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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K ANNUAL REPORT
[X] ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 COMMISSION FILE NO. 1-9172
NACCO INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
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(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
5875 Landerbrook Drive,
Mayfield Heights, Ohio
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
34-1505819
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(I.R.S. EMPLOYER IDENTIFICATION NO.)
44124-4017
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(ZIP CODE)
Registrant's telephone number, including area code: (440) 449-9600
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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<S> <C>
Class A Common Stock, New York Stock Exchange
Par Value $1.00 Per Share
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Class B Common Stock, Par Value $1.00 Per Share
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirement for
the past 90 days.
YES X NO _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Aggregate market value of Class A Common Stock and Class B Common Stock held by
non-affiliates as of February 29, 2000:
$214,860,770
Number of shares of Class A Common Stock outstanding at February 29, 2000:
6,519,212
Number of shares of Class B Common Stock outstanding at February 29, 2000:
1,647,279
DOCUMENTS INCORPORATED BY REFERENCE
(a) Portions of the Company's 1999 Annual Report are incorporated herein by
reference in Part I and Part II; and
(b) Portions of the Company's Proxy Statement for its 2000 annual meeting
of stockholders are incorporated herein by reference in Part III.
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PART I
ITEM 1. BUSINESS
GENERAL
NACCO Industries, Inc. ("NACCO" or the "Company") is a holding company
that owns four principal operating subsidiaries that function in three principal
industries: lignite mining, lift trucks and housewares.
(a) North American Coal. The Company's wholly owned subsidiary, The
North American Coal Corporation, and its affiliated coal companies
(collectively, "NACoal"), mine and market lignite for use primarily as fuel for
power generation by electric utilities. NACoal also provides dragline mining
services for a limerock quarry near Miami, Florida. NACoal accounted for 10% and
31% of NACCO's revenues and operating profits, respectively, in 1999.
(b) NACCO Materials Handling Group. NACCO Materials Handling Group
consists of the Company's wholly owned subsidiary, NMHG Holding Co., and its
wholly owned subsidiaries (collectively, "NMHG"), including NACCO Materials
Handling Group, Inc. ("NMHG Wholesale") and NMHG Distribution Co. ("NMHG
Retail"). NMHG Wholesale primarily designs, engineers, manufactures and sells a
full line of lift trucks and replacement parts marketed worldwide under the
Hyster(R) and Yale(R) brand names. NMHG Retail primarily sells, rents and
services Hyster and Yale lift trucks and replacement parts through a network of
wholly owned retail dealerships. NMHG Wholesale accounted for 61% and 56% of
NACCO's revenues and operating profits, respectively, in 1999. NMHG Retail,
including the elimination of intercompany transactions, accounted for 6% and
(12%) of NACCO's revenues and operating profits, respectively, in 1999.
(c) NACCO Housewares Group. NACCO Housewares Group ("Housewares")
consists of two of the Company's wholly owned subsidiaries: Hamilton
Beach-Proctor-Silex, Inc. ("HB-PS"), one of the nation's leading manufacturers
and marketers of small electric motor and heat-driven appliances as well as
commercial products for restaurants, bars and hotels, and The Kitchen
Collection, Inc. ("KCI"), a national specialty retailer of brand-name
kitchenware, small electrical appliances and related accessories. Housewares
accounted for 23% and 32% of NACCO's revenues and operating profits,
respectively, in 1999.
Additional information relating to financial and operating data on a segment
basis (including NACCO and Other, which reduced operating profits by 7% in 1999)
is set forth under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's 1999 Annual
Report (the "1999 Annual Report") and in Note Eighteen to the Consolidated
Financial Statements in the 1999 Annual Report, which portions of the 1999
Annual Report are incorporated herein by reference.
NACCO was incorporated as a Delaware corporation in 1986 in connection
with the formation of a holding company structure for a predecessor corporation
organized in 1913.
SIGNIFICANT EVENTS
In September 1997, Phillips Coal Company and NACoal formed a joint
venture (75% owned by Phillips Coal and 25% owned by NACoal) to develop a new
lignite mine in Mississippi (the "Red Hills Mine"). The 30 year lignite sales
contract between the joint venture and the electric power facility was entered
into on April 1, 1998. Commercial operation of the electric power facility is
expected to begin in the fourth quarter of 2000.
On December 31, 1997, the Chinese government gave approval for the
formation of Shanghai Hyster Forklift Truck, Ltd., a joint venture (the
"Shanghai Hyster Joint Venture") among NMHG Wholesale (55% share),
Sumitomo-NACCO Materials Handling Group (30% share) and Shanghai Perfect Jinqiao
United Development Co. (15% share). The Shanghai Hyster Joint Venture acquired
land in the Pudong area of Shanghai and commenced construction of a
manufacturing facility in the second quarter of 1998. Production commenced in
the third quarter of 1999. The facility manufactures Hyster large and medium
capacity lift trucks primarily for sale in the Chinese domestic market. The
Shanghai Hyster Joint Venture also distributes forklift trucks it manufactures.
In 1998, NMHG, through NMHG Retail, embarked on a strategy of acquiring
or investing in certain independently owned Hyster and Yale and competitor
retail dealerships. As of December 31, 1999, NMHG Retail had acquired and
consolidated two dealerships in the United States, 11 dealerships in Europe
and nine dealerships in Asia-Pacific.
In December 1998, HB-PS entered into an agreement to lease a 500,000
square foot distribution center in Memphis, Tennessee. The new distribution
center has allowed HB-PS to consolidate its distribution network and is expected
to enhance efficiencies and customer service. The new distribution center became
operational during the second quarter of 1999.
In 1999, HB-PS entered into a private label arrangement with
Wal*Mart which is scheduled to continue for at least three years.
Wal*Mart had previously licensed certain trademarks from General Electric
Company for use with small kitchen and other appliances for exclusive sale in
Wal*Mart stores. Wal*Mart has selected several manufacturers to supply
these GE-branded products. HB-PS has been named the lead supplier for this
program. In addition to supplying a number of products, HB-PS is responsible for
the creation of the GE product line's "design language" and for providing other
services.
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BUSINESS SEGMENT INFORMATION
A. NORTH AMERICAN COAL
GENERAL
NACoal is engaged in the mining and marketing of lignite for use
primarily as fuel for power generation by electric utilities. Sales by NACoal
are made primarily through wholly owned project mining subsidiaries pursuant to
long-term, cost plus a profit per ton contracts. The utility customers have
arranged and guaranteed the financing of the development and operation of the
project mining subsidiaries. There is no recourse to NACCO or NACoal for the
financing of these subsidiary mines. NACoal also provides dragline mining
services for a limerock quarry near Miami, Florida. At December 31, 1999,
NACoal's operating mines consist of mines where the reserves were acquired and
developed by NACoal, except for the South Hallsville No. 1 Mine and the San
Miguel Lignite Mine where reserves are owned by the customers of these mines.
NACoal also earns royalty income from the lease of various coal and gas
properties. For further information as to the financing of the project mining
subsidiaries, see Note Nine to the Consolidated Financial Statements at page 50
of the 1999 Annual Report. Project mining subsidiaries accounted for 19% and 26%
of NACCO's assets and liabilities, respectively, as of December 31, 1999, while
their operations accounted for 9% and 33% of NACCO's revenues and operating
profits, respectively, in 1999.
SALES, MARKETING AND OPERATIONS
The principal customers of NACoal are electric utilities and a synfuels
plant. In 1999, sales to one customer, which supplies coal to four facilities,
accounted for 47% of NACoal's revenues compared with 45% and 46% in 1998 and
1997, respectively. The distribution of sales in the last five years has been as
follows:
DISTRIBUTION
------------
TOTAL
TONS SOLD ELECTRIC SYNFUELS
(MILLIONS) UTILITIES PLANT
---------- --------- -----
1999 31.3 80% 20%
1998 31.7 80% 20%
1997 29.9 80% 20%
1996 27.6 77% 23%
1995 26.7 76% 24%
The contracts under which the project mining subsidiaries were
organized provide that, under certain conditions of default, the customer(s)
involved may elect to acquire the assets (subject to the liabilities) or the
capital stock of the subsidiary, for an amount effectively equal to book value.
In one case, the customer may elect to acquire the stock of the subsidiary after
a specified period of time without reference to default, in exchange for certain
payments on coal thereafter mined. In addition, the customer for NACoal's
contract mining operation may elect to terminate the contract for convenience at
any time on or after July 1, 2000. NACoal does not know of any conditions of
default that currently exist.
The location, mine type, reserve data, coal quality characteristics,
customer, sales tonnage and contract expiration date for the mines operated by
NACoal in 1999 were as follows:
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<TABLE>
<CAPTION>
DEVELOPED LIGNITE MINING OPERATIONS
PROVEN AND PROBABLE RESERVES(1)
COMMITTED
UNDER AVERAGE SULFUR
CONTRACT UNCOMMITTED AVERAGE CONTENT PER
PROJECT MINING (MILLIONS (MILLIONS BTUS UNIT
SUBSIDIARIES MINE LOCATION TYPE OF MINE OF TONS) OF TONS) PER POUND OF WEIGHT
- --------------- ---- -------- ------------ ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
The Coteau Properties Freedom Mine(2) Beulah, ND Surface Lignite 509.4 ---- 6,767 0.8%
Company
The Falkirk Mining Falkirk Mine(2) Underwood, ND Surface Lignite 481.4 ---- 6,200 0.6%
Company
The Sabine Mining South Hallsville Hallsville, TX Surface Lignite (4) (4) (4) (4)
Company No. 1 Mine(2)
OTHER
-----
San Miguel Lignite San Miguel Jourdanton, TX Surface Lignite (5) (5) (5) (5)
Mining Operations Lignite Mine
Red River Mining Oxbow Mine Coushatta, LA Surface Lignite 9.0(7) 11.9(7) 6,722 0.7%
Company(6) --- ----
Total Developed 999.8 11.9
UNDEVELOPED MINING
OPERATIONS
----------
North Dakota ---- ---- ---- ---- 566.5 6,428 0.7%
Texas ---- ---- ---- ---- 169.3 6,208 0.9%
Eastern ---- ---- ---- 76.9 54.0 12,070 3.3%
Mississippi ---- ---- ---- 41.5(9) 24.7(9) 5,300 0.6%
---- ----
Total 118.4 814.5
Undeveloped
Total Developed/ 1,118.2 826.4
Undeveloped
<CAPTION>
DEVELOPED LIGNITE MINING OPERATIONS
PROVEN AND PROBABLE RESERVES(1)
1999 SALES
PROJECT MINING TONNAGE CONTRACT
SUBSIDIARIES CUSTOMER(S) (PLANT) (MILLIONS) EXPIRES
- -------------- ------------------- ---------- -------
<S> <C> <C> <C>
The Coteau Properties Dakota Coal Company 6.3 2007(3)
Company (Great Plains Synfuels
Plant)
Dakota Coal Company 5.5 2007(3)
(Antelope Valley
Station)
Dakota Coal Company 3.6 2007(3)
(Leland Olds Station)
Dakota Coal Company 1.0 2002
(Stanton Station of
United Power
Association)
The Falkirk Mining United Power 7.2 2020
Company Association/
Cooperative Power
Association
(Coal Creek Station)
The Sabine Mining Company Southwestern Electric 3.6 2020
Power Company
(Henry W. Pirkey Power
Plant)
OTHER
- -----
San Miguel Lignite Mining San Miguel Electric 3.4 2007
Operations Cooperative,
Inc. (San Miguel Power
Plant)
Red River Mining Central Louisiana 0.7(8) 2010
Company(6) Electric Company/
Southwestern Electric
Power Company
(Dolet Hills Power
Plant)
UNDEVELOPED MINING
OPERATIONS
- ----------
North Dakota ---- ---- ----
Texas ---- ---- ----
Eastern ---- ---- ----
Mississippi ---- ---- ----
<FN>
(1) The projected extraction loss is approximately ten percent (10%) of the proven
and probable reserves, except with respect to the reserves for the Eastern
Undeveloped Mining Operations, in which case the extraction loss is approximately
thirty percent (30%) of the proven and probable reserves.
(2) The contracts for these mines require the customer to cover the cost of the
ongoing replacement and upkeep of the plant and equipment of the mine.
(3) Although the term of the existing coal sales agreement terminates in 2007, the
term may be extended for six (6) additional periods of five years, or until 2037,
at the option of The Coteau Properties Company.
