
<S> <C> <C>
NACCO Materials Handling Group ............... $ 139.2 $ 117.4
Hamilton Beach/Proctor-Silex ................. 71.8 43.3
-------- --------
211.0 160.7
-------- --------
Raw materials and work in process
NACCO Materials Handling Group ............... 156.1 182.0
Hamilton Beach/Proctor-Silex ................. 15.5 15.7
-------- --------
171.6 197.7
-------- --------
LIFO reserve
NACCO Materials Handling Group ............... (16.6) (13.3)
Hamilton Beach/Proctor-Silex ................. (.6) (.3)
-------- --------
(17.2) (13.6)
-------- --------
Total manufacturing inventories ................ 365.4 344.8
North American Coal:
Coal ......................................... 11.2 10.6
Mining supplies .............................. 19.2 19.1
Retail inventories - Kitchen Collection ............ 16.2 14.3
======== ========
$ 412.0 $ 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 June 30, 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 SIX MONTHS ENDED
JUNE 30 JUNE 30
---------------------------- ------------------------------
1996 1995 1996 1995
-------- ---------- ---------- ----------
REVENUES
<S> <C> <C> <C> <C>
NACCO Materials Handling Group ..................... $ 407.6 $ 370.2 $ 828.4 $ 733.3
Hamilton Beach/Proctor-Silex ....................... 82.7 79.7 150.6 146.7
North American Coal ................................ 56.7 55.3 115.8 115.8
Kitchen Collection ................................. 14.6 13.5 27.5 25.6
NACCO and Other .................................... .1 .3 .2 .3
Eliminations ....................................... (.8) (1.4) (2.1) (1.7)
-------- ---------- ---------- ----------
$ 560.9 $ 517.6 $ 1,120.4 $ 1,020.0
======== ========== ========== ==========
AMORTIZATION OF GOODWILL
NACCO Materials Handling Group ..................... $ 2.8 $ 2.7 $ 5.7 $ 5.4
Hamilton Beach/Proctor-Silex ....................... .9 .7 1.8 1.4
Kitchen Collection ................................. .1 -- .1 --
-------- ---------- ---------- ----------
$ 3.8 $ 3.4 $ 7.6 $ 6.8
======== ========== ========== ==========
OPERATING PROFIT (LOSS)
NACCO Materials Handling Group ..................... $ 25.4 $ 21.9 $ 51.9 $ 45.5
Hamilton Beach/Proctor-Silex ....................... 4.7 3.6 3.7 5.0
North American Coal ................................ 7.8 9.2 17.6 21.0
Kitchen Collection ................................. (.6) (.3) (1.8) (.8)
NACCO and Other .................................... (2.6) (2.3) (5.1) (4.3)
-------- ---------- ---------- ----------
$ 34.7 $ 32.1 $ 66.3 $ 66.4
======== ========== ========== ==========
OPERATING PROFIT (LOSS) EXCLUDING
GOODWILL AMORTIZATION
NACCO Materials Handling Group ..................... $ 28.2 $ 24.6 $ 57.6 $ 50.9
Hamilton Beach/Proctor-Silex ....................... 5.6 4.3 5.5 6.4
North American Coal ................................ 7.8 9.2 17.6 21.0
Kitchen Collection ................................. (.5) (.3) (1.7) (.8)
NACCO and Other .................................... (2.6) (2.3) (5.1) (4.3)
-------- ---------- ---------- ----------
$ 38.5 $ 35.5 $ 73.9 $ 73.2
======== ========== ========== ==========
INTEREST EXPENSE
NACCO Materials Handling Group ..................... $ (7.9) $ (8.0) $ (16.0) $ (15.5)
Hamilton Beach/Proctor-Silex ....................... (1.5) (1.7) (2.8) (3.3)
North American Coal ................................ -- (.4) (.1) (.8)
Kitchen Collection ................................. (.1) (.1) (.3) (.2)
NACCO and Other .................................... (.4) (.8) (.8) (1.6)
Eliminations ....................................... .3 .9 .8 1.9
-------- ---------- ---------- ----------
(9.6) (10.1) (19.2) (19.5)
Project mining subsidiaries ........................ (3.4) (2.3) (6.8) (6.9)
-------- ---------- ---------- ----------
$ (13.0) $ (12.4) $ (26.0) $ (26.4)
======== ========== ========== ==========
</TABLE>
<PAGE>
FINANCIAL SUMMARY - continued
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------------- -------------------------
1996 1995 1996 1995
------- ------- ------- -------
OTHER-NET, INCOME (EXPENSE)
<S> <C> <C> <C> <C>
NACCO Materials Handling Group ........................... $ (.1) $ 1.0 $ .4 $ 1.1
Hamilton Beach/Proctor-Silex ............................. (.1) (.1) (.1) (.2)
North American Coal ...................................... 3.2 -- 3.5 .2
NACCO and Other .......................................... .4 .1 .4 .2
------- ------- ------- -------
$ 3.4 $ 1.0 $ 4.2 $ 1.3
======= ======= ======= =======
NET INCOME (LOSS)
Before Extraordinary Charge
NACCO Materials Handling Group ........................... $ 9.6 $ 8.9 $ 21.8 $ 18.6
Hamilton Beach/Proctor-Silex ............................. 1.7 1.1 1.0 .9
North American Coal ...................................... 5.3 5.4 10.1 10.6
Kitchen Collection ....................................... (.5) (.3) (1.2) (.6)
NACCO and Other .......................................... (1.6) .1 (4.1) (1.3)
Minority interest ........................................ (.5) (.5) (.7) (.7)
------- ------- ------- -------
14.0 14.7 26.9 27.5
Extraordinary charge, net-of-tax ......................... -- -- -- (1.3)
------- ------- ------- -------
$ 14.0 $ 14.7 $ 26.9 $ 26.2
======= ======= ======= =======
DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE
NACCO Materials Handling Group $ 16.6 $ 16.2
Hamilton Beach/Proctor-Silex 9.1 8.0
North American Coal 1.0 .8
Kitchen Collection .5 .5
NACCO and Other .1 .1
------- -------
27.3 25.6
Project mining subsidiaries 14.5 14.0
------- -------
$ 41.8 $ 39.6
======= =======
CAPITAL EXPENDITURES
NACCO Materials Handling Group $ 26.0 $ 17.9
Hamilton Beach/Proctor-Silex 3.9 4.3
North American Coal .7 1.3
Kitchen Collection .7 .9
NACCO and Other .1 .1
------- -------
31.4 24.5
Project mining subsidiaries 10.4 9.3
------- -------
$ 41.8 $ 33.8
======= =======
</TABLE>
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
---------- ----------
TOTAL ASSETS
<S> <C> <C>
NACCO Materials Handling Group ..... $ 1,086.9 $ 1,052.2
Hamilton Beach/Proctor-Silex ....... 295.6 288.0
North American Coal ................ 37.7 40.7
Kitchen Collection ................. 24.3 25.1
NACCO and Other .................... 53.0 62.7
---------- --------
1,497.5 1,468.7
Project mining subsidiaries ........ 433.1 433.3
---------- --------
1,930.6 1,902.0
Consolidating eliminations ......... (85.2) (68.2)
---------- --------
$ 1,845.4 $ 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
and six months ended June 30:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
------------------------ ------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Coteau Properties ................................... 3.4 3.3 7.6 7.4
Falkirk Mining ...................................... 1.5 1.6 3.4 3.5
Sabine Mining ....................................... .9 .7 1.8 1.6
Red River Mining .................................... .2 .3 .3 .4
--- ---- ---- ----
6.0 5.9 13.1 12.9
=== ==== ==== ====