(4) The reserves of the South Hallsville No. 1 Mine are owned and controlled by the
customer and, therefore, have not been listed in the table.
(5) The reserves of the San Miguel Lignite Mine are owned and controlled by the
customer and, therefore, have not been listed in the table.
(6) Joint venture with Phillips Coal Company.
(7) These amounts represent the total (100%) of the joint venture reserves.
(8) This amount represents the total (100%) of the 1999 joint venture tonnage.
(9) These amounts represent 25% of the reserves owned and controlled by Mississippi
Lignite Mining Company, a joint venture with Phillips Coal Company, related to
the Red Hills Mine. The company's investment in Mississippi Lignite Mining
Company is accounted for under the equity method.
</TABLE>
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GOVERNMENT REGULATION
NACoal, like other coal producers, continues to be subject to Federal
and state health, safety and environmental regulations. The 2000 expenditures
which will be required for compliance with the provisions of governmental
regulations, including mined land reclamation and other air and water pollution
abatement requirements, are estimated at $6.7 million for certain closed mines
and are included in the caption "Self-Insurance Reserves and Other" in NACCO's
Consolidated Financial Statements in the 1999 Annual Report. The active
operations are required to make certain additional capital expenditures to
comply with such governmental regulations, which expenditures will be recovered
under the terms of the coal sales agreements with the utility customers.
NACoal's management believes that the Clean Air Act Amendments, which
became effective in 1990, have not had and will not have a material adverse
effect on its current operations, because substantially all of the power
generating facilities operated or supplied by NACoal's customers meet or exceed
the requirements of the Clean Air Act.
COMPETITION
The coal industry competes with other sources of energy, particularly
oil, gas, hydro-electric power and nuclear power. Among the factors that affect
competition are the price and availability of oil and natural gas, environmental
considerations, the time and expenditures required to develop new energy
sources, the cost of transportation, the cost of compliance with governmental
regulation of operations, the impact of Federal and state energy policies and
the current trend toward deregulation of energy markets. The ability of NACoal
to market and develop its reserves will depend upon the interaction of these
factors.
There is no official source of information on the subject, but NACoal
believes that it is the eighth largest coal producer in the United States.
EMPLOYEES
As of February 29, 2000, NACoal had approximately 1,050 employees.
B. NACCO MATERIALS HANDLING GROUP
GENERAL
During 1999, NACCO purchased from Sumitomo Heavy Industries, Inc. for
book value of $11.3 million the remaining two percent indirect interest in NACCO
Materials Handling Group, Inc. that it previously did not own. In addition, the
legal structure of the forklift business was reorganized to create NMHG Holding
Co., which now indirectly owns 100 percent of NMHG Wholesale and directly owns
100 percent of NMHG Retail. The new legal structure was formed primarily to
distinguish the wholesale operations from the retail operations of NMHG.
1. NMHG WHOLESALE
GENERAL
NMHG Wholesale is one of the leading worldwide designers, manufacturers
and marketers of forklift trucks, which comprise the largest segment of the
materials handling equipment industry. NMHG Wholesale accounted for 51% and 40%
of NACCO's assets and liabilities, respectively, as of December 31, 1999, while
its operations accounted for 61% and 56% of NACCO's revenues and operating
profits, respectively, in 1999.
THE INDUSTRY
Forklift trucks are used in a wide variety of business applications,
including manufacturing and warehousing. The materials handling industry,
especially in industrialized nations, is generally a mature industry, which has
historically been cyclical. Fluctuations in the rate of orders for forklift
trucks reflect the capital investment decisions of the customers, which in turn
depend upon the general level of economic activity in the various industries
served by such customers.
Since 1991, the worldwide market for forklift trucks has gradually
increased to approximately 530,000 units. During this time, however, individual
geographic markets have been subject to cyclicality. The North American market
for forklift trucks peaked in 1995, began a cyclical downturn in 1996 and then
recovered to a new high in 1999. The European market reversed a declining trend
in 1994 and grew steadily to a new high in 1998, which was almost matched in
1999. The Japanese market reversed a growth trend in 1998 and worsened in 1999
as a result of the widely publicized financial problems in Japan in 1998. The
market in Asia-Pacific (outside of Japan) continued modest growth in 1996 and
the first half of 1997. However, the late-1997 Asian financial crisis, which
continued through 1998, has negatively affected lift truck demand in that part
of the world. This downturn in demand continued in 1999.
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COMPANY OPERATIONS
NMHG Wholesale maintains product differentiation between Hyster and
Yale brands of forklift trucks and distributes its products through separate
worldwide dealer networks. Nevertheless, NMHG Wholesale has integrated
overlapping operations and takes advantage of economies of scale in design,
manufacturing and purchasing. NMHG Wholesale provides virtually all of its own
design, manufacturing and administrative functions. Products are marketed and
sold through two separate primarily independent dealer networks which retain and
promote the Hyster and Yale identities. In Japan, NMHG Wholesale has a 50% owned
joint venture with Sumitomo Heavy Industries Ltd. which is generally known as
Sumitomo-NACCO Materials Handling Group ("S-N"). S-N performs certain design
activities and produces lift trucks and components which it markets in Japan
under the name "Sumitomo Yale" and which are exported for sale by NMHG Wholesale
and its affiliates in the U.S., Europe and Asia-Pacific.
PRODUCT LINES
NMHG Wholesale designs and manufactures a wide range of forklift trucks
under both the Hyster and Yale brand names. The principal categories of forklift
trucks include electric rider, electric narrow-aisle and electric motorized hand
forklift trucks primarily for indoor use and internal combustion engine ("ICE")
forklift trucks for indoor or outdoor use. Forklift truck sales accounted for
approximately 83%, 83% and 82% of NMHG Wholesale's net sales in 1999, 1998 and
1997, respectively.
NMHG Wholesale also derives significant revenues from the sale of
service parts for its products. Profit margins on service parts are greater than
those on forklift trucks. The large population of Hyster and Yale forklift
trucks now in service provides a market for service parts. In addition to parts
for its own forklift trucks, NMHG Wholesale has a program in North America,
UNISOURCE(TM), and in Europe, MULTIQUIP(TM), designed to supply Hyster dealers
with replacement parts for most competing brands of forklift trucks. NMHG
Wholesale has a similar program, PREMIER(TM), for its Yale dealers in the
Americas and Europe. Accordingly, NMHG Wholesale dealers can offer their mixed
fleet customers a "one stop" supply source. Certain of these parts are
manufactured by and purchased from third party component makers. Service parts
accounted for approximately 17%, 17% and 18% of NMHG's net sales in 1999, 1998
and 1997, respectively. For further information on geographic regions, see Note
Eighteen to the Consolidated Financial Statements in the 1999 Annual Report.
COMPETITION
Although there is no official source for information on the subject,
NACCO believes that in 1999 NMHG Wholesale was one of the leading manufacturers
of forklift trucks in the world, based on the number of lift trucks sold.
The forklift truck industry is highly competitive. The worldwide
competitive structure of the industry is fragmented by product line and country;
however, each of the three largest forklift truck manufacturers have a
significantly greater market position on a unit volume basis than the other
manufacturers. The principal methods of competition among forklift truck
manufacturers are product performance, price, service and distribution networks.
The forklift truck industry also competes with alternative methods of materials
handling, including conveyor systems, automated guided vehicle systems and
manual labor. Global competition is also affected by a number of other factors,
including currency fluctuations, variations in labor costs and effective tax
rates, and the costs related to compliance with applicable regulations,
including export restraints, antidumping provisions and environmental
regulations.
NMHG Wholesale's position is strongest in North America, where it
believes it is the leader in unit sales of electric rider and ICE forklift
trucks and has a significant share of unit sales of electric narrow-aisle and
electric motorized hand forklift trucks. Although the European market is
fragmented and competitive positions vary from country to country, NMHG
Wholesale believes that it has a significant share of unit sales of electric
rider and ICE forklift trucks in Western Europe.
TRADE RESTRICTIONS
UNITED STATES
Since June 1988, Japanese-built ICE forklift trucks imported into the
United States, with lifting capacities between 2,000 and 15,000 pounds,
including finished and unfinished forklift trucks, chassis, frames and frames
assembled with one or more component parts, have been subject to an antidumping
duty order. Antidumping duty rates in effect through 1999 range from 7.39% to
56.81% depending on manufacturer or importer. The antidumping duty rate
applicable to imports from S-N is 51.33%. NMHG Wholesale does not currently
import for sale in the United States any forklift trucks or components subject
to the antidumping duty order. This antidumping duty order will remain in effect
until the Japanese manufacturers and importers satisfy the U.S. Department of
Commerce (the "Commerce Department") that they have not individually sold
merchandise subject to the order in the United States below foreign market value
for at least three consecutive years, or unless the Commerce Department or the
U.S. International Trade Commission finds that changed circumstances exist
sufficient to warrant the retirement of the order. The legislation implementing
the Uruguay round of GATT negotiations passed in 1994 provides that the
antidumping order was to be reviewed for possible retirement in 2000. All of
NMHG Wholesale's major Japanese competitors have either built or acquired
manufacturing or assembly facilities in the United States. NMHG Wholesale cannot
predict with any certainty if there have been or will be any negative effects to
it resulting from Japanese manufacturers sourcing their forklift products from
the United States. NMHG Wholesale prevailed in
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opposing retirement of the antidumping duty in 2000. The antidumping order will
again be reviewed for possible retirement in 2005.
EUROPE
There are no formal restraints on foreign forklift manufacturers in the
European Union. Several Japanese manufacturers have established manufacturing or
assembly facilities within the European Union.
PRODUCT DESIGN AND DEVELOPMENT
NMHG Wholesale spent $41.4 million, $38.6 million and $23.5 million on
product design and development activities in 1999, 1998 and 1997, respectively.
The Hyster and Yale products are differentiated for the specific needs of their
respective customer bases. NMHG Wholesale continues to pursue opportunities to
improve product costs by engineering new Hyster and Yale brand products with
component commonality.
Certain product design and development activities with respect to ICE
forklift trucks and some components are performed in Japan by S-N. S-N spent
approximately $4.1 million, $4.3 million and $4.1 million on product design and
development in 1999, 1998 and 1997, respectively.
BACKLOG
As of December 31, 1999, NMHG Wholesale's backlog of unfilled orders
for forklift trucks was approximately 21,500 units, or $362 million, of which
substantially all is expected to be filled during fiscal 2000. This compares to
the backlog as of December 31, 1998 of approximately 19,500 units, or $350
million. Decreased production and a slight increase in the rate of incoming
orders for forklift trucks in 1999 caused this slight increase in backlog
levels. Backlog represents unit orders to NMHG Wholesale's manufacturing plants
from independent dealerships, retail customers and contracts with the United
States government. Although these orders are believed to be firm, such orders
may be subject to cancellation or modification.
SOURCES
NMHG Wholesale has adopted a strategy of obtaining its raw materials
and principal components on a global basis from competitively priced sources.
NMHG Wholesale is dependent on a limited number of suppliers for certain of its
critical components, including diesel and gasoline engines and cast-iron
counterweights used on certain forklift trucks. There would be a material
adverse effect on NMHG Wholesale if it were unable to obtain all or a
significant portion of such components, or if the cost of such components was to
increase significantly under circumstances which prevented NMHG Wholesale from
passing on such increases to its customers.
DISTRIBUTION
The Hyster and Yale brand products are distributed through separate
highly developed worldwide dealer networks which are primarily independently
owned. For further information, see the discussion under the heading "NMHG
Retail" below. In addition, NMHG Wholesale has an internal sales force for each
brand to sell directly to major customers. In Japan, forklift truck products are
distributed by S-N.
FINANCING OF SALES
In 1998, NMHG Wholesale amended its existing joint venture agreement
with General Electric Capital Corporation ("GE Capital") to provide that GE
Capital would furnish leasing and financing services to selected Hyster dealers
in North America in addition to the Yale dealers GE Capital was already
supporting under the agreement. NMHG Wholesale owns 20% of the joint venture
entity, NMHG Financial Services, Inc., and is entitled to certain fees and
remarketing profits. In addition, NMHG Wholesale entered into an International
Operating Agreement with GE Capital pursuant to which GE Capital provides
leasing and financing services to Hyster and Yale dealers throughout the major
countries of the world and makes referral fee payments to NMHG Wholesale once
certain financial thresholds are reached. The agreements expire in 2003.
United States Hyster dealer sales and direct sales of Hyster products
in the United States are supported by leasing and financing services provided by
Hyster Credit Company pursuant to an operating agreement that expires in
December 2000.
EMPLOYEES
As of February 29, 2000, NMHG Wholesale had approximately 7,000
employees. Employees in the Danville, Illinois manufacturing and parts depot
operations (approximately 773 employees) are unionized, as are tool room
employees (approximately 22 employees) located in Portland, Oregon. A three-year
contract for the Danville union employees expires in June 2000. A one-year
contract with the Portland tool room union expires in October 2000. Employees at
the facilities in Berea, Kentucky; Sulligent, Alabama; and Greenville and
Lenoir, North Carolina are not represented by unions.
In Europe, shop employees in the Craigavon, Northern Ireland facility
are unionized. Employees in the Irvine, Scotland and Nijmegen, the Netherlands
facilities are not represented by unions. The employees in Nijmegen
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have organized a works council, as required by Dutch law, which performs a
consultative role on employment matters. In Mexico, shop employees are
unionized.
NMHG Wholesale's management believes its current labor relations with
both union and non-union employees are generally satisfactory and that it will
be able to renew the Danville and Portland union contracts in 2000 on acceptable
terms. However, there can be no assurances that NMHG Wholesale will be able to
successfully renegotiate these union contracts without work stoppages or on
acceptable terms. A prolonged work stoppage at either of these facilities could
materially adversely affect NMHG Wholesale's business and results of operations.
GOVERNMENT REGULATION
NMHG Wholesale's manufacturing facilities, in common with others in the
industry, are subject to numerous laws and regulations designed to protect the
environment, particularly with respect to disposal of plant waste. NMHG
Wholesale's products are also subject to various industry and governmental
standards. NMHG Wholesale's management believes that the impact of expenditures
to comply with such requirements will not have a material adverse effect on NMHG
Wholesale.
PATENTS, TRADEMARKS AND LICENSES
NMHG Wholesale is not materially dependent upon patents or patent
protection. NMHG Wholesale is the owner of the Hyster trademark, which is
currently registered in approximately 55 countries. The Yale trademark, which is
used on a perpetual royalty-free basis by NMHG Wholesale in connection with the
manufacture and sale of forklift trucks and related components, is currently
registered in approximately 150 countries. NMHG Wholesale's management believes
that its business is not dependent upon any individual trademark registration or
license, but that the Hyster and Yale trademarks are material to its business.
FOREIGN OPERATIONS
For a description of net sales and other financial information by
geographic region, see Note Eighteen to the Consolidated Financial Statements in
the 1999 Annual Report.
2. NMHG RETAIL
GENERAL
In 1998, NMHG, through NMHG Retail, embarked on a strategy of acquiring
or investing in certain independently owned Hyster and Yale and competitor
retail dealerships. NMHG Retail believes its expansion into retail distribution
will be beneficial in the long term because of the potential revenue that occurs
at the retail level from new and used unit sales, part sales, rental income and
the maintenance and repair business. NMHG Retail believes that ownership of
retail dealers will ensure strategic alignment of its manufacturing with its
distribution and will streamline its distribution channel. NMHG Retail's
ownership and operation of retail dealers will allow it to financially
strengthen this portion of its distribution organization. NMHG has experience
(prior to 1992) in operating company owned Hyster and Yale dealers and believes
it has the experience, personnel and resources to be successful in the retail
distribution end of the materials handling business. NMHG Retail intends to
further expand its retail operations over the next several years through
acquisitions, principally outside the United States, and growth of its existing
dealerships. For further information, see the 1999 Annual Report under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of Operations."
As of December 31, 1999, NMHG Retail has acquired and consolidated two
dealerships in the United States, 11 dealerships in Europe and nine dealerships
in Asia-Pacific. NMHG Retail, including the elimination of intercompany
transactions, accounted for 7% and 9% of NACCO's assets and liabilities,
respectively, as of December 31, 1999, while its operations accounted for 6% and
(12%) of NACCO's revenues and operating profits, respectively, in 1999.
THE INDUSTRY
Forklift trucks are sold at the retail level worldwide by independent
dealers and by dealerships owned by the original equipment manufacturer (OEM).
Some OEMs distribute exclusively through independent dealers, some OEMs
distribute exclusively through owned dealerships and some OEMs (such as NMHG
Wholesale), distribute through a combination of independent and owned
dealerships. NMHG believes there is a growing trend by OEMs in the forklift
industry to acquire their dealerships.
COMPANY OPERATIONS
An NMHG Retail dealership is authorized to sell either Hyster or Yale
brand materials handling equipment. These dealerships will typically also sell
allied lines of equipment from other manufacturers pursuant to dealer
agreements. Allied equipment includes such items as sweepers, aerial work
platforms, personnel carts, rough terrain forklifts and other equipment as well
as racking and shelving. The number and type of products available will vary
from dealership to dealership. A primary source of revenue for dealerships is
the sale of parts and service for equipment sold by the dealership. Service is
performed both in-shop and on-site. In addition to the outright sale of new and
used equipment, dealerships provide equipment for lease and for long or
short-term rental.
7
<PAGE> 9
NMHG Retail dealerships are granted a primary geographic territory by
NMHG Wholesale in which they operate. NMHG Retail operations are conducted at
branch facilities located in major cities within NMHG Retail's assigned area of
operations.
COMPETITION
The materials handling equipment sales and rental industry is highly
fragmented and competitive. NMHG Retail's competitors primarily include: its own
independent Hyster and Yale dealers, OEM owned dealers for competing brands, OEM
direct sales efforts, independently owned equipment rental companies,
independent parts operations and independent service shops. The forklift truck
industry also competes with alternative methods of materials handling, including
conveyor systems, automated guided vehicle systems and manual labor.
CUSTOMERS
NMHG Retail's customer base is highly diversified and ranges from
Fortune 100 companies to small businesses in virtually every type of
manufacturing and service industry. No single customer accounted for more than
10% of its revenues during 1999. NMHG Retail's customer base varies widely by
branch and is determined by several factors, including the equipment mix and
marketing focus of the particular branch and the business composition of the
local economy.
FINANCING OF SALES
NMHG Retail dealerships may obtain wholesale and retail financing for
the sale and leasing of equipment through NMHG Financial Services, a joint
venture between NMHG Wholesale and GE Capital. This affords these dealerships
with a wide variety of financial products at competitive rates. See also
"Financing of Sales" under NMHG Wholesale above.
EMPLOYEES
As of February 29, 2000, NMHG Retail had approximately 1,670 employees.
GOVERNMENT REGULATION
NMHG Retail's operations, like others in similar operations, are
subject to numerous laws and regulations designed to protect the environment,
particularly with respect to the disposal of cleaning solvents and wastewater
and the use of and disposal of petroleum products from underground and
above-ground storage tanks. NMHG Retail is currently assessing the nature of any
environmental problems and remediation requirements at its recently acquired
dealerships. Based on currently known facts, NMHG Retail's management believes
that any environmental remediation and compliance costs will not have a material
adverse effect on NMHG Retail. However, the assessment is in a preliminary stage
and no assurance can be given that environmental remediation and compliance
costs resulting from NMHG Retail's final assessment will not have material
adverse effect on NMHG Retail.
FOREIGN OPERATIONS
For a description of net sales and other financial information by
geographic region, see Note Eighteen to the Consolidated Financial Statements in
the 1999 Annual Report.
C. NACCO HOUSEWARES GROUP
GENERAL
In 1998, NACCO began reporting the results of HB-PS and KCI on a
combined basis as the NACCO Housewares Group. HB-PS believes that it is the
largest full-line manufacturer and marketer of small electric kitchen appliances
in North America based on market share of key product categories. HB-PS'
products are marketed primarily to retail merchants and wholesale distributors.
KCI is a national specialty retailer of kitchenware, small electric appliances
and related accessories that operated 150 retail stores as of December 31, 1999.
Stores are located primarily in factory outlet complexes that feature
merchandise of highly recognizable name-brand manufacturers, including HB-PS.
Housewares accounted for 19% and 14% of NACCO's assets and liabilities,
respectively, as of December 31, 1999, while its operations accounted for 23%
and 32% of NACCO's revenues and operating profits, respectively, in 1999.
SALES AND MARKETING
HB-PS manufactures and markets a wide range of small electric household
appliances, including motor-driven appliances such as blenders, food processors,
mixers and electric knives, and heat-generating appliances such as toasters,
irons, coffeemakers, indoor grills and toaster ovens. HB-PS also makes
commercial products for restaurants, bars and hotels. HB-PS generally markets
its "better" and "best" segments under the Hamilton Beach(R) brand and uses the
Proctor-Silex(R) brand for the "good" and "better" segments. HB-PS generally
markets its products primarily in North America, but also sells products in
Latin America, Asia-Pacific and Europe. Sales are generated predominantly by a
network of inside sales employees to mass merchandisers, national department
stores, variety store chains, drug store chains, catalog showrooms and other
retail outlets. Principal customers include Wal*Mart,
8
<PAGE> 10
Kmart, Target, Canadian Tire, Zellers, SAM'S Club, Dollar General, Sears and
Ames. Sales promotional activities are primarily focused on cooperative
advertising.
Because of the seasonal nature of the markets for small electric
appliances, HB-PS' management believes that backlog is not a meaningful
indicator of performance and is not a significant indicator of annual sales.
Backlog of orders as of December 31, 1999 was approximately $5.2 million. This
compares with the backlog as of December 31, 1998 of approximately $5.5 million.
This backlog represents customer orders, which may be canceled at any time prior
to shipment.
HB-PS' warranty program to the consumer consists generally of a limited
warranty lasting for two years for electric appliances. Under its warranty
program, HB-PS may repair or replace, at its option, those products found to
contain manufacturing defects.
Revenues and operating profit for Housewares are traditionally greater
in the second half of the year as sales of small electric appliances to
retailers and consumers increase significantly with the fall holiday selling
season. Because of the seasonality of purchases of its products, HB-PS incurs
substantial short-term debt to finance inventories and accounts receivable
during this period.
PRODUCT DESIGN AND DEVELOPMENT
The Housewares Group spent $6.6 million in 1999, $5.5 million in 1998
and $4.4 million in 1997 on product design and development activities. All of
these expenditures were made by HB-PS.
SOURCES
The principal raw materials used to manufacture and distribute HB-PS'
products are steel, aluminum, plastic and packaging materials. HB-PS' management
believes that adequate quantities of raw materials are available from various
suppliers.
COMPETITION
The small electric household appliance industry is highly competitive.
Based on publicly available information about the industry, HB-PS' management
believes it is the largest full-line manufacturer and marketer of small electric
kitchen appliances in North America based on key product categories.
As retailers generally purchase a limited selection of small electric
appliances, HB-PS competes with other suppliers for retail shelf space and
focuses its primary marketing efforts on retailers rather than consumers. In
1996, HB-PS also initiated consumer advertising for the Hamilton Beach(R) brand.
HB-PS' management believes that the principal areas of competition with respect
to its products are quality, price, product design, product features,
merchandising, promotion and warranty. HB-PS' management believes that it is
competitive in all of these areas.
As the outlet channel of the retail industry is approaching maturity,
the management of KCI continues to explore alternate areas of growth and
diversification. For the past several years, KCI has been testing alternative
store formats both within the outlet industry and the more traditional retail
environments. Not all of these formats have met KCI's rigorous financial
performance standards. KCI continues to explore alternate channels of
distribution, including distribution through the Internet.
GOVERNMENT REGULATION
HB-PS, in common with other manufacturers, is subject to numerous
Federal and state health, safety and environmental regulations. HB-PS'
management believes that the impact of expenditures to comply with such laws
will not have a material adverse effect on HB-PS. HB-PS' products are subject to
testing or regulation by Underwriters' Laboratories, the Canadian Standards
Association and various entities in foreign countries that review product
design.
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
HB-PS holds patents and trademarks registered in the United States and
foreign countries for various products. HB-PS' management believes that its
business is not dependent upon any individual patent, trademark, copyright or
license, but that the Hamilton Beach and Proctor-Silex trademarks are material
to its business.
EMPLOYEES
As of February 29, 2000, Housewares' work force consisted of
approximately 5,400 employees, most of which are not represented by unions. In
Canada, approximately 20 hourly employees at HB-PS' Picton, Ontario distribution
facility are unionized. These employees are represented by an employee
association which performs a consultative role on employment matters. On
February 1, 1999, a collective bargaining agreement, which expires on January
31, 2001, was executed for HB-PS' Saltillo manufacturing facility. There are
approximately 1,613 employees subject to the terms of this agreement.