</TABLE>
Revenues, income before taxes, provision for taxes and net income were as
follows for the three and six months ended June 30:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
-------------------------- -------------------------
1996 1995 1996 1995
------- ------ ------ ------
Revenues
<S> <C> <C> <C> <C>
Project mines ....................................... $ 52.1 $ 49.2 $ 106.7 $ 104.0
Other mining operations ............................. 4.0 3.9 7.6 7.2
------- ------ ------ ------
56.1 53.1 114.3 111.2
Royalties and other ................................. .6 2.2 1.5 4.6
======= ====== ====== ======
$ 56.7 $ 55.3 $ 115.8 $ 115.8
======= ====== ====== ======
Income before taxes
Project mines ....................................... $ 5.2 $ 5.2 $ 11.5 $ 11.6
Other mining operations ............................. .5 .5 1.1 .7
------- ------ ------ ------
Total from operating mines .............................. 5.7 5.7 12.6 12.3
Royalty and other income, net ........................... 4.1 3.1 5.6 5.8
Headquarters expense .................................... (1.8) (1.3) (3.2) (3.0)
------- ------ ------ ------
8.0 7.5 15.0 15.1
Provision for taxes ..................................... 2.7 2.1 4.9 4.5
------- ------ ------ ------
Net income .......................................... $ 5.3 $ 5.4 $ 10.1 $ 10.6
======= ====== ====== ======
</TABLE>
<PAGE>
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
Second Quarter of 1996 Compared with Second 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 June 30:
<TABLE>
<CAPTION>
Income
Before Net
Revenues Taxes Income
--------- --------- ---------
<S> <C> <C> <C>
1995 $ 55.3 $ 7.5 $ 5.4
Increase (decrease) in 1996 from:
Project mines
Tonnage volume ................................................. 2.3 .1 --
Mix of tons sold ............................................... (.1) (.1) (.1)
Pass-through costs ............................................. .8 -- --
Other mining operations
Tonnage volume ................................................. (.1) .6 .4
Mix of tons sold ............................................... .1 .1 .1
Operating costs ................................................ -- (1.0) (.6)
Other income ................................................... -- .4 .2
----- ---- ----
Changes from operating mines ...................................... 3.0 .1 --
Escrow payments ................................................... -- 2.8 1.8
Management fees ................................................... (1.0) (1.0) (.7)
Royalties ......................................................... (.6) (.7) (.5)
Other ............................................................. -- (.2) --
Headquarters expense .............................................. -- (.5) (.3)
Differences between effective and
statutory tax rates ............................................ -- -- (.4)
----- ---- ----
1996 $ 56.7 $ 8.0 $ 5.3
===== ==== ====
</TABLE>
The favorable 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 increase in operating costs at the
other mining operations was due to the costs associated with operating the
Florida dragline operations along with increased costs at Red River due to lower
production volumes. The reduction in revenues from 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. Offsetting the impact on net income from the reduced
management fees and royalties was the receipt during the second quarter of 1996
of a nonrecurring final escrow payment for the sale of a previously owned
eastern underground mining property.
<PAGE>
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
First Six Months of 1996 Compared with First Six Months of 1995
The following schedule details the components of the changes in revenues, income
before taxes and net income for the six months ended June 30:
<TABLE>
<CAPTION>
Income
Before Net
Revenues Taxes Income
---------- --------- ---------
<S> <C> <C> <C>
1995 $ 115.8 $ 15.1 $ 10.6
Increase (decrease) in 1996 from:
Project mines
Tonnage volume 3.1 .2 .1
Mix of tons sold (.1) (.1) (.1)
Pass-through costs (.3) --- ---
Other mining operations
Tonnage volume --- 1.4 .9
Mix of tons sold .3 .3 .2
Average selling price .1 .1 ---
Operating costs --- (1.9) (1.2)
Other income --- .4 .3
---------- --------- ---------
Changes from operating mines 3.1 .4 .2
Escrow payments --- 2.9 1.9
Management fees (2.0) (2.0) (1.3)
Royalties (1.1) (1.1) (.7)
Other --- (.1) (.1)
Headquarters expense --- (.2) (.1)
Differences between effective and
statutory tax rates --- --- (.4)
---------- --------- ---------
1996 $ 115.8 $ 15.0 $ 10.1
========== ========= =========
</TABLE>
The impact of the Florida dragline operations somewhat offset by reduced tonnage
volume at Red River resulted in a favorable volume variance at the other mining
operations. The increase in operating costs at the other mining operations was
due to the operating costs of the Florida dragline operations and, to a lesser
degree, increased costs at Red River. The receipt of the final management fee
relating to the Trinity project in 1995 along with reduced royalties resulted in
lower royalty revenues in 1996. Offsetting the unfavorable effect of the reduced
management fees and royalty income was the receipt of the nonrecurring final
escrow payment from the sale of a previously owned eastern underground mining
property.
<PAGE>
NORTH AMERICAN COAL - continued
FINANCIAL REVIEW - continued
Other Income and Expense and Income Taxes
Items of other income (expense) for the three and six months ended June 30:
<TABLE>
<CAPTION>
Three Months Six Months
--------------------- ----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
Interest income
<S> <C> <C> <C> <C>
Project mining subsidiaries .................. $ .3 $ .3 $ .5 $ .6
Other mining operations ...................... .1 .6 .3 1.0
--------- --------- --------- ---------
$ .4 $ .9 $ .8 $ 1.6
========= ========= ========= =========
Interest expense
Project mining subsidiaries .................. $ (3.4) $ (2.3) $ (6.8) $ (6.9)
Other mining operations ...................... -- ( .4) (.1) (.8)
--------- --------- --------- ---------
$ (3.4) $ (2.7) $ (6.9) $ (7.7)
========= ========= ========= =========
Other-net
Project mining subsidiaries .................. $ -- $ -- $ -- $ .1
Other mining operations ...................... 3.2 -- 3.5 .1
--------- --------- --------- ---------
$ 3.2 $ -- $ 3.5 $ .2
========= ========= ========= =========
Effective tax rate 33.6% 28.4% 32.8% 29.5%
</TABLE>
The increase in other-net relates to the previously discussed nonrecurring final
payment received in the second quarter of 1996. The increase in NACoal's
effective tax rate in 1996 compared with 1995 is due primarily to the receipt in
the second quarter of 1995 of a nonrecurring tax refund.
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 $50.0 million of its revolving credit facility available
at June 30, 1996.