The management of HB-PS and KCI believe their current labor relations
with both union and non-union employees are satisfactory.
9
<PAGE> 11
ITEM 2. PROPERTIES
A. NACCO
NACCO currently leases its corporate headquarters building in Mayfield
Heights, Ohio.
B. NACOAL
NACoal's proven and probable coal reserves and deposits (owned in fee
or held under leases which generally remain in effect until exhaustion of the
reserves if mining is in progress) are estimated at approximately 1.9 billion
tons, approximately 80% of which are lignite deposits in North Dakota. Reserves
are estimates of quantities of coal, made by NACoal's geological and engineering
staff, that are considered mineable in the future using existing operating
methods. Developed reserves are those which have been allocated to mines which
are in operation; all other reserves are classified as undeveloped. Information
concerning mine type, reserve data and coal quality characteristics for NACoal's
properties are set forth on the table on page 3 under "Item 1. Business -- A.
NACoal -- Sales, Marketing and Operations."
10
<PAGE> 12
C. NMHG
1. NMHG WHOLESALE
The following table summarizes certain information with respect to the
principal manufacturing, distribution and office facilities owned or leased by
NMHG Wholesale.
<TABLE>
<CAPTION>
LOCATION OWNED LEASED FUNCTION/PRINCIPAL PRODUCTS
- -------- ----- ------ ---------------------------
<S> <C> <C> <C>
Berea, Kentucky X Manufacture of forklift trucks
Craigavon, Northern Ireland X Manufacture of forklift trucks
Danville, Illinois X Manufacture of forklift trucks, components and service parts
Danville, Illinois X Distribution of service parts for both Hyster and Yale
forklift trucks
Fleet, England X Hyster and Yale forklift truck marketing and sales operations
for Europe, the Middle East and Africa
Greenville, North Carolina X NMHG Americas division headquarters;
Hyster and Yale marketing and sales
operations for NMHG Americas; design
and manufacture of forklift trucks
Irvine, Scotland X NMHG European division headquarters; manufacture of forklift
trucks
Lenoir, North Carolina X Manufacture of component parts for forklift trucks
Masate, Italy X Manufacture of forklift trucks
Modena, Italy X Manufacture of forklift trucks
Nijmegen, the Netherlands X Design and manufacture of forklift trucks and component
parts; distribution of service parts for forklift trucks
Obu, Japan X S-N headquarters; manufacture of forklift trucks and
component parts; distribution of service parts for forklift
trucks
Portland, Oregon X Counterbalanced forklift truck development center for design
and testing of forklift trucks, prototype equipment and
component parts
Portland, Oregon X NMHG global headquarters
Portland, Oregon X Manufacture of production tooling and prototype units
Ramos Arizpe, Mexico X Manufacturing facility for component parts of forklift trucks
(near Saltillo)
Sao Paulo, Brazil X Assembly of forklift trucks; distribution of service parts
for forklift trucks
Shanghai, China X Manufacturing facility for forklift trucks by Shanghai Hyster
Joint Venture
Sulligent, Alabama X Manufacture of component parts for forklift trucks
Sydney, Australia X Distribution of service parts for forklift trucks and staff
operations for NMHG Asia-Pacific division
</TABLE>
11
<PAGE> 13
2. NMHG RETAIL
NMHG Retail's owned dealerships currently operate 53 branch locations.
Of these locations, 10 are in the United States, 27 are in Europe and 16 are in
Asia-Pacific as shown below:
United States:
Kentucky (2)
Ohio (6)
Pennsylvania (1)
West Virginia (1)
Europe:
France (7)
Germany (11)
Netherlands (1)
United Kingdom (8)
Asia-Pacific:
Australia (15)
Singapore (1)
Branch locations generally include facilities for displaying equipment,
servicing equipment, parts storage and sales and administrative offices. NMHG
Retail owns two of its branch locations and leases 51 of its locations. Certain
of the leases were entered into (or assumed) in connection with acquisitions and
many of the lessors under these leases are former owners of businesses that NMHG
Retail acquired.
NMHG Retail geographic headquarters are shared with NMHG Wholesale in
Greenville, North Carolina; Fleet, England; and Sydney, Australia.
D. NACCO HOUSEWARES GROUP
The following table summarizes certain information with respect to the
principal manufacturing, distribution and office facilities owned or leased by
HB-PS.
<TABLE>
<CAPTION>
LOCATION OWNED LEASED FUNCTION/PRINCIPAL PRODUCTS
- -------- ----- ------ ---------------------------
<S> <C> <C> <C>
El Paso, Texas X Distribution center
Glen Allen, Virginia X Corporate headquarters
Juarez, Chihuahua, Mexico X Assembly of heat-driven products (two plants); plastic
molding facility (one plant)
Memphis, Tennessee X Distribution center
Mt. Airy, North Carolina X Manufacture of heat-driven products
Picton, Ontario, Canada X Distribution center
Southern Pines, North Carolina X Manufacture of commercial products;
service center for customer returns;
catalog sales center; parts
distribution center
Toronto, Ontario, Canada X Proctor-Silex Canada sales and administration headquarters
Washington, North Carolina X Customer service center
Saltillo, Mexico X Manufacture of heat-driven and motor products and plastic
molding facility
</TABLE>
Sales offices are also leased in several cities in the United States
and Canada.
KCI currently leases its corporate headquarters building, a
warehouse/distribution facility and a retail store in Chillicothe, Ohio. KCI
leases the remainder of its retail stores. A typical store is approximately
3,000 square feet.
ITEM 3. LEGAL PROCEEDINGS
Neither the Company nor any of its subsidiaries is a party to any
material pending legal proceeding other than ordinary routine litigation
incidental to its respective business.
12
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders of the Company.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The information under this Item is furnished pursuant to Instruction 3
to Item 401(b) of Regulation S-K.
There exists no arrangement or understanding between any executive
officer and any other person pursuant to which such executive officer was
elected. Each executive officer serves until his successor is elected and
qualified.
The table on the following pages sets forth the name, age, current
position and principal occupation and employment during the past five years of
the Company's executive officers.
13
<PAGE> 15
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION OTHER POSITIONS
- ---- --- ---------------- ---------------
<S> <C> <C> <C>
Alfred M. Rankin, Jr. 58 Chairman, President and Chief Executive
Officer of NACCO (since prior to 1995)
Charles A. Bittenbender 50 Vice President, General Counsel and
Secretary of NACCO (since prior to 1995)
Kenneth C. Schilling 40 Vice President and Controller of NACCO From June 1996 to May 1997, Controller of
(since May 1997) NACCO. From July 1995 to May 1996, Manager
of Tax and Budgeting of NACCO. From prior
to 1995 to June 1995, Manager of Tax of
NACCO.
J.C. Butler, Jr. 39 Vice President - Corporate Development From June 1996 to May 1997, Manager of
and Treasurer of NACCO (since May 1997) Corporate Development and Treasurer of
NACCO. From May 1995 to May 1996, Manager
of Corporate Development of NACCO. From
prior to 1995 to 1995, Associate at
McFarland Dewey & Co. (investment banking).
Lauren E. Miller 45 Vice President - Consulting Services of From January 1996 to May 1997, Director of
NACCO (since May 1997) Internal Consulting of NACCO. From prior
to 1995 to December 1995, Manager of
Strategy Development of NACCO.
</TABLE>
14
<PAGE> 16
PRINCIPAL OFFICERS OF THE COMPANY'S SUBSIDIARIES
A. NACOAL
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION OTHER POSITIONS
- ---- --- ---------------- ---------------
<S> <C> <C> <C>
Clifford R. Miercort 60 President and Chief Executive Officer
of NACoal (since prior to 1995)
Herschell A. Cashion 57 Senior Vice President - Business
Development of NACoal (since prior to
1995)
Charles B. Friley 58 Senior Vice President - Finance and From February 1995 to August 1999, Vice
Chief Financial Officer of NACoal President and Chief Financial Officer of
(since August 1999) NACoal
Thomas A. Koza 53 Vice President - Law and Administration
of NACoal; Secretary of NACoal (since
prior to 1995)
Clark A. Moseley 48 Vice President - Engineering of NACoal From prior to 1995 to June 1997, Manager,
(since June 1997) Engineering and Project Development,
NACoal.
K. Donald Grischow 52 Controller and Treasurer of NACoal
(since prior to 1995)
</TABLE>
15
<PAGE> 17
PRINCIPAL OFFICERS OF THE COMPANY'S SUBSIDIARIES
B. NMHG
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION OTHER POSITIONS
- ---- --- ---------------- ---------------
<S> <C> <C> <C>
Reginald R. Eklund 59 President and Chief Executive Officer
of NMHG (since prior to 1995)
Julie C. Hui 43 Controller of NMHG (since January 1995) From prior to 1995 to January 1995,
Controller, Burr Brown Corporation
(manufacturer of micro electronics and
systems products).
Ron J. Leptich 56 Vice President, Engineering and Big From June 1996 to October 1997, Vice
Trucks of NMHG (since October 1997) President, Engineering and Big Trucks,
Worldwide of NMHG. From prior to 1995
to June 1996, Vice President, Engineering,
Worldwide of NMHG.
Geoffrey D. Lewis 42 Vice President, Corporate Development, From September 1995 to June 1999, Vice
General Counsel and Secretary of NMHG President, General Counsel and Secretary
(since June 1999) of NMHG. From prior to 1995 to September
1995, Senior Vice President, General
Counsel and Corporate Secretary of
American Health Properties, Inc. (health
care facilities).
Jeffrey C. Mattern 47 Treasurer of NMHG (since prior to 1995)
William C. Maxwell 53 Vice President, Finance and Chief From prior to 1995 to August 1996, Vice
Financial Officer of NMHG (since August President Finance - Europe of NMHG.
1996)
Frank G. Muller 58 Vice President of NMHG; President, NMHG
Americas (since prior to 1995)
Ronald D. Muller 53 Vice President, Operations Strategy & From August 1996 to August 1998, Vice
Counterbalanced Products of NMHG (since President, Manufacturing and Information
August 1998) Services, Worldwide of NMHG. From February
1995 to August 1996, Vice President,Manufacturing
and Component Strategy, Worldwide of NMHG. From
prior to 1995 to February 1995, Vice President,
Manufacturing, Worldwide of NMHG.
Victoria L. Rickey 47 Vice President of NMHG; Managing From prior to 1995 to January 1995, Senior
Director, NMHG Europe, Africa and Vice President International Business
Middle East (since January 1995) Group, J.I. Case (manufacturer of
agricultural and construction equipment).
Edward W. Ryan 61 Vice President, Marketing of NMHG From February 1995 to November 1996, Vice
(since February 1995); President, NMHG President, Counterbalanced Trucks,
Asia-Pacific, China and Japan (since Worldwide of NMHG. From prior to 1995 to
November 1996) February 1995, Vice President, Yale
Materials Handling Corporation. From prior
to 1995 to February 1995, Vice President,
Yale Marketing.
</TABLE>
16
<PAGE> 18
PRINCIPAL OFFICERS OF THE COMPANY'S SUBSIDIARIES
C. NACCO HOUSEWARES GROUP
1. HB-PS
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION OTHER POSITIONS
- ---- --- ---------------- ---------------
<S> <C> <C> <C>
Richard E. Posey 53 President and Chief Executive Officer
of HB-PS (since September 1995)
Charles B. Hoyt 52 Senior Vice President - Finance and From prior to 1995 to January 1997, Vice
Chief Financial Officer of HB-PS (since President - Finance and Chief Financial
January 1997) Officer of HB-PS.
Clark S. Leslie 66 Senior Vice President - Operations of From March 1996 to December 1996, Vice
HB-PS (since January 1997) President - Operations of HB-PS. From
prior to 1995 to March 1996, General
Manager, Washington, N.C. plant, HB-PS.
Michael J. Morecroft 57 Senior Vice President - From prior to 1995 to December 1996, Vice
Engineering/Product Development of President, Engineering/Product Development
HB-PS (since January 1997) of HB-PS.
Judith B. McBee 52 Senior Vice President - Marketing of From prior to 1995 to December 1996,
HB-PS (since January 1997) Executive Vice President - Marketing of
HB-PS.