The financing of the project mining subsidiaries, which is guaranteed by the
utility customers, is comprised of long-term equipment leases, notes payable and
non-interest-bearing advances from customers. The obligations of the project
mining subsidiaries do not impact the short- or long-term liquidity of the
company and are without recourse to NACCO or NACoal. 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)
NACoal's capital structure, excluding the project mining subsidiaries, is
presented below:
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
------- -------
<S> <C> <C>
Investment in Project Mining Subsidiaries ............ $ 2.4 $ 3.3
Other Net Tangible Assets ............................ 9.6 (2.8)
------- -------
Total Tangible Assets ............................ 12.0 .5
Advances to Parent Company ........................... 3.3 14.9
Debt Related to Parent Advances ...................... -- --
Other Debt ........................................... (.2) (.3)
------- -------
Total Debt ....................................... (.2) (.3)
======= =======
Stockholder's Equity ................................. $ 15.1 $ 15.1
======= =======
Debt to Total Capitalization 1% 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 and six months
ended June 30:
<TABLE>
<CAPTION>
Three Months Six Months
-------------------------- --------------------------
1996 1995 1996 1995
-------- -------- -------- --------
Revenues
<S> <C> <C> <C> <C>
Americas ................................................ $ 269.5 $ 240.5 $ 541.7 $ 490.0
Europe, Africa and Middle East .......................... 113.4 107.3 234.7 203.0
Asia-Pacific ............................................ 24.7 22.4 52.0 40.3
-------- -------- -------- --------
$ 407.6 $ 370.2 $ 828.4 $ 733.3
======== ======== ======== ========
Operating profit
Americas ................................................ $ 15.6 $ 13.0 $ 31.7 $ 29.9
Europe, Africa and Middle East .......................... 10.8 8.3 21.7 14.0
Asia-Pacific ............................................ (1.0) .6 (1.5) 1.6
-------- -------- -------- --------
$ 25.4 $ 21.9 $ 51.9 $ 45.5
======== ======== ======== ========
Operating profit excluding
goodwill amortization
Americas ................................................ $ 17.6 $ 15.1 $ 35.7 $ 33.9
Europe, Africa and Middle East .......................... 11.6 8.9 23.3 15.4
Asia-Pacific ............................................ (1.0) .6 (1.4) 1.6
-------- -------- -------- --------
$ 28.2 $ 24.6 $ 57.6 $ 50.9
======== ======== ======== ========
Net income before extraordinary charge ...................... $ 9.6 $ 8.9 $ 21.8 $ 18.6
Extraordinary charge ........................................ -- -- -- (1.3)
-------- -------- -------- --------
Net income .............................................. $ 9.6 $ 8.9 $ 21.8 $ 17.3
======== ======== ======== ========
</TABLE>
<PAGE>
NACCO MATERIALS HANDLING GROUP - continued
FINANCIAL REVIEW - continued
Second Quarter of 1996 Compared With Second Quarter of 1995
The following schedule details the components of the changes in revenues,
operating profit and net income for the second quarter of 1996 compared with the
second quarter of 1995:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
---------- ----------- ---------
<S> <C> <C> <C>
1995 $ 370.2 $ 21.9 $ 8.9
Increase (Decrease) in 1996 from:
Unit volume ................................................... 21.2 4.5 2.9
Sales mix ..................................................... 10.6 (10.3) (6.7)
Average sales price ........................................... 4.2 4.2 2.7
Service parts ................................................. 5.3 2.4 1.6
Foreign currency .............................................. (3.9) 5.9 3.8
Manufacturing cost ............................................ -- .7 .4
Other operating expense ....................................... -- (3.9) (2.5)
Other income and expense ...................................... -- -- (.7)
Differences between effective
and statutory tax rates ..................................... -- -- (.8)
----- ----- ----
1996 $ 407.6 $ 25.4 $ 9.6
===== ======== =======
</TABLE>
Unit volumes in the second quarter of 1996 increased 6 percent in the Americas,
18 percent in Europe and 4 percent in Asia-Pacific compared with the same period
in 1995. While industry demand, as measured by retail bookings, is down almost
13 percent in the Americas, unit shipments increased due to a reduction in
backlog and increased market share. In Europe, the growth in shipments resulted
from an overall increase in market share and increased market size in most
markets. NMHG's backlog of orders at June 30, 1996 was approximately 14,400
forklift truck units compared to 17,300 and 21,200 forklift truck units at March
31, 1996 and December 31, 1995, respectively. Product sales mix favorably
impacted revenues due to increased sales of higher value product classes.
Margins were negatively affected by a shift in sales to lower margin countries
in Europe. The favorable impact from pricing was due to the price increases
which became effective in Europe in late 1995 and early 1996, offset somewhat by
unfavorable pricing in Asia-Pacific due to competitive pressures. The
improvement in service parts was concentrated mainly in the Americas.
Operating profit was positively affected by currency because of the strength of
the dollar and pound sterling relative to the yen. Other operating expenses
increased in 1996 primarily due to marketing expenditures related to increased
volumes and new product launches, increased parts distribution cost and
inflation.
<PAGE>
NACCO MATERIALS HANDLING GROUP - continued
FINANCIAL REVIEW - continued
First Six Months of 1996 Compared With First Six Months of 1995
The following schedule details the components of the changes in revenues,
operating profit and net income for the first six months of 1996 compared with
the first six months of 1995:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
---------- ----------- ---------
<S> <C> <C> <C>
1995 $ 733.3 $ 45.5 $ 17.3
Increase (Decrease) in 1996 from:
Unit volume .................................................... 62.4 11.8 7.7
Sales mix ...................................................... 17.3 (14.4) (9.4)
Average sales price ............................................ 8.8 8.8 5.7
Service parts .................................................. 10.0 4.1 2.7
Foreign currency ............................................... (3.4) 8.7 5.7
Manufacturing cost ............................................. -- (2.6) (1.9)
Other operating expense ........................................ -- (10.0) (6.3)
Other income and expense ....................................... -- -- (1.1)
Differences between effective
and statutory tax rates ...................................... -- -- .1
Extraordinary charge ........................................... -- -- 1.3
---- ---- ---
1996 $ 828.4 $ 51.9 $ 21.8
======== ========= ========
</TABLE>
Unit volumes for the first six months of 1996 increased 7 percent in the
Americas, 24 percent in Europe and 25 percent in Asia-Pacific compared with the
same period in 1995. The increased volumes in the Americas was due to a
reduction in backlog and improved market share. Improvement in overall European
market size and market share resulted in increased unit shipments. Product sales
mix favorably impacted revenues due to increased sales of higher value product
classes. Margins were negatively affected by a shift in sales to lower margin
countries in Europe. The improvement in service parts sales was primarily from
sales in the Americas of service parts for both Hyster and Yale lift trucks and
competitors' lift trucks.
The strength of the dollar and pound sterling relative to the yen favorably
impacted operating profit. Increased product costs partially offset by lower
purchased materials costs and higher factory throughput in the Americas resulted
in increased manufacturing costs. Other operating expenses increased in 1996 due
to higher marketing expenditures related to increased volumes and new product
launches along with general inflation.
<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 and six months ended
June 30:
<TABLE>
<CAPTION>
Three Months Six Months
------------------------- --------------------------
1996 1995 1996 1995
---- ----- ----- -----
<S> <C> <C> <C> <C>
Interest income ................................. $ .2 $ .4 $ .2 $ .7
Interest expense ................................ (7.9) (8.0) (16.0) (15.5)
Other-net ....................................... (.1) 1.0 .4 1.1
---- ----- ----- -----
$ (7.8) $ (6.6) $ (15.4) $ (13.7)
==== ===== ===== =====
Effective tax rate 45.2% 41.7% 40.3% 41.6%
</TABLE>
In the second quarter of 1995, NMHG recognized a nonrecurring tax refund which
reduced the effective tax rate compared with the same period in 1996. During the
first quarter of 1996, NMHG recorded a favorable income tax adjustment from the
resolution of tax issues from prior years which reduced the effective tax rate
for the first six months of 1996 compared with 1995.
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 $26.0 million during the
first six months of 1996. It is estimated that NMHG's capital expenditures for
the remainder of 1996 will be approximately $25.9 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 June 30, 1996 NMHG had available $60.0 million
of its $350.0 million revolving credit facility. In addition, NMHG has separate
facilities totalling $31.4 million, of which $17.7 million was available at June
30, 1996.