Paul C. Smith 53 Senior Vice President - Sales of HB-PS From prior to 1995 to January 1996, Senior
(since January 1996) Vice President - Sales of HB-PS.
George P. Manson, Jr. 46 Vice President, General Counsel and From March 1995 to July 1996, Corporate
Secretary of HB-PS (since July 1996) Counsel of American Home Products Corp.
(health care and consumer products
manufacturer). From prior to 1995 to
January 1995, Assistant General Counsel,
A.T. Massey Coal Company (mining company).
James H. Taylor 42 Vice President and Treasurer of HB-PS
(since prior to 1995)
</TABLE>
2. KCI
<TABLE>
<CAPTION>
<S> <C> <C>
NAME AGE CURRENT POSITION OTHER POSITIONS
Randolph J. Gawelek 52 President and Chief Executive Officer From March 1999 to August 1999, President,
of KCI (since August 1999). Secretary and Treasurer of KCI. From
December 1998 to March 1999, Executive Vice
President, Secretary and Treasurer of KCI. From
prior to 1995 to December 1998, Executive Vice
President and Secretary of KCI.
</TABLE>
17
<PAGE> 19
PART II
ITEM 5. MARKET FOR NACCO INDUSTRIES, INC. COMMON STOCK AND RELATED SECURITY
HOLDERS' MATTERS
The information required by this Item 5 is set forth on page 39 of the
1999 Annual Report under the heading "Market For NACCO Industries, Inc. Common
Stock and Related Security Holders' Matters," which information is incorporated
herein by reference.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The information required by this Item 6 with respect to selected
financial data is set forth on page 1 of the 1999 Annual Report under the
heading "Selected Financial and Operating Data," which information is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item 7 is set forth at pages 24
through 38 of the 1999 Annual Report under the heading "Management's Discussion
and Analysis of Financial Condition and Results of Operations," which
information is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item 7A is set forth at page 39 of the
1999 Annual Report under the heading "Quantitative and Qualitative Disclosures
About Market Risk," which information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item 8 is set forth at pages 40
through 63 of the 1999 Annual Report, which information is incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors of the Company will be set forth
in the 2000 Proxy Statement under the headings "Business to be Transacted -- 1.
Election of Directors," and "Section 16(a) Beneficial Ownership Reporting
Compliance," which information is incorporated herein by reference. Information
regarding the executive officers of the Company is included as Item 4A of Part I
as permitted by Instruction 3 to Item 401(b) of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to executive compensation will be set forth in
the 2000 Proxy Statement under the heading "Business to be Transacted -- 1.
Election of Directors" under the subheadings "-- Compensation of Directors," "--
Compensation of Executive Officers," "-- Stock Option Grants," "-- Stock Option
Exercises and Fiscal Year-End Values," "-- Long-Term Incentive Plans," "--
Compensation Committee Interlocks and Insider Participation" and "-- Pension
Plans," which information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to security ownership of certain beneficial
owners and management will be set forth in the 2000 Proxy Statement under the
heading "Business to be Transacted -- 1. Election of Directors -- Beneficial
Ownership of Class A Common and Class B Common," which information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain relationships and related
transactions will be set forth in the 2000 Proxy Statement under the heading
"Business to be Transacted -- 1. Election of Directors -- Compensation Committee
Interlocks and Insider Participation," which information is incorporated herein
by reference.
18
<PAGE> 20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) and (2) The response to Item 14(a)(1) and (2) is set forth
beginning at page F-1 of this Annual Report on Form 10-K.
(a) (3) Listing of Exhibits -- See the exhibit index beginning at
page X-1 of this Annual Report on Form 10-K.
(b) The Company did not file any current reports on Form 8-K during the
fourth quarter of 1999.
(c) The response to Item 14(c) is set forth beginning at page X-1 of
this Annual Report on Form 10-K.
(d) Financial Statement Schedules -- The response to Item 14(d) is set
forth beginning at page F-3 of this Annual Report on Form 10-K.
19
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 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.
By: /s/ Kenneth C. Schilling
------------------------------------
Kenneth C. Schilling
Vice President and Controller
(principal financial
and accounting officer)
March 30, 2000
20
<PAGE> 22
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Alfred M. Rankin, Jr. Chairman, President and March 30, 2000
- ------------------------------------ Chief Executive Officer (principal
Alfred M. Rankin, Jr. executive officer), Director
/s/ Kenneth C. Schilling Vice President and Controller March 30, 2000
- ------------------------------------ (principal financial and accounting
Kenneth C. Schilling officer)
* Owsley Brown II Director March 30, 2000
- ------------------------------------
Owsley Brown II
* Robert M. Gates Director March 30, 2000
- ------------------------------------
Robert M. Gates
* Leon J. Hendrix, Jr. Director March 30, 2000
- ------------------------------------
Leon J. Hendrix, Jr.
* David H. Hoag Director March 30, 2000
- ------------------------------------
David H. Hoag
* Dennis W. LaBarre Director March 30, 2000
- ------------------------------------
Dennis W. LaBarre
* Richard de J. Osborne Director March 30, 2000
- ------------------------------------
Richard de J. Osborne
* Ian M. Ross Director March 30, 2000
- ------------------------------------
Ian M. Ross
* John C. Sawhill Director March 30, 2000
- ------------------------------------
John C. Sawhill
* Britton T. Taplin Director March 30, 2000
- ------------------------------------
Britton T. Taplin
* David F. Taplin Director March 30, 2000
- ------------------------------------
David F. Taplin
* John F. Turben Director March 30, 2000
- ------------------------------------
John F. Turben
</TABLE>
*Kenneth C. Schilling, by signing his name hereto, does hereby sign
this Annual Report on Form 10-K on behalf of each of the above named and
designated directors of the Company pursuant to a Power of Attorney executed by
such persons and filed with the Securities and Exchange Commission.
/s/ Kenneth C. Schilling March 30, 2000
- ---------------------------------------
Kenneth C. Schilling, Attorney-in-Fact
21
<PAGE> 23
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) AND (2), AND ITEM 14(d)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1999
NACCO INDUSTRIES, INC.
MAYFIELD HEIGHTS, OHIO
F-1
<PAGE> 24
FORM 10-K
ITEM 14(a)(1) AND (2)
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of NACCO Industries,
Inc. and Subsidiaries are incorporated by reference in Item 8 beginning at page
40 of the 1999 Annual Report:
Consolidated Statements of Income and Comprehensive Income--Year ended
December 31, 1999, 1998 and 1997.
Consolidated Balance Sheets--December 31, 1999 and December 31, 1998.
Consolidated Statements of Cash Flows--Year ended December 31, 1999,
1998 and 1997.
Consolidated Statements of Stockholders' Equity--Year ended December
31, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements.
NACCO Industries, Inc. Report of Management.
Report of Independent Public Accountants--Year ended December 31, 1999,
1998 and 1997.
The following consolidated financial statement schedules of NACCO
Industries, Inc. and Subsidiaries are included in Item 14(d):
Schedule I -- Condensed Financial Information of the Parent
Schedule II -- Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.
F-2
<PAGE> 25
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of NACCO Industries, Inc.:
We have audited in accordance with auditing standards generally
accepted in the United States, the consolidated financial statements included in
NACCO Industries, Inc.'s annual report to stockholders, incorporated by
reference in this Form 10-K, and have issued our report thereon dated February
8, 2000. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedules listed in the index are the
responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic consolidated financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
/s/ Arthur Andersen LLP
Cleveland, Ohio
February 8, 2000
F-3
<PAGE> 26
<TABLE>
<CAPTION>
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF THE PARENT
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PARENT COMPANY CONDENSED BALANCE SHEETS
Year ended December 31
------------------------------
1999 1998
-------- --------
(In millions)
<S> <C> <C>
Current assets $ 0.2 $ 0.6
Current intercompany accounts receivable, net 0.4 5.5
Other assets 0.4 0.2
Investment in subsidiaries
NMHG 468.7 451.0
Housewares 163.9 150.1
NACoal 23.2 15.1
Bellaire 0.5 0.7
-------- --------
656.3 616.9
Property, plant and equipment, net 1.2 1.6
Deferred income taxes 20.6 21.8
-------- --------
Total Assets $ 679.1 $ 646.6
======== ========
Current liabilities $ 8.5 $ 10.0
Reserve for future interest on UMWA obligation 55.3 57.1
Note payable to Bellaire 36.0 38.4
Notes payable to other subsidiaries 12.7 18.0
Deferred income taxes and other 4.4 4.8
Stockholders' equity 562.2 518.3
-------- --------
Total Liabilities and Stockholders' Equity $ 679.1 $ 646.6
======== ========
</TABLE>
See Notes to Parent Company Financial Statements.
F-4
<PAGE> 27
<TABLE>
<CAPTION>
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF THE PARENT
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PARENT COMPANY STATEMENTS OF INCOME
Year ended December 31
--------------------------------------------------
1999 1998 1997
------- -------- -------
(In millions)
<S> <C> <C> <C>
Income (expense):
Intercompany interest expense $ (0.7) $ (1.0) $ (2.3)
Other - net (2.6) 0.9 1.9
------- -------- -------
(3.3) (0.1) (0.4)
Administrative and general expenses 8.9 10.5 8.4
------- -------- -------
Loss before income taxes (12.2) (10.6) (8.8)
Income tax benefit (4.6) (4.2) (3.4)
------- -------- -------
Net loss before equity in earnings of
subsidiaries (7.6) (6.4) (5.4)
Equity in earnings of subsidiaries 60.7 108.7 67.2
------- -------- -------
Net income $ 53.1 $ 102.3 $ 61.8
======= ======== =======
</TABLE>
See Notes to Parent Company Financial Statements.
F-5
<PAGE> 28
<TABLE>
<CAPTION>
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF THE PARENT
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PARENT COMPANY STATEMENTS OF CASH FLOWS
Year ended December 31
---------------------------
1999 1998 1997
------- ------- -------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 53.1 $ 102.3 $ 61.8
Equity in earnings of subsidiaries (60.7) (108.7) (67.2)
------- ------- -------
Parent company only net loss (7.6) (6.4) (5.4)
Deferred income taxes 1.2 (0.6) (1.3)
Income taxes net of intercompany tax payments (1.4) (6.8) 6.0
Working capital changes (0.3) 3.4 (1.3)
Changes in current intercompany amounts 2.6 7.9 (1.8)
Changes in reserve for future interest on UMWA obligation (1.8) (2.1) (2.3)
Items of income or expense not requiring cash outlays 0.4 0.4 0.4
------- ------- -------
Net cash used for operating activities (6.9) (4.2) (5.7)
INVESTING ACTIVITIES
Dividends and advances received from subsidiaries 13.9 15.4 14.8
Notes payable to Bellaire (2.4) (0.8) (1.3)
Expenditures for equipment (0.1) (0.1) (0.1)
------- ------- -------
Net cash provided by investing activities 11.4 14.5 13.4
FINANCING ACTIVITIES
Cash dividends (7.0) (6.6) (6.3)
Purchases of treasury stock - (4.7) (2.8)
Treasury stock sales under stock option and
Directors' compensation plans - net 2.5 1.0 1.0
Other - net - - 0.1
------- ------- -------
Net cash used for financing activities (4.5) (10.3) (8.0)
------- ------- -------
CASH AND CASH EQUIVALENTS
Increase (decrease) for the period - - (0.3)
Balance at the beginning of the period - - 0.3
------- ------- -------
Balance at the end of the period $ - $ - $ -
======= ========= =======
</TABLE>
See Notes to Parent Company Financial Statements.
F-6
<PAGE> 29
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF THE PARENT
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
The Notes to Consolidated Financial Statements, incorporated by reference
elsewhere in this Form 10-K, are hereby incorporated by reference into these
Notes to Parent Company Financial Statements.
NOTE A - LONG-TERM OBLIGATIONS AND GUARANTEES
NACCO Industries, Inc. ("NACCO" the parent company) is a holding company which
owns four operating subsidiaries. It is NACCO's policy not to guarantee the debt
of such subsidiaries.
NOTE B - CASH DIVIDENDS AND ADVANCES TO NACCO
Dividends received from the subsidiaries were $16.6 million in 1999, $22.6
million in 1998, and $37.7 million in 1997.
NOTE C - UNRESTRICTED CASH
The amount of unrestricted cash available to NACCO, included in Investment in
subsidiaries was $36.2 million at December 31, 1999.
F-7
<PAGE> 30
<TABLE>
<CAPTION>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- ------------------------------------------------------------------------------------------------------------------------------------
COL A. COL B. COL C. COL D. COL E.