NMHG's capital structure is presented below:
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
-------- --------
<S> <C> <C>
Total Tangible Assets .............................................................. $ 316.4 $ 305.2
Goodwill at Cost ................................................................... 439.6 438.9
-------- --------
Total Assets Before Goodwill Amortization ..................................... 756.0 744.1
Accumulated Goodwill Amortization ............................................. (77.0) (71.2)
Total Debt .................................................................. (319.9) (331.9)
-------- -------
Stockholders' Equity ............................................................... $ 359.1 $ 341.0
======== ========
Debt to Total Capitalization 47% 49%
</TABLE>
<PAGE>
HAMILTON BEACH/PROCTOR-SILEX
HBPS, 80 percent-owned by NACCO, is a leading manufacturer of small electric
appliances. Because 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 six months
ended June 30:
<TABLE>
<CAPTION>
Three Months Six Months
-------------------------- ----------------------------
1996 1995 1996 1995
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues ............................................. $ 82.7 $ 79.7 $ 150.6 $ 146.7
Operating profit ..................................... $ 4.7 $ 3.6 $ 3.7 $ 5.0
Operating profit excluding
goodwill amortization ............................ $ 5.6 $ 4.3 $ 5.5 $ 6.4
Net income ........................................... $ 1.7 $ 1.1 $ 1.0 $ .9
</TABLE>
Second Quarter of 1996 Compared With Second Quarter of 1995
The following schedule details the components of the changes in revenues,
operating profit and net income for the second quarter of 1996 compared with the
second quarter of 1995:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
------------ ------------ ---------
<S> <C> <C> <C>
1995 $ 79.7 $ 3.6 $ 1.1
Increase (Decrease) in 1996 from:
Unit volume and sales mix ...................................... 4.5 1.6 1.1
Average sales price ............................................ (1.5) (1.5) (1.1)
Manufacturing cost ............................................. -- 2.0 1.3
Other operating expense ........................................ -- (1.0) (.6)
Other income and expense ....................................... -- -- .2
Differences between effective
and statutory tax rates ..................................... -- -- (.3)
---- ---- ----
1996 $ 82.7 $ 4.7 $ 1.7
========= ========= ========
</TABLE>
<PAGE>
HAMILTON BEACH/PROCTOR-SILEX - continued
FINANCIAL REVIEW - continued
The favorable unit volume and sales mix variance is due mainly to higher unit
sales of blenders, coffeemakers, can openers and indoor grills somewhat offset
by reduced sales of toasters, mixers, irons, and toaster ovens. In addition,
increased sales of products in the "better" product category somewhat offset by
reduced sales in the "good" and "best" product categories generated a favorable
sales mix. A competitive pricing environment, due primarily to low-cost Chinese
imports, caused the unfavorable effect on operating results due to price.
Reductions in raw materials costs, somewhat offset by higher overhead costs,
resulted in favorable manufacturing costs in 1996. The reductions in raw
materials costs included the favorable impact from the acquisition in 1995 of
SOTEC S.A. de C.V. which supplies plastic parts to HBPS's Mexican operations.
The unfavorable variance from other operating expenses was primarily caused by
higher marketing expenses and increased amortization related to the 1995
acquisition of SOTEC.
First Six Months of 1996 Compared With First Six Months of 1995
The following schedule details the components of the changes in revenues,
operating profit and net income for the first six months of 1996 compared with
the first six months of 1995:
<TABLE>
<CAPTION>
Operating Net
Revenues Profit Income
------------ ------------ ---------
<S> <C> <C> <C>
1995 $ 146.7 $ 5.0 $ .9
Increase (Decrease) in 1996 from:
Unit volume and sales mix 6.5 1.7 1.2
Average sales price (2.6) (2.6) (1.7)
Manufacturing cost --- 1.8 1.2
Other operating expense --- (2.2) (1.5)
Other income and expense --- --- .4
Differences between effective
and statutory tax rates --- --- .5
------------ ------------ ---------
1996 $ 150.6 $ 3.7 $ 1.0
============ ============ =========
</TABLE>
Increased sales of blenders, coffeemakers, can openers and indoor grills offset
by lower toaster, iron, toaster oven and mixer sales resulted in a favorable
impact on unit volume and sales mix. During the first quarter the impact from
volume increases resulted in a minimal improvement on operating profit due to a
sales mix shift from products in the "best" and "good" product categories to the
"better" category. The average sales price, manufacturing cost and other
operating expense variances were caused by the same factors as explained for the
second quarter.
<PAGE>
HAMILTON BEACH/PROCTOR-SILEX - continued
FINANCIAL REVIEW - continued
Other Income and Expense and Income Taxes
Below is a detail of other income (expense) for the three and six months ended
June 30:
<TABLE>
<CAPTION>
Three Months Six Months
---------------------------- ---------------------------
1996 1995 1996 1995
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Interest expense ............................... $ (1.5) $ (1.7) $ (2.8) $ (3.3)
Other-net ...................................... (.1) (.1) (.1) (.2)
------- ------- ------- -------
$ (1.6) $ (1.8) $ (2.9) $ (3.5)
======= ======= ======= =======
Effective tax rate ............................. 44.1% 35.4% (30.3%) 33.5%
</TABLE>
The reduction in interest expense in 1996 was due primarily to lower average
borrowings in 1996 compared with 1995.
In the second quarter of 1995, HBPS's effective tax rate was reduced due to the
utilization of foreign tax credits that were not repeated in 1996. These credits
were received as a result of the repatriation in 1995 of foreign earnings
previously taxed at a rate in excess of the U.S. statutory rate. HBPS's
effective tax rate for the first six months of 1996 was substantially affected
by the favorable impact from the recognition in the first quarter of 1996 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 $3.9 million during the
first six months of 1996 and are estimated to be $19.0 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, located in Saltillo, Coahuila, has begun with production targeted to
begin in the first quarter of 1997. 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 June 30, 1996, HBPS had $44.9
million available under this Facility. The May 1999 expiration date of this
Facility may be extended annually for one additional year upon the mutual
consent of HBPS and the bank group. At June 30, 1996, HBPS also had $18.9
million available under separate facilities.
<PAGE>
HAMILTON BEACH/PROCTOR-SILEX - continued
LIQUIDITY AND CAPITAL RESOURCES - continued
HBPS's capital structure is presented below:
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
-------- --------
<S> <C> <C>
Total Net Tangible Assets .......................................................... $ 138.4 $ 131.7
Goodwill at Cost ................................................................... 112.3 112.0
-------- --------
Total Assets Before Goodwill Amortization ...................................... 250.7 243.7
Accumulated Goodwill Amortization .................................................. (20.5) (18.6)
Total Debt ......................................................................... (96.9) (82.8)
-------- --------
Stockholders' Equity ............................................................... $ 133.3 $ 142.3
======== =========
Debt to Total Capitalization 42% 37%
</TABLE>
Because of the seasonal nature of the housewares business, HBPS's inventory and
debt levels reach seasonal peaks in the second and third quarters.
<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
Second Quarter of 1996 Compared With Second Quarter of 1995
The following schedule details the components of the changes in revenues,
operating loss and net loss for the second quarter of 1996 compared with the
second quarter of 1995:
<TABLE>
<CAPTION>
Operating Net
Revenues Loss Loss
------------- ------------ --------
<S> <C> <C> <C>
1995 $ 13.5 $ (.3) $ (.3)
Increase (decrease) in 1996 from:
Stores opened in 1996 ......................................... .2 (.1) (.1)
Stores opened in 1995 ......................................... 1.1 .1 .1
Comparable stores ............................................. (.2) (.2) (.1)
Other ......................................................... -- (.1) (.1)
-------- ------- ------
1996 $ 14.6 $ (.6 ) $ (.5)
========= =========== ========
</TABLE>
First Six Months of 1996 Compared with First Six Months of 1995
The following schedule details the components of the changes in revenues,
operating loss and net loss for the first six months of 1996 compared with the
first six months of 1995:
<TABLE>
<CAPTION>
Operating Net
Revenues Loss Loss
-------- -------- --------
<S> <C> <C> <C>
1995 $ 25.6 $ (.8) $ (.6)
Increase (decrease) in 1996 from:
Stores opened in 1996 ......................................... .2 (.1) (.1)
Stores opened in 1995 ......................................... 2.6 -- --
Comparable stores ............................................. (.9) (.5) (.3)
Other ......................................................... -- (.4) (.2)
----- ---- ----
1996 $ 27.5 $ (1.8) $ (1.2)
========= ======== ======
</TABLE>
KCI operated 140 stores at June 30, 1996 compared with 124 stores at June 30,
1995. A full quarter of operation of stores opened in 1995 contributed favorably
to revenues in 1996. The results at comparable stores and profitability at new
stores were adversely affected by the continuing difficult factory outlet 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.