- ------------------------------------------------------------------------------------------------------------------------------------
Additions (D)
-------------------------
Balance at Charged to Charged to Balance at
Beginning of Costs and Other Accounts Deductions End of
Description Period Expenses --Describe --Describe Period
- ------------------------------------------------------------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C> <C> <C> <C> <C>
1999
Reserves deducted from asset accounts:
Allowance for doubtful accounts $ 7.8 $ 2.2 $ 0.2(C) $ 2.8 (A) $ 7.4
Allowance for discounts,
adjustments and returns 7.8 23.1 - 21.6 (B) 9.3
Reserve for losses on inventory 21.5 8.6 (0.4)(C) 6.8 (A) 22.9
Valuation allowance against
deferred tax assets 6.7 1.2 - - 7.9
1998
Reserves deducted from asset accounts:
Allowance for doubtful accounts 6.3 2.5 0.1 (C) 1.1 (A) 7.8
Allowance for discounts,
adjustments and returns 7.8 17.4 - 17.4 (B) 7.8
Reserve for losses on inventory 15.8 7.2 0.5 (C) 2.0 (A) 21.5
Valuation allowance against
deferred tax assets 5.9 0.8 - - 6.7
1997
Reserves deducted from asset accounts:
Allowance for doubtful accounts 5.0 2.0 (0.1)(C) 0.6 (A) 6.3
Allowance for discounts,
adjustments and returns 7.5 16.7 - 16.4 (B) 7.8
Reserve for losses on inventory 16.1 9.8 (3.3)(C) 6.8 (A) 15.8
Valuation allowance against
deferred tax assets - 5.9 - - 5.9
Note (A) - Write-offs, net of recoveries.
Note (B) - Payments.
Note (C) - Subsidiary's foreign currency translation adjustments and other.
Note (D) - Balances which are not required to be presented and those which are
immaterial have been omitted.
</TABLE>
F-8
<PAGE> 31
EXHIBIT INDEX
(3) Articles of Incorporation and By-laws.
(i) Restated Certificate of Incorporation of the Company is
incorporated by reference to Exhibit 3(i) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172.
(ii) Restated By-laws of the Company are incorporated by reference to
Exhibit 3(ii) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, Commission File Number 1-9172.
(4) Instruments defining the rights of security holders, including indentures.
(i) The Company by this filing agrees, upon request, to file with the
Securities and Exchange Commission the instruments defining the rights of
holders of Long-Term debt of the Company and its subsidiaries where the total
amount of securities authorized thereunder does not exceed 10% of the total
assets of the Company and its subsidiaries on a consolidated basis.
(ii) The Mortgage and Security Agreement, dated April 8, 1976, between
The Falkirk Mining Company (as Mortgagor) and Cooperative Power Association and
United Power Association (collectively as Mortgagee) is incorporated by
reference to Exhibit 4(ii) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, Commission File Number 1-9172.
(iii) Amendment No. 1 to the Mortgage and Security Agreement, dated as
of December 15, 1993, between Falkirk Mining Company (as Mortgagor) and
Cooperative Power Association and United Power Association (collectively as
Mortgagee) is incorporated by reference to Exhibit 4(iii) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997,
Commission File Number 1-9172.
(iv) Stockholders' Agreement, dated as of March 15, 1990, among the
signatories thereto, the Company and Ameritrust Company National Association, as
depository, is incorporated herein by reference to Exhibit 2 to the Schedule 13D
filed on March 29, 1990 with respect to the Class B Common Stock, par value
$1.00 per share, of NACCO Industries, Inc.
(v) Amendment to Stockholders' Agreement, dated as of April 6, 1990,
among the signatories thereto, the Company and Ameritrust Company National
Association, as depository, is incorporated herein by reference to Exhibit 4 to
Amendment No. 1 to the Schedule 13D filed on April 11, 1990 with respect to the
Class B Common Stock, par value $1.00 per share, of NACCO Industries, Inc.
(vi) Amendment to Stockholders' Agreement, dated as of April 6, 1990,
among the signatories thereto, the Company and Ameritrust Company National
Association, as depository, is incorporated herein by reference to Exhibit 5 to
Amendment No. 1 to the Schedule 13D filed on April 11, 1990 with respect to the
Class B Common Stock, par value $1.00 per share, of NACCO Industries, Inc.
(vii) Amendment to Stockholders' Agreement, dated as of November 17,
1990, among the signatories thereto, the Company and Ameritrust Company National
Association, as depository, is incorporated herein by reference to Amendment No.
2 to the Schedule 13D filed on March 18, 1991 with respect to the Class B Common
Stock, par value $1.00 per share, of NACCO Industries, Inc.
(viii) Amendment to Stockholders' Agreement, dated November 14, 1996,
adding CTR Family Associates, L.P. as a Participating Stockholder, among the
signatories thereto, the Company, and Key Bank, N.A. (successor to Ameritrust
Company National Association), as depository, is incorporated herein by
reference to Amendment No. 3 to the Schedule 13D filed on November 26, 1996,
with respect to the Class B Common Stock, par value $1.00 per share, of NACCO
Industries, Inc.
(ix) Amendment to Stockholders' Agreement, dated as of November 14,
1996, adding Rankin Mangement, Inc. as a Participating Stockholder, among the
signatories thereto, the Company, and Key Bank, N.A. (successor to Ameritrust
Company National Association), as depository, is incorporated herein by
reference to Amendment No. 3 to the Schedule 13D filed on November 26, 1996,
with respect to the Class B Common Stock, par value $1.00 per share, of NACCO
Industries, Inc.
(x) Amendment to Stockholders' Agreement, dated as of April 9, 1998, by
and among KeyCorp Shareholder Services, Inc., the Company, the Participating
Stockholders (as defined therein) and the New Participating Stockholders (as
defined therein) is incorporated by reference to Amendment No. 6 to the Schedule
13D filed on March 25, 1999, with respect to the Class B Common Stock, par value
$1.00 per share, of NACCO Industries, Inc.
(xi) Amendment to Stockholders' Agreement, dated as of December 26,
1998, by and among KeyCorp Shareholder Services, Inc., the Company, the
Participating Stockholders (as defined therein) and the New Participating
Stockholders (as defined therein) is incorporated by reference to Amendment No.
6 to the Schedule 13D filed on March 25, 1999, with respect to the Class B
Common Stock, par value $1.00 per share, of NACCO Industries, Inc.
X-1
<PAGE> 32
(xii) Amendment to Stockholders' Agreement, dated as of November 30,
1999, by and among First Chicago Trust Company of New York, the Company and the
Participating Stockholders (as defined therein) is incorporated by reference to
Amendment No. 7 to the Schedule 13D filed on March 30, 2000, with respect to the
Class B Common Stock, par value $1.00 per share, of NACCO Industries, Inc.
(xiii) Amendment to Stockholders' Agreement, dated as of November 30,
1999, by and among First Chicago Trust Company of New York, the Company and the
Participating Stockholders (as defined therein) is incorporated by reference to
Amendment No. 7 to the Schedule 13D filed on March 30, 2000, with respect to the
Class B Common Stock, par value $1.00 per share, of NACCO Industries, Inc.
(xiv) Amendment to Stockholders' Agreement, dated as of March 30, 2000,
by and among First Chicago Trust Company of New York, the Company, the
Participating Stockholders (as defined therein) and the New Participating
Stockholders (as defined therein) is incorporated by reference to Amendment No.
7 to the Schedule 13D filed on March 30, 2000, with respect to the Class B
Common Stock, par value $1.00 per share, of NACCO Industries, Inc.
(10) Material contracts.
*(i) The NACCO Industries, Inc. 1975 Stock Option Plan (as amended and
restated as of July 17, 1986) is incorporated herein by reference to Exhibit
10(i) to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, Commission File Number 1-9172.
*(ii) Form of Incentive Stock Option Agreement for incentive stock
options granted before 1987 under The NACCO Industries, Inc. 1975 Stock Option
Plan (as amended and restated as of July 17, 1986) is incorporated herein by
reference to Exhibit 10(ii) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991, Commission File Number 1-9172.
*(iii) Form of Incentive Stock Option Agreement for incentive stock
options granted after 1986 under The NACCO Industries, Inc. 1975 Stock Option
Plan (as amended and restated as of July 17, 1986) is incorporated herein by
reference to Exhibit 10(iii) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991, Commission File Number 1-9172.
*(iv) Form of Non-Qualified Stock Option Agreement under The NACCO
Industries, Inc., 1975 Stock Option Plan (as amended and restated as of July 17,
1986) is incorporated herein by reference to Exhibit 10(iv) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1991,
Commission File Number 1-9172.
*(v) The NACCO Industries, Inc. 1981 Stock Option Plan (as amended and
restated as of July 17, 1986) is incorporated herein by reference to Exhibit
10(v) to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, Commission File Number 1-9172.
*(vi) Form of Non-Qualified Stock Option Agreement under The NACCO
Industries, Inc. 1981 Stock Option Plan (as amended and restated as of July 17,
1986) is incorporated herein by reference to Exhibit 10(vi) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1991,
Commission File Number 1-9172.
*(vii) Form of Incentive Stock Option Agreement for incentive stock
options granted before 1987 under The NACCO Industries, Inc. 1981 Stock Option
Plan (as amended and restated as of July 17, 1986) is incorporated herein by
reference to Exhibit 10(vii) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991, Commission File Number 1-9172.
*(viii) Form of Incentive Stock Option Agreement for incentive stock
options granted after 1986 under The NACCO Industries, Inc. 1981 Stock Option
Plan (as amended and restated as of July 17, 1986) is incorporated herein by
reference to Exhibit 10(viii) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991, Commission File Number 1-9172.
*(ix) The Retirement Benefit Plan for Alfred M. Rankin, Jr., effective
as of January 1, 1994 is incorporated herein by reference to Exhibit 10 (ix) to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1994, Commission File Number 1-9172.
*(x) Amendment No. 1, dated as of March 15, 1995, to the Retirement
Benefit Plan for Alfred M. Rankin, Jr. is incorporated herein by reference to
Exhibit 10 (x) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, Commission File Number 1-9172.
*(xi) Instrument of Adoption and Merger for NACCO Industries, Inc. for
the NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (As Amended and
Restated Effective October 1, 1994) dated December 30, 1994, is incorporated
herein by reference to Exhibit 10(xxii) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994, Commission File Number 1-9172.
X-2
<PAGE> 33
*(xii) Instrument of Withdrawal and Transfer of Liabilities from The
North American Coal Corporation Deferred Compensation Plan for Management
Employees, effective as of December 31, 1994, is incorporated herein by
reference to Exhibit 10(xxiii) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, Commission File Number 1-9172.
*(xiii) NACCO Industries, Inc. Annual Incentive Compensation Plan,
effective as of January 1, 1999, is incorporated herein by reference to as
Exhibit 10(xx) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, Commission File Number 1-9172.
*(xiv) NACCO Industries, Inc. Supplemental Annual Incentive
Compensation Plan, effective as of January 1, 1996, is incorporated herein by
reference to Exhibit 10(xiv) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, Commission File Number 1-9172.
*(xv) NACCO Industries, Inc. Executive Long-Term Incentive Compensation
Plan, amended and restated as of January 1, 1996, is attached incorporated
herein by reference to Exhibit 10(xv) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996, Commission File Number 1-9172.
(xvi) Assumption Agreement, made as of December 20, 1991, between the
Company and Citicorp North America, Inc., as agent is incorporated herein by
reference to Exhibit 10(xciii) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991, Commission File Number 1-9172.
(xvii) Intentionally left blank.
*(xviii) NACCO Industries, Inc. Non-Employee Directors' Equity
Compensation Plan, effective January 1, 1992, is incorporated by reference to
Exhibit 10(cxi) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, Commission File Number 1-9172.
*(xix) Amendment No. 2, dated June 30, 1995, to the Retirement Benefit
Plan for Alfred M. Rankin, Jr. (as amended and restated effective January 1,
1994) is incorporated herein by reference to Exhibit 10 (clxxi) to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, Commission
File Number 1-9172.
*(xx) NACCO Industries, Inc. Annual Incentive Compensation Plan,
effective as of January 1, 2000, is attached hereto as Exhibit 10(xx).
*(xxi) Amendment No. 3, dated as of September 13, 1999, to the
Retirement Benefit Plan for Alfred M. Rankin, Jr. (as amended and restated
effective January 1, 1994) is attached hereto as Exhibit 10(xxi).