<PAGE>
Provision for Income Taxes
KCI's effective tax rate for the three months ended June 30, 1996 and 1995 was
43.1 percent and 41.1 percent, respectively. KCI's effective tax rate for the
six months ended June 30, 1996 and 1995 was 42.1 percent and 40.9 percent,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for property, plant and equipment were $0.7 million during the
first six months of 1996. Estimated capital expenditures for the remainder of
1996 are $0.6 million. These expenditures relate primarily to new store openings
and improvements to existing facilities. The principal source of funds for these
capital expenditures is short term borrowings. At June 30, 1996, KCI had
available $2.2 million of its $5.0 million line of credit.
KCI's capital structure is presented below:
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
------- -------
<S> <C> <C>
Total Net Tangible Assets .......................................................... $ 14.7 $ 13.1
Goodwill at Cost ................................................................... 4.6 4.6
----- -----
Total Assets Before Goodwill Amortization ...................................... 19.3 17.7
Accumulated Goodwill Amortization .................................................. (.9) (.9)
Total Debt ......................................................................... (7.8) (5.0)
----- -----
Stockholder's Equity ............................................................... $ 10.6 $ 11.8
===== =====
Debt to Total Capitalization 42% 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 results 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 $2.7 million for
the remainder of 1996.
The results of operations at NACCO and Other were as follows for the three and
six months ended June 30:
<TABLE>
<CAPTION>
Three Months Six Months
------------------------- -------------------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues ............................................... $ .1 $ .3 $ .2 $ .3
Operating loss ......................................... $ (2.6) $ (2.3) $ (5.1) $ (4.3)
Other income (expense), net ............................ $ .4 $ .1 $ .4 $ .2
Net income (loss) ...................................... $ (1.6) $ .1 $ (4.1) $ (1.3)
</TABLE>
In the second quarter of 1995, a nonrecurring tax benefit with related interest
income was recorded resulting from the settlement of several prior year tax
examinations. This tax item is the primary reason for the variance in net loss
in 1996 compared with 1995.
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 up to $25.0 million
of dividends to be paid to NACCO; there have not yet been any such transfers.
There are no restrictions on transfers from NACoal. Dividends and advances from
subsidiaries 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
- ------ ---------------------------------------------------
The following matters were submitted to a vote of security
holders at the Annual Meeting of Stockholders held May 8, 1996,
with the results indicated:
Outstanding Shares Entitled to Vote Number of Votes
-------------------------------------- ---------------------
7,274,163 Class A Common 7,274,163
1,708,786 Class B Common 17,087,860
--------------------
24,362,023
====================
Item 1.Election of ten directors for the ensuing year.
Votes
Director Nominee For Withheld Total
---------------------- --------------- ------------ ---------
Owsley Brown II 22,171,939 46,025 22,217,964
John J. Dwyer 22,162,861 55,103 22,217,964
Robert M. Gates 22,167,119 50,845 22,217,964
Leon J. Hendrix, Jr. 22,171,939 46,025 22,217,964
Dennis W. LaBarre 22,161,357 56,607 22,217,964
Alfred M. Rankin, Jr. 22,175,139 42,825 22,217,964
Ian M. Ross 21,967,818 250,146 22,217,964
John C. Sawhill 22,174,089 43,875 22,217,964
Britton T. Taplin 22,140,134 77,830 22,217,964
Frank E. Taplin, Jr. 22,008,693 209,271 22,217,964
Item 2.Approval of the supplemental annual incentive
compensation plan.
For Against Abstain Total
--------------- -------------- ---------------- --------------
22,008,910 163,362 45,692 22,217,964
Item 3.Approval of the executive long-term incentive
compensation plan.
For Against Abstain Total
------------- ---------------- ---------------- ---------------
21,979,394 198,885 39,685 22,217,964
<PAGE>
Item 4.Confirming the appointment of Arthur Andersen LLP as the
independent certified public accountants of the
Company for the current fiscal year.
For Against Abstain Total
------------- ----------- ------------- ---------------
22,187,520 15,145 15,299 22,217,964
Item 5.Authority to vote on other matters that may
properly come before the meeting.
Votes
For Withheld Total
-------------- -------------- ----------------
22,215,264 2,700 22,217,964
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
- ------ --------------------------------
(a) Exhibits. See Exhibit Index on page 30 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 August 13, 1996 Frank B. O'Brien
Frank B. O'Brien
Senior Vice President - Corporate
Development and Chief Financial
Officer
Date August 13, 1996 Kenneth C. Schilling
Kenneth C. Schilling
Controller
(Principal Accounting Officer)
<PAGE>
Exhibit Index
Exhibit
Number* Description of Exhibit
(10) (lxxv) Amended and Restated Credit Agreement dated as of June
4, 1996 among NACCO Materials Handling Group, Inc., the Banks
party thereto, the Co-Arrangers and Co-Agents listed on the
signature page thereto and Morgan Guaranty Trust Company
of New York, as Agent.
(cxvii) Amendment No. 1 dated as of March 29, 1996 to the
Second Amended and Restated Credit Agreement dated as of
October 11, 1990, amended and restated as of April 18,
1995, among Hamilton Beach/Proctor-Silex, Inc.,
Proctor-Silex Canada Inc., Proctor-Silex S.A. de C.V., as
Borrowers, the Banks signatory thereto and the Chase
Manhattan Bank, N.A., as U.S. Agent, and The Chase Manhattan
Bank of Canada, as Canadian agent.
(11) Computation of Earnings Per Common Share
(27) Financial Data Schedule
*Numbered in accordance with Item 601 of Regulation S-K.
Exhibit 10(lxxv)
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 4, 1996
among NACCO MATERIALS HANDLING GROUP, INC., the BANKS party hereto, the
CO-ARRANGERS and CO-AGENTS listed on the signature pages hereof and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks listed on the signature pages
hereof and the Agent are parties to a $350,000,000 Credit Agreement dated as of
February 28, 1995 (the "Existing Agreement");
WHEREAS, each of Star Bank, N.A. and The Bank of Tokyo, Ltd. desires to
reduce its Commitment under the Existing Agreement to zero and cease to be a
party to the Existing Agreement on the Restatement Effective Date; and
WHEREAS, the parties hereto (other than Star Bank, N.A. and The Bank of
Tokyo, Ltd.) desire to amend the Existing Agreement as set forth herein and to
restate the Existing Agreement in its entirety to read as set forth in the
Existing Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Existing Agreement
has the meaning assigned to such term in the Existing Agreement. Each reference
to "hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Existing Agreement shall from and after the Restatement
Effective Date refer to the Existing Agreement as amended and restated hereby.
SECTION 2. Amendments to Definitions. Section 1.1 of the Existing Agreement
is amended as follows:
(a) The definitions of "Final Termination Date" and "Termination
Date" are each amended by replacing the date "February 28, 2000" with the date
"June 4, 2001".
(b) The following new definitions are added in the appropriate
alphabetical order:
"Amendment and Restatement" means the Amended and Restated Credit
Agreement dated as of June 4, 1996 among the parties hereto, amending
and restating this Agreement.
"Co-Agents" means the Banks identified on the signature pages of
the Amendment and Restatement as Co-Agents, solely in their capacity as
Co-Agents under the credit facility provided herein.
"Co-Arrangers" means the Banks identified on the signature pages
of the Amendment and Restatement as Co-Arrangers, solely in their
capacity as Co-Arrangers of the credit facility provided herein.
"Restatement Effective Date" means the date the Amendment and
Restatement becomes effective in accordance with Section 14 of the
Amendment and Restatement.
(c) The definition of "Bank" is amended to read as follows:
"Bank" means each bank (other than Star Bank, N.A. and The Bank of
Tokyo, Ltd.) listed on the signature pages of the Amendment and
Restatement, each Assignee which becomes a Bank pursuant to
Section 9.6(c), and their respective successors.