(xxii) - (xxx) Intentionally left blank.
*(xxxi) The North American Coal Annual Incentive Plan, effective as of
January 1, 1999, is incorporated herein by reference to Exhibit 10(xlv) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1998,
Commission File Number 1-9172.
*(xxxii) Instrument of Merger, Amendment and Transfer of Sponsorship of
Benefit Plans, effective as of August 31, 1994, is incorporated herein by
reference to Exhibit 10(xxviii) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, Commission File Number 1-9172.
(xxxiii) Credit Agreement, dated as of September 27, 1991, among The
North American Coal Corporation, Citibank, N.A., Ameritrust Company National
Association and Morgan Guaranty Trust Company of New York, as agent is
incorporated herein by reference to Exhibit 10(xcii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File
Number 1-9172.
(xxxiv) Subordination Agreement, dated September 27, 1991, among The
North American Coal Corporation, the Company and Morgan Guaranty Trust Company
of New York, as agent, is incorporated herein by reference to Exhibit 10(xciv)
to the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1991, Commission File Number 1-9172.
*(xxxv) The North American Coal Corporation Value Appreciation Plan, as
amended on March 11, 1992, is incorporated herein by reference to Exhibit
10(xcviii) to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, Commission File Number 1-9172.
*(xxxvi) Amendment No. 1 to The North American Coal Corporation Value
Appreciation Plan, dated as of December 14, 1994, is incorporated herein by
reference to Exhibit 10(xcix) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, Commission File Number 1-9172.
(xxxvii) Intentionally left blank.
(xxxviii) Amendment No. 1 to the Credit Agreement, dated as of July 28,
1993, among The North American Coal Corporation and the banks listed on the
signatory pages and Morgan Guaranty Trust Company of New York, as Agent, is
incorporated herein by reference to Exhibit 10(cxxxxiii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File
Number 1-9172.
X-3
<PAGE> 34
(xxxix) Amendment No. 2 to the Credit Agreement, dated as of September,
1995, among The North American Coal Corporation and the banks listed on the
signatory pages and Morgan Guaranty Trust Company of New York, as Agent, is
incorporated herein by reference to Exhibit 10 (xxxix) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, Commission File
Number 1-9172.
*(xl) The North American Coal Corporation Supplemental Retirement
Benefit Plan, as amended and restated effective September 1, 1994, is
incorporated by reference to Exhibit 10 (clxv) to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1994, Commission File Number 1-
9172.
*(xli) The North American Coal Corporation Deferred Compensation Plan
for Management Employees (as amended and restated effective January 1, 1996), is
incorporated herein by reference to Exhibit 10(xli) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, Commission File
Number 1-9172.
*(xlii) Amendment No. 1, dated December 1, 1995, to The North American
Coal Corporation Supplemental Retirement Benefit Plan (as amended and restated
effective September 1, 1994), effective as of December 31, 1994, is incorporated
herein by reference to Exhibit 10 (xlii) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, Commission File Number 1-9172.
(xliii) Amendment No. 3 to the Credit Agreement, dated as of September
16, 1996, among The North American Coal Corporation and the banks listed on the
signatory pages and Morgan Guaranty Trust Company of New York, as Agent, is
incorporated herein by reference to Exhibit 10(xliii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, Commission File
Number 1-9172.
*(xliv) Intentionally left blank.
*(xlv) The North American Coal Annual Incentive Plan, effective as of
January 1, 2000, is attached hereto as Exhibit 10(xlv).
(xlvi) Waiver Agreement, dated November 15, 1996, by and among Morgan
Guaranty Trust Company, Citibank, N.A., Wells Fargo (Texas), N.A., Key Bank
National Association and The North American Coal Corporation is incorporated
herein by reference to Exhibit 10(xlvi) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996, Commission File Number 1-9172.
(xlvii) Amendment No. 4 to the Credit Agreement, dated as of July 29,
1997, among The North American Coal Corporation, the banks listed on the
signatory pages and Morgan Guaranty Trust Company of New York, as Agent, is
incorporated herein by reference to Exhibit 10(xlvii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997, Commission File
Number 1-9172.
(xlviii) Assignment and Assumption Agreement, dated as of August 22,
1997, among The North American Coal Corporation, the banks listed on the
signatory pages and Morgan Guaranty Trust Company of New York, as Agent, is
incorporated herein by reference to Exhibit 10(xlviii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997, Commission File
Number 1-9172.
*(xlix) The North American Coal Corporation Deferred Compensation Plan
for Management Employees, dated December 29, 1998 (as amended and restated
effective January 1, 1999) is incorporated herein by reference to Exhibit
10(xlix) to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, Commission File Number 1-9172.
*(l) Amendment No. 2, dated October 1, 1998, to The North American Coal
Corporation Supplemental Retirement Benefit Plan (as amended and restated
effective September 1, 1994), effective as of July 15, 1998, is incorporated
herein by reference to Exhibit 10(l) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998, Commission File Number 1-9172.
*(li) Amendment No. 3, dated October 30, 1998, to The North American
Coal Corporation Supplemental Retirement Benefit Plan (as amended and restated
effective September 1, 1994), effective as of July 15, 1998, is incorporated
herein by reference to Exhibit 10(li) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, Commission File Number 1-9172.
*(lii) Amendment No. 4, dated December 8, 1999, to The North American
Coal Corporation Supplemental Retirement Benefit Plan (as amended and restated
effective September 1, 1994), effective as of January 1, 2000, is attached
hereto as Exhibit 10(lii).
(liii) Intentionally left blank.
*(liv) Amendment No. 1 to the Hyster-Yale Materials Handling, Inc.
Long-Term Incentive Compensation Plan, effective as of January 1, 1994, is
incorporated herein by reference to Exhibit 10(lxxxviii) to the Hyster-Yale
Annual Report on Form 10-K for the fiscal year ended December 31, 1994,
Commission File Number 33-28812.
X-4
<PAGE> 35
(lv) Agreement and Plan of Merger, dated as of April 7, 1989, among
NACCO Industries, Inc., Yale Materials Handling Corporation, Acquisition I, Esco
Corporation, Hyster Company and Newesco, is incorporated herein by reference to
Exhibit 2.1 to Hyster-Yale Materials Handling, Inc.'s Registration Statement on
Form S-1 filed May 17, 1989 (Registration Statement Number 33-28812).
(lvi) Agreement and Plan of Merger, dated as of April 7, 1989, among
NACCO Industries, Inc., Yale Materials Handling Corporation, Acquisition II,
Hyster Company and Newesco, is incorporated herein by reference to Exhibit 2.2
to Hyster-Yale Materials Handling, Inc.'s Registration Statement on Form S-1
filed May 17, 1989 (Registration Statement Number 33-28812).
(lvii) Intentionally left blank.
*(lviii) NACCO Materials Handling Group, Inc. Annual Incentive
Compensation Plan for 1999 is incorporated herein by reference to Exhibit
10(lxiii) to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, Commission File Number 1-9172.
*(lix) Hyster-Yale Materials Handling, Inc. Long-Term Incentive
Compensation Plan, dated as of January 1, 1990, is incorporated herein by
reference to Exhibit 10(lxxxix) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1990, Commission File Number 1-9172.
(lx) Intentionally left blank.
(lxi) Agreement and Plan of Merger, dated as of December 20, 1993,
between Hyster Company, an Oregon corporation, and Hyster Company, a Delaware
corporation, is incorporated herein by reference to Exhibit 10(lxxviii) to
Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31,
1993, Commission File Number 33-28812.
*(lxii) Agreement and Plan of Merger, dated as of December 20, 1993,
between Yale Materials Handling Corporation, a Delaware corporation, Hyster
Company, a Delaware corporation, and Hyster-Yale Materials Handling, Inc., a
Delaware corporation, is incorporated herein by reference to Exhibit 10(lxxix)
to Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31,
1993, Commission File Number 33-28812.
*(lxiii) NACCO Materials Handling Group, Inc. Annual Incentive Plan,
effective as of January 1, 2000, is attached hereto as Exhibit 10(lxiii).
(lxiv) - (lxvi) Intentionally left blank.
*(lxvii) Amendment No. 2, effective as of December 31, 1993, to the
Hyster-Yale Materials Handling, Inc. Long-Term Incentive Compensation Plan is
incorporated herein by reference to Exhibit 10 (lxxxxiii) of the Hyster-Yale
Annual Report on Form 10-K for the fiscal year ended December 31, 1993,
Commission File Number 33-28812.
*(lxviii) Amendment No. 3, effective as of January 1, 1994, to the
Hyster-Yale Materials Handling, Inc. Long-Term Incentive Compensation Plan is
incorporated herein by reference to Exhibit 10 (lxxxxv) to the Hyster-Yale
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, Commission
File Number 33-28812.
(lxix) Amendment, dated as of January 1, 1994, to the Third Amendment
and Restated Operating Agreement dated as of November 7, 1991, between NACCO
Materials Handling Group and AT&T Commercial Finance Corporation is incorporated
herein by reference to Exhibit 10(c) to the Hyster-Yale Quarterly Report on Form
10-Q for the quarter ended September 30, 1994, Commission File Number 33-28812.
*(lxx) The Yale Materials Handling Corporation Deferred Incentive
Compensation Plan (also known as The Yale Materials Handling Corporation
Short-Term Incentive Compensation Deferral Plan), dated March 1, 1984, is
incorporated herein by reference to Exhibit 10(lxxi) to the Hyster-Yale Annual
Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File
Number 33-28812.
(lxxi) Intentionally left blank.
(lxxii) Credit Agreement between NACCO Materials Handling Group, Inc.
and Morgan Guaranty Trust company of New York, as Agent, and the other banks
listed thereto, dated February 28, 1995, is incorporated by reference herein to
Exhibit 10(lxxxvii) of the Hyster-Yale Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, Commission File Number 33-28812.
(lxxiii) Intentionally left blank.
*(lxxiv) The NACCO Materials Handling Group, Inc. Unfunded Benefit Plan
(as amended and restated effective as of January 1, 1999) is incorporated herein
by reference to Exhibit 10(lxxiv) the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998, Commission File Number 1-9172.
X-5
<PAGE> 36
(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, is incorporated by reference to
Exhibit 10(lxxv) to the Company's Quarterly Statement on Form 10-Q for the
quarter ended June 30, 1996, Commission File Number 1-9172.
(lxxvi) Amendment, dated as of December 16, 1996, to the 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, is incorporated herein by reference to Exhibit 10(lxxxvi) to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996, Commission File Number 1-9172.
(lxxvii) Amendment No. 2, dated as of March 26, 1997, to the 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, is incorporated herein by reference to Exhibit 10(lxxviii) to
the Company's Quarterly Statement on Form 10-Q for the quarter ended March 31,
1997, Commission File Number 1-9172.
(lxxviii) Amendment No. 3, dated as of May 19, 1997, to the 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, is incorporated herein by reference to Exhibit 10(lxxviii) to
the Company's Quarterly Statement on Form 10-Q for the quarter ended June 30,
1997, Commission File Number 1-9172.
*(lxxix) Amendment No. 1, dated as of June 5, 1999, to the The NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as amended and restated
effective as of January 1, 1999) is attached hereto as Exhibit 10(lxxix).
*(lxxx) Amendment No. 2, dated as of October 8, 1999, to the The NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as amended and restated
effective as of January 1, 1999) is attached hereto as Exhibit 10(lxxx).
*(lxxxi) Amendment No. 3, dated as of August 27, 1999, to the The NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (as amended and restated
effective as of January 1, 1999) is attached hereto as Exhibit 10(lxxxi).
*(lxxxii) Amendment No. 4, dated as of September 24, 1999, to the The
NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (as amended and
restated effective as of January 1, 1999) is attached hereto as Exhibit
10(lxxxii).
*(lxxxiii) Amendment No. 4, dated as of October 8,1999, to the NACCO
Materials Handling Group, Inc. Long-Term Incentive Compensation Plan is attached
hereto as Exhibit (lxxxiii).
*(lxxxiv) Amendment No. 5, dated as of December 20,1999, to the NACCO
Materials Handling Group, Inc. Long-Term Incentive Compensation Plan is attached
hereto as Exhibit (lxxxiv).
(lxxxv) Intentionally left blank.