(d) Clause (i) of the definition of "Commitment" is amended to
read as follows:
(i) with respect to each Bank listed on the signature pages of the
Amendment and Restatement, the amount set forth opposite the
name of such Bank on said signature pages or
SECTION 3. New Pricing Schedule. The Pricing Schedule to the
Existing Agreement is deleted and replaced by the Pricing Schedule attached
hereto.
SECTION 4. Date From Which New Facility Fees Accrue. Section
2.10(a)(i) of the Existing Agreement is amended by deleting the reference to
"Effective Date" and substituting "Restatement Effective Date" therefor.
SECTION 5. List of Existing Investments Updated. Exhibit M to
the Existing Agreement is deleted and replaced by Exhibit M attached hereto.
SECTION 6. Increased Investments Permitted. Section 5.15 of the
Existing Agreement is amended as
follows:
(i) Clause (a) is amended to read as follows:
(a) Investments existing on June 4, 1996 and described in Exhibit
M attached hereto in an aggregate amount not exceeding $20,125,000; and
(ii) the word "and" at the end of clause (f) is deleted; clause
(g) is redesignated as clause (h); the reference in clause (e) to
"clause (g)"is changed to refer to "clause (h)"; and the following new
clause (g) is added:
(g) an Investment (described to the Banks as "Project Olive") made
after June 4, 1996 in a European manufacturer and distributor; provided
that such Investment shall not exceed $10,000,000 in amount; it being
understood that any portion of such Investment that exceeds such amount
shall be permitted if the excess above such amount is an Investment
permitted by clause (h) of this Section; and
SECTION 7. Specification of Certain Dates. (a) The words "the
date of this Agreement" in Sections 5.9 and 5.17 of the Existing Agreement are
changed to "February 28, 1995".
(b) The words "the date of this Agreement" in Section 8.2 of the
Existing Agreement and the words "the date hereof", wherever they appear in
Section 8.3 thereof, are changed to "June 4, 1996".
SECTION 8. Updated Representations as to Financial Information.
Section 4.4 of the Existing Agreement is amended to read as follows:
SECTION 4.4. Financial Information. (a) The consolidated balance sheet of
the Borrower and its Subsidiaries as of December 31, 1995 and the related
consolidated statements of income, cash flows and stockholders' equity for the
Fiscal Year then ended, reported on by Arthur Andersen LLP, a copy of which has
been delivered to each of the Banks, fairly present, in conformity with GAAP,
the consolidated financial position of the Borrower and its Subsidiaries as of
such date and their consolidated results of operations and cash flows for such
Fiscal Year.
(b) The unaudited consolidated balance sheet of the Borrower and
its Subsidiaries as of March 31, 1996 and the related unaudited
consolidated statements of income, cash flows and stockholders' equity
for the three months then ended, a copy of which has been delivered to
each of the Banks, fairly present, on a basis consistent with the
financial statements referred to in subsection (a) of this Section, the
consolidated financial position of the Borrower and its Subsidiaries as
of such date and their consolidated results of operations and cash
flows for such three-month period (subject to normal year-end
adjustments).
(c) Since March 31, 1996 there has been no material adverse change
in the business, financial position or results of operations of the
Borrower and its Subsidiaries, considered as a whole.
SECTION 9. Additional Representations and Warranties. The Borrower
represents and warrants that as of the Restatement Effective Date after giving
effect to the amendment and restatement of the Existing Agreement provided for
herein:
(a) no Default will have occurred and be continuing; and
(b) each representation and warranty of the Borrower set forth in
the Agreement will be true as though made on and as of the Restatement
Effective Date.
SECTION 10. Co-Arrangers and Co-Agents. The following new Section 7.10 is
added at the end of Article 7 of the Existing
Agreement:
SECTION 7.10. Co-Arrangers and Co-Agents. The Co-Arrangers and Co-Agents,
in their capacities as such, shall have no duties, obligations or liabilities of
any kind hereunder.
SECTION 11. Role of Star Bank, N.A. and The Bank of Tokyo, Ltd. Each of
Star Bank, N.A.and The Bank of Tokyo, Ltd. is each signing this Amendment and
Restatement solely for the purpose of reducing its Commitment to zero and
complying with the provisions of Section 9.5 of the Existing Agreement, which
states that any such non-pro rata reduction of the Commitments requires the
consent of all the Banks. After the Restatement Effective Date, Star Bank, N.A.
and The Bank of Tokyo, Ltd. will have no obligations under the Existing
Agreement as amended and restated hereby, but will continue to have, with
respect to events occurring prior to the Restatement Effective Date, the
obligations set forth in Section 7.6 of the Existing Agreement and the benefits
of the indemnification provisions set forth in Sections 2.16, 8.3, 8.4 and
9.3(b) thereof.
SECTION 12. Governing Law. This Amendment and Restatement shall be governed
by and construed in accordance with the laws of the State of New York.
SECTION 13. Counterparts. This Amendment and Restatement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 14. Conditions to Effectiveness. This Amendment and Restatement
shall become effective, and the Existing Agreement will be amended and restated
in its entirety to read as set forth in the Existing Agreement with the
amendments specified above, on the date when the Agent shall have received all
of the following:
(a) counterparts of this Amendment and Restatement signed by the
Borrower and all of the Banks that are parties to the Existing
Agreement (or, in the case of any party as to which an executed
counterpart shall not have been received, the Agent shall have
received, in form satisfactory to it, facsimile or other written
confirmation from such party of execution of a counterpart hereof by
such party);
(b) evidence satisfactory to the Agent that (i) all loans
outstanding under the Existing Agreement and (ii) all interest and fees
accrued thereunder to but excluding the Restatement Effective Date have
been paid in full or the Borrower has made arrangements satisfactory to
the Agent to pay such amounts in full on the Restatement Effective
Date;
(c) an opinion of Geoffrey D. Lewis, Esq., Vice President, General
Counsel and Secretary of the Borrower, substantially in the form of
Exhibit O hereto; and
(d) all documents the Agent may reasonably request relating to the
existence of the Borrower, the corporate authority for and the validity
of the Existing Agreement, as amended and restated hereby, and any
other matters relevant hereto, all in form and substance satisfactory
to the Agent;
provided that this Amendment and Restatement shall not become effective or be
binding on any party hereto unless all of the foregoing conditions are satisfied
not later than June 24, 1996. The Agent shall promptly notify the Borrower and
the Banks of the Restatement Effective Date, and such notice shall be conclusive
and binding on all parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended
and Restated Agreement to be duly executed as of the date first above written.
NACCO MATERIALS
HANDLING GROUP, INC.
By /s/ Jeffrey C. Mattern
Title: Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as a Co-Arranger and a Bank
By /s/ Patricia P. Lunka
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Co-Arranger and a Bank
By /s/ Michael J. Balok
Title: Managing Director
CITIBANK, N.A., as a Co-Arranger and a Bank
By /s/ Marjorie Futornick
Title: Vice President
THE BANK OF NOVA SCOTIA, as a
Co-Agent and a Bank
By /s/ Amanda S. Norsworthy
Title: Senior Team Leader-Loan Operations
THE FIRST NATIONAL BANK OF
CHICAGO, as a Co-Agent and a Bank
By /s/ L. Gene Buebe
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., as a Co-Agent and a Bank
By /s/ Brady S. Sadek
Title: Vice President & Deputy General Manager
ROYAL BANK OF CANADA, as a Co-Agent and a Bank
By /s/ Molly Drennan
Title: Manager, Corporate Banking
UNION BANK OF CALIFORNIA,
N.A., as a Co-Agent and a Bank
By /s/ Kevin McBride
Title: Vice President
KEY BANK OF WASHINGTON, as a Co-Agent and a Bank
By /s/ Kathleen J. Johanson
Title: Vice President
UNITED STATES NATIONAL BANK OF
OREGON, as a Co-Agent and a Bank
By /s/ Chris J. Karlin
Title: Vice President
<PAGE>
WELLS FARGO BANK, N.A., as a Co-Agent and a Bank
By /s/ Bill Hauck
Title: Vice President
BANK OF SCOTLAND
By /s/ Catherine M. Oniffrey
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.
By /s/ Christopher C. Wardwell
Title: Managing Director
CAISSE NATIONALE DE CREDIT AGRICOLE
By /s/ Dean Balice
Title: Senior Vice President Branch Manager
MELLON BANK, N.A.
By /s/ Mark J. Johnston
Title: Assistant Vice President
THE SUMITOMO BANK, LTD.
By /s/ Hiroyuki Iwami
Title: Joint General Manager
ISTITUTO BANCARIO SAN PAOLO
DI TORINO S.P.A.
By /s/ William DeAngelo
Title: First Vice President
By /s/ Wendell Jones
Title: Vice President
STAR BANK, N.A.
By /s/ John Barrett
Title: Vice President
THE BANK OF TOKYO, LTD. PORTLAND BRANCH
By /s/ M.W. Kringlen
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Patricia P. Lunka
Title: Vice President
<PAGE>
PRICING SCHEDULE
Subject to the last sentence of this Pricing Schedule, each of
the terms "Facility Fee Rate", "Euro-Dollar Margin" and "CD Margin" means, for
any day, the rate per annum set forth below in the row opposite such term and in
the column corresponding to the Pricing Level that applies on such day:
- -------------- ------------ ----------- ----------- ---------- ----------
Pricing Level Level I Level II Level III Level IV Level V
- -------------- ------------ ----------- ----------- ---------- ----------
Facility Fee 0.100% 0.125% 0.200% 0.250% 0.375%
Rate
- -------------- ------------ ----------- ----------- ---------- ----------
Euro-Dollar 0.200% 0.250% 0.300% 0.500% 0.625%
Margin
- -------------- ------------ ----------- ----------- ---------- ----------
CD Margin 0.325% 0.375% 0.425% 0.625% 0.750%
- -------------- ------------ ----------- ----------- ---------- ----------
For purposes of this Pricing Schedule, the following terms have the
following meanings:
"Average Debt Ratio" means, for any Fiscal Quarter, the ratio of (i)
Average Total Debt during such Fiscal Quarter to (ii) the sum of (x) such
Average Total Debt plus (y) Consolidated Net Worth at the end of such Fiscal
Quarter.
"Average Total Debt" means, for any Fiscal Quarter, the sum of (i) the
daily average amount of Debt of the Borrower and its domestic Subsidiaries
outstanding during such Fiscal Quarter and (ii) the quotient obtained by
dividing (x) the sum of the amount of Debt of the Borrower's foreign
Subsidiaries outstanding at the end of each month included in such Fiscal
Quarter by (y) the number of months included in such Fiscal Quarter; provided
that for purposes of this definition the term "Debt" does not include Debt owed
by the Borrower to any Subsidiary or Debt owed by any Subsidiary to the Borrower
or to another Subsidiary.
"Level I Pricing" applies during any Rate Period if the Average Debt
Ratio for the Preceding Fiscal Quarter was less than or equal to 0.37 to 1.
"Level II Pricing" applies during any Rate Period if the Average Debt
Ratio for the Preceding Fiscal Quarter was greater than 0.37 to 1 but less than
or equal to 0.42 to 1.
"Level III Pricing" applies during any Rate Period if the Average Debt
Ratio for the Preceding Fiscal Quarter was greater than 0.42 to 1 but less than
or equal to 0.47 to 1.
"Level IV Pricing" applies during any Rate Period if the Average Debt
Ratio for the Preceding Fiscal Quarter was greater than 0.47 to 1 but less than
or equal to 0.52 to 1.
"Level V Pricing" applies during any Rate Period if the Average Debt
Ratio for the Preceding Fiscal Quarter was greater than 0.52 to 1.
"Preceding Fiscal Quarter" means, with respect to any Rate Period, the
most recent Fiscal Quarter ended before such Rate Period begins.
"Rate Period" means any period from and including the 46th day of a
Fiscal Quarter to and including the 45th day of the immediately succeeding
Fiscal Quarter.
If the Interest Coverage Ratio is equal to or less than 3.25 to 1 at
the end of any Fiscal Quarter, (i) the Facility Fee Rate applicable during the
Rate Period that begins on the 46th day of the following Fiscal Quarter shall be
0.125% per annum higher than the applicable rate shown in the table above and
(ii) the Euro-Dollar Margin and CD Margin applicable during such Rate Period
shall each be 0.750% per annum higher than the applicable rate shown in the
table above.
Exhibit 10(cxvii)
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of March 29, 1996 to the SECOND AMENDED AND
RESTATED CREDIT AGREEMENT dated as of October 11, 1990, amended and restated as
of April 18, 1995, among HAMILTON BEACH/PROCTOR-SILEX, INC., PROCTOR-SILEX
CANADA INC., PROCTOR-SILEX S. A. de C. V., as Borrowers, the BANKS signatory
thereto and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as U. S. Agent, and
THE CHASE MANHATTAN BANK OF CANADA, as Canadian Agent.
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks and the Agent are parties to the Second
Amended and Restated Credit Agreement referred to above (as heretofore amended,
the "Credit Agreement") pursuant to which the Banks have agreed to extend credit
to the Borrowers as provided therein.
WHEREAS, pursuant to Section 2.09 of the Credit Agreement, the Company
has requested that the Revolving Credit Termination Date be extended to for an
Additional Period from the Existing Termination Date of May 8, 1998 to May 8,
1999.
WHEREAS, the Company has requested that the Banks consent to the
adoption of an amended Tax Sharing Agreement in the form of Exhibit A hereto to
take effect upon approval thereof by NACCO's Subsidiaries which are parties
thereto.
WHEREAS, the Company has requested the Banks and the Agents to amend the
Credit Agreement as provided herein.
WHEREAS, the Banks and the Agents are agreeable to such amendment on the
terms and conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein it is hereby agreed as follows:
1. Definitions.
All terms defined in the Credit Agreement shall be used herein as
defined in the Credit Agreement unless otherwise defined herein or the context
otherwise requires.
2. Consents.
(a) The Banks hereby consent to the Company's request pursuant to
Section 2.09 of the Credit Agreement to an extension of the Existing Termination
Date from May 8, 1998 to May 8, 1999.
(b) The Banks hereby consent to the adoption of an amended Tax Sharing
Agreement substantially in the form of Exhibit A hereto to take effect upon the
approval by NACCO's Subsidiaries which are parties thereto.
3. Amendments to the Agreement.
(a) Section 1.01 of the Credit Agreement is hereby amended by
deleting the definition of "Restricted Payments Period" in its entirety."
(b) Section 2.01(h) of the Credit Agreement is hereby amended by
deleting it in its entirety.
(c) Section 9.12 of the Credit Agreement is hereby amended by
restating it in full to read as follows:
"9.12 Restricted Payments. Except for the Holdings Dividend, the
Company shall not, and shall not permit any of the Subsidiaries to,
declare or make any Restricted Payments; provided that the Company may
make Restricted Payments subject to the satisfaction of the following
conditions on the date of such Restricted Payment and after giving effect
thereto:
(a) no Default has occurred or is continuing; and
(b) the aggregate amount of Restricted Payments made in any
fiscal year of the Company shall not exceed the lesser of (A) the
quotient of the sum of (i) Cash Flow of the Company and its
Subsidiaries for the Computation Period ending December 31 of the
immediately preceding fiscal year of the Company minus (ii) Fixed
Charges of the Company and its Subsidiaries for such Computation
Period divided by 1.05 and (B) the amount of the net income of the
Company and its Subsidiaries for such Computation Period; provided
that the Company shall be permitted to make Restricted Payments in
such fiscal year in excess of the limit set forth in this paragraph
(b) so long as (x) the Leverage Ratio as at the last day of such
Computation Period (computed by deducting from the Net Worth of the
Company the proposed Restricted Payment to be made pursuant to this
Section 9.12) is less than or equal to .35 to 1 and (y) the Interest
Coverage Ratio for such Computation Period is equal to or greater
than 4.0 to 1."
(d) Section 9.18(g) of the Credit Agreement is hereby amended by
restating it in full to read as follows:
"(g) Capital Lease Obligations of the Company and the
Subsidiaries in an aggregate principal amount outstanding (as to the Company and
the Subsidiaries taken together) not to exceed U. S. $20,000,000."
(e) Sections 9.21 (b) and (c) of the Credit Agreement is hereby
amended by restating it in full to read as follows:
"(b) The Company shall not, and shall not permit any of the
Subsidiaries to, enter into Interest Rate Protection Arrangements with respect
to interest on an aggregate notional principal amount at anytime in excess of
U. S. $120,000,000.
(c) The Company shall not, and shall not permit any of the
Subsidiaries to, enter into Foreign Currency Hedging Arrangements under which
exposure (defined as the total amount outstanding under such arrangements) of
the Company and the Subsidiaries exceeds U. S. $40,000,000 at any time."
3. Representations and Warranties.
In order to induce the Banks and the Agent to make this Amendment, the
Borrower hereby represents that:
(a) the execution and delivery of this Amendment and the performance of
the Obligors thereunder and under the Credit Agreement as amended hereby (i)
have been duly authorized by all necessary corporate action, will not violate
any provision of law, or the Borrower's charter or by-laws, or result in the
breach of or constitute a default, or require a consent, under any indenture or
other agreement or instrument to which the Borrower or any of its Subsidiaries
is a party or by which the Borrower or any of its Subsidiaries or their
respective property may be bound or affected, and (ii) each of this Amendment,
the Notes and the Credit Agreement as amended hereby constitutes the legal,
valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms;
(b) the representations and warranties in Article 8 of the Credit
Agreement are true and correct as of the Closing Date (hereinafter defined) as
if they were being made on such date; and
(c) no Event of Default or event which with notice or lapse of time, or
both, would constitute an Event of Default, has occurred and is continuing on
the Closing Date.
4. Conditions of Effectiveness.
This Amendment shall be effective (as of the date hereof) on the date
when all of the following conditions shall have been met, and such date shall be
the "Closing Date":
(a) Counterparts of this Amendment shall have been executed by the
Borrower, the Banks and the Agent;
(b) The Agent shall have received copies of all corporate resolutions of
the Borrower authorizing the execution and delivery of this Amendment and the
Notes and the performance of the Borrower thereunder and under the Credit
Agreement as hereby amended, certified as of the Closing Date by the Secretary
or Assistant Secretary of the Borrower;
(c) The Agent shall have received a certificate dated the Closing Date
specifying the names and titles and including specimen signatures of the
officers authorized to sign this Amendment and the Notes;
(d) All legal matters incident to the transactions contemplated in the
Credit Agreement as amended hereby shall be satisfactory to the Banks ,the Agent
and their respective counsel.
5. Miscellaneous.
(a) Except as specifically amended hereby, all the provisions of the
Credit Agreement shall remain unamended and in full force and effect, and the
term "Credit Agreement", and words of like import shall be deemed to refer to
the Credit Agreement as amended by this Amendment unless otherwise provided
herein or the context otherwise requires. Nothing herein shall affect the
obligations of the Borrower under the Credit Agreement with respect to any
period prior to the effective date hereof.
(b) This Amendment shall be governed by and construed and
interpreted in accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers as of the day and
year first above written.
HAMILTON BEACH/PROCTOR-SILEX, INC.
By James H. Taylor
Name: James H. Taylor
Title: Vice President, Treasurer
PROCTOR-SILEX CANADA INC.
By James H. Taylor
Name: James H. Taylor
Title: Treasurer
PROCTOR-SILEX S. A. DE C. V.
By James H. Taylor
Name: James H. Taylor
Title: Sole Administrator
<PAGE>
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as U. S. Agent
and a Bank
By Carol A. Ulmer
Name: Carol A. Ulmer
Title: Vice President
THE CHASE MANHATTAN BANK OF CANADA, as
Canadian Agent and a Bank
By Carol A.Ulmer
Name: Carol A. Ulmer
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By Marguerite Canestraro
Name: Marguerite Canestraro
Title: Vice President
THE BANK OF NOVA SCOTIA
By F.C.H. Ashby
Name: F.C.H. Ashby
Title:
BANK OF AMERICA ILLINOIS
By Lynn W. Stetson
Name Lynn W. Stetson
Title: Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE
By: Karen Coons
Name: Karen Coons
Title:
CRESTAR BANK
By: Christopher B. Werner
Name: Christopher B. Werner
Title: Vice President
SOCIETY NATIONAL BANK
By: Marianne T. Meil
Name: Marianne T. Meil
Title: Assistant Vice President
Exhibit 11
NACCO Industries, Inc. And Subsidiaries
Form 10-Q
Computation of Earnings per Share
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------------- -----------------------------
1996 1995 1996 1995
------------- ------------ ------------- --------------
(Amounts in thousands except per share data)
Income (loss):
<S> <C> <C> <C> <C>
Income before extraordinary charge $ 14,012 $ 14,732 $ 26,931 $ 27,537
Extraordinary charge, net-of-tax --- --- --- (1,280)
------------- ------------ ------------- --------------
Net income $ 14,012 $ 14,732 $ 26,931 $ 26,257
============= ============ ============= ==============
Per share amounts reported to stockholders - Note 1:
Income before extraordinary charge $ 1.56 $ 1.64 $ 3.00 $ 3.07
Extraordinary charge, net-of-tax --- --- --- (.14)
------------- ------------ ------------- --------------
Net income $ 1.56 $ 1.64 $ 3.00 $ 2.93
============= ============ ============= ==============
Primary:
Weighted average shares outstanding 8,984 8,965 8,979 8,961
Dilutive stock options - Note 2 12 12 12 11
------------- ------------ ------------- --------------
Totals 8,996 8,977 8,991 8,972
============= ============ ============= ==============
Per share amounts
Income before extraordinary charge $ 1.56 $ 1.64 $ 3.00 $ 3.07
Extraordinary charge, net-of-tax --- --- --- (.14)
------------- ------------ ------------- --------------
Net income $ 1.56 $ 1.64 $ 3.00 $ 2.93
============= ============ ============= ==============
Fully diluted - Note 3:
Weighted average shares outstanding 8,965 8,961
Dilutive stock options - Note 2 13 13
------------ --------------
Totals 8,978 8,974
============ ==============
Per share amounts
Income before extraordinary charge $ 1.64 $ 3.07
Extraordinary charge, net-of-tax --- (.14)
------------ --------------
Net income $ 1.64 $ 2.93
============ ==============
</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 and six months ended
June 30, 1996 are not disclosed because the quarter-end market price did not
exceed the average market price for the three and six month periods in 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000789933
<NAME> NACCO Industries, Inc.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 29,817
<SECURITIES> 0
<RECEIVABLES> 268,094
<ALLOWANCES> 7,874
<INVENTORY> 411,970
<CURRENT-ASSETS> 734,020
<PP&E> 541,379
<DEPRECIATION> 413,333
<TOTAL-ASSETS> 1,845,350
<CURRENT-LIABILITIES> 521,322
<BONDS> 0
0
0
<COMMON> 8,984
<OTHER-SE> 382,266
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<TOTAL-REVENUES> 1,120,368
<CGS> 904,731
<TOTAL-COSTS> 1,054,019
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 45,262
<INCOME-TAX> 17,603
<INCOME-CONTINUING> 26,931
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<NET-INCOME> 26,931
<EPS-PRIMARY> 3.00
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</TABLE>