(lxxxvi) Agreement of Merger, dated as of January 20, 1988, among NACCO
Industries, Inc., Housewares Holding Company, WE-PS Merger, Inc. and
WearEver-ProctorSilex, Inc., is incorporated herein by reference to pages 8
through 97 of Exhibit 2 to the Company's Current Report on Form 8-K, dated
February 1, 1988, Commission File Number 1-9172.
(lxxxvii) Shareholders Agreement, dated January 20, 1988, among NACCO
Industries, Inc. and the shareholders named therein is incorporated herein by
reference to pages 98 through 108 of Exhibit 2 to the Company's Current Report
on Form 8-K, dated February 1, 1988, Commission File Number 1-9172.
(lxxxviii) Intentionally left blank.
*(lxxxix) The Hamilton Beach/Proctor-Silex, Inc. Unfunded Benefit Plan
(As Amended and Restated Effective January 1, 1999) is incorporated herein by
reference to Exhibit 10(lxxxix) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998, Commission File Number 1-9172.
*(xc) Amendment No. 1, dated as of December 22, 1999, to the Hamilton
Beach/Proctor-Silex, Inc. Unfunded Benefit Plan (As Amended and Restated
Effective January 1, 1999) is attached hereto as Exhibit 10(xc).
(xci) Intentionally left blank.
(xcii) Pledge Agreement re: 66% Pledge of PSC Stock, dated as of
October 11, 1990, between Hamilton Beach/Proctor-Silex and The Chase Manhattan
Bank (National Association) is incorporated herein by reference to
X-6
<PAGE> 37
Exhibit 10(cx) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
(xciii) Pledge Agreement re: 66% Pledge of PSM Stock, dated as of
October 11, 1990, between Hamilton Beach/Proctor-Silex and The Chase Manhattan
Bank (National Association) is incorporated herein by reference to Exhibit
10(cxi) to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, Commission File Number 1-9172.
(xciv) Pledge Agreement re: 34% pledge of PSC Stock, dated as of
October 11, 1990, between Hamilton Beach/Proctor-Silex and The Chase Manhattan
Bank (National Association) is incorporated herein by reference to Exhibit
10(cxii) to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, Commission File Number 1-9172.
(xcv) Pledge Agreement re: 33.2% Pledge of PSM Stock, dated as of
October 11, 1990, between Hamilton Beach/Proctor Silex and The Chase Manhattan
Bank (National Association) is incorporated herein by reference to Exhibit
10(cxiii) to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, Commission File Number 1-9172.
(xcvi) Pledge Agreement, dated as of October 11, 1990, between
Housewares Holding Company and The Chase Manhattan Bank (National Association)
is incorporated herein by reference to Exhibit 10(cxiv) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File
Number 1-9172.
(xcvii) Pledge Agreement, dated as of October 11, 1990, between HB-PS
Holding Company, Inc. and The Chase Manhattan Bank (National Association) is
incorporated herein by reference to Exhibit 10(cxv) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File
Number 1-9172.
(xcviii) Security Agreement, dated as of October 11, 1990, between
Hamilton Beach/Proctor-Silex and The Chase Manhattan Bank (National
Association), as the United States agent, is incorporated herein by reference to
Exhibit 10(cxvi) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
(xcix) Collateral Assignment of Patents and Trademarks and Security
Agreement, dated as of October 11, 1990, between Hamilton Beach/Proctor-Silex
and The Chase Manhattan Bank (National Association), as the United States agent,
is incorporated herein by reference to Exhibit 10(cxvii) to the Company s Annual
Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File
Number 1-9172.
(c) NACCO Supplemental Agreement, dated as of October 11, 1990, between
NACCO and The Chase Manhattan Bank (National Association), as the United States
agent, is incorporated herein by reference to Exhibit 10(cxviii) to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1990, Commission File Number 1-9172.
(ci) Housewares Supplemental Agreement, dated as of October 11, 1990,
between Housewares Holding Company and The Chase Manhattan Bank (National
Association), as the United States agent, is incorporated herein by reference to
Exhibit 10(cxix) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
(cii) Holdings Supplemental Agreement, dated as of October 11, 1990,
between HB-PS Holding Company, Inc. and The Chase Manhattan Bank (National
Association), as the United States agent, is incorporated herein by reference to
Exhibit 10(cxx) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31,1990, Commission File Number 1-9172.
(ciii) Override Agreement, dated as of October 11, 1990, among the
Company, Housewares Holding Company, Glen Dimplex, Precis [521] Ltd., Glen
Electric, Ltd. and The Chase Manhattan Bank (National Association), as the
United States agent, is incorporated herein by reference to Exhibit 10(cxxi) to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1990, Commission File Number 1-9172.
(civ) General Security Agreement, dated as of October 11, 1990, by
Proctor-Silex Canada to and in favor of The Chase Manhattan Bank of Canada, as
the Canadian agent, is incorporated herein by reference to Exhibit 10(cxxii) to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1990, Commission File Number 1-9172.
*(cv) The Hamilton Beach/Proctor-Silex, Inc. 1999 Annual Incentive
Compensation Plan is incorporated herein by reference to Exhibit 10(cxx) to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, Commission File Number 1-9172.
*(cvi) Hamilton Beach/Proctor-Silex, Inc. Long-Term Incentive
Compensation Plan, effective January 1, 1993, is incorporated by reference to
Exhibit 10(cxxiv) to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992, Commission File Number 1-9172.
X-7
<PAGE> 38
(cvii) First Amendment to the Housewares Supplemental Agreement, dated
as of March 1, 1991, between Housewares Holding Company and The Chase Manhattan
Bank (National Association), as the United States agent, is incorporated herein
by reference to Exhibit 10(cxxv) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1990, Commission File Number 1-9172.
(cviii) First Amendment to the Holdings Supplemental Agreement, dated
as of March 1, 1991, between HB-PS Holding Company and The Chase Manhattan Bank
(National Association), as the United States agent, is incorporated herein by
reference to Exhibit 10(cxxvi) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1990, Commission File Number 1-9172.
(cvix) Consent and Authorization with reference made to the Credit
Agreement dated October 11, 1990, as amended among Hamilton Beach/Proctor-Silex,
Inc., Proctor-Silex Canada, Inc., Proctor-Silex S.A. de C.V., the banks named on
the signatory pages and The Chase Manhattan Bank is incorporated herein by
reference to Exhibit (cxxxvii) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993, Commission File Number 1-9172.
(cx) Amended and Restated Credit Agreement, dated as of May 10, 1994
among Hamilton Beach/Proctor-Silex, Inc., Proctor-Silex Canada, Inc.,
Proctor-Silex S.A. DE C.V., the banks named on the signatory pages and the Chase
Manhattan Bank is incorporated herein by reference to as Exhibit 10 (cxxxviii)
to the NACCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994, Commission File Number 1-9172.
(cxi) Confirmation Agreement, dated May 10, 1994, among Hamilton
Beach/Proctor-Silex, Inc., Housewares Holding Company, Precis [521] Ltd., HB-PS
Holding Company, Glen Dimplex, Glen Electric, Ltd., the banks named on the
signatory pages, the Chase Manhattan Bank and the Chase Manhattan Bank of Canada
is incorporated herein by reference to Exhibit 10 (cxxix) to the NACCO
Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended on June 30,
1994, Commission File Number 1-9172.
(cxii) First Amendment to the NACCO Supplemental Agreement, dated as of
March 1, 1991, between the Company and The Chase Manhattan Bank (National
Association), as the United States agent, is incorporated herein by reference to
Exhibit 10(cxxi) to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Commission File Number 1-9172.
(cxiii) Waiver Agreement, dated January 16, 1996, among Hamilton
Beach/Proctor-Silex, Inc., Proctor-Silex Canada, Inc., Proctor-Silex S.A. de
C.V. the banks named on the signatory pages and Chase Manhattan Bank is
incorporated herein by reference to Exhibit 10 (cxiii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, Commission File
Number 1-9172.
(cxiv) Amended and Restated Credit Agreement, dated as of April 18,
1995, among Hamilton Beach/Proctor-Silex, Inc., Proctor- Silex, Inc.,
Proctor-Silex S.A. de C.V., the banks named on the signatory pages and The Chase
Manhattan Bank is incorporated herein by reference to Exhibit 10(cxiv) to the
Company's Annual Report on From 10-K for the fiscal year ended December 31,
1995, Commission File Number 1-9172.
(cxv) 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, is incorporated by reference
herein to Exhibit 10 (xvii) on the Company's Quarterly Statement on Form 10-Q
for the quarter ended June 30, 1996, Commission File Number 1-9172.
(cxvi) Amendment No. 2, dated as of October 4, 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, is incorporated herein by
reference to Exhibit 10(cxviii) to the Company's Quarterly Statement for the
quarter ended September 30, 1996, Commission File Number 1-9172.
(cxvii) Amendment No. 3, dated as of April 14, 1997, 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, is incorporated herein by
reference to Exhibit 10(cxviii) to the Company's Quarterly Statement for the
quarter ended June 30, 1997, Commission File Number 1-9172.
(cxviii) Pledge Agreement, dated as of November 30, 1995, between
Hamilton Beach/Proctor-Silex and The Chase Manhattan Bank (National
Association), is incorporated herein by reference to Exhibit 10(cxviii) to the
Company's Annual Report on From 10-K for the fiscal year ended December 31,
1997, Commission File Number 1-9172.
X-8
<PAGE> 39
(cxix) Pledge Agreement re: 66% of PST Stock, dated as of November 30,
1995, between HB/PS El Paso, Inc. and The Chase Manhattan Bank (National
Association), is incorporated herein by reference to Exhibit 10(cxix) to the
Company's Annual Report on From 10-K for the fiscal year ended December 31,
1997, Commission File Number 1-9172.
*(cxx) The Hamilton Beach/Proctor-Silex, Inc. 2000 Annual Incentive
Plan is attached hereto as Exhibit 10 (cxx).
(cxxi) Amendment No. 4, dated as of April 22, 1998, 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 Obligors, 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, is incorporated herein by
reference to Exhibit 10(cxxi) to the Company's Quarterly Statement for the
quarter ended March 31, 1998, Commission File Number 1-9172.
(cxxii) Amendment No. 5, dated as of June 10, 1998, 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 Obligors, 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, is incorporated herein by
reference to Exhibit 10(cxxii) to the Company's Quarterly Statement for the
quarter ended June 30, 1998, Commission File Number 1-9172.
(cxxiii) Amendment No. 6, dated as of December 8, 1998, 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 Obligors, the Banks
signatory thereto and The Chase Manhattan Bank (successor by merger to The Chase
Manhattan Bank, N.A.)(the Existing U.S. Agent), KeyBank National Association
(the Successor U.S. Agent), The Chase Manhattan Bank of Canada(the Existing
Canadian Agent) and The Bank of Nova Scotia (the Successor Canadian Agent), is
incorporated herein by reference to Exhibit 10(cxxiii) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998, Commission File
Number 1-9172
*(cxxiv) Amendment No. 1, dated December 12, 1999, to the Hamilton
Beach/Proctor-Silex, Inc. Long-Term Incentive Compensation Plan is attached
hereto as Exhibit 10(cxxiv).
(13) Portions of the Company's 1999 Annual Report to security holders that
are incorporated by reference into this Form 10-K are attached hereto
as Exhibit 13.
(21) Subsidiaries. A list of the subsidiaries of the Company is attached
hereto as Exhibit 21.
(23) Consents of experts and counsel.
(i) The consent of Arthur Andersen LLP, independent accountant, is
attached hereto as Exhibit 23(i).
(24) Powers of Attorney.
(i) A copy of a power of attorney for Owsley Brown II is attached hereto
as Exhibit 24(i).
(ii) A copy of a power of attorney for Robert M. Gates is attached hereto
as Exhibit 24(ii).
(iii) A copy of a power of attorney for Leon J. Hendrix, Jr. is attached
hereto as Exhibit 24(iii).
(iv) A copy of a power of attorney for David H. Hoag is attached hereto
as Exhibit 24 (iv).
(v) A copy of a power of attorney for Dennis W. LaBarre is attached
hereto as Exhibit 24(v).
(vi) A copy of a power of attorney for Richard de J. Osborne is attached
hereto as Exhibit 24(vi).
(vii) A copy of a power of attorney for Ian M. Ross is attached hereto as
Exhibit 24 (vii).
(viii) A copy of a power of attorney for John C. Sawhill is attached
hereto as Exhibit 24(viii).
(ix) A copy of a power of attorney for Britton T. Taplin is attached
hereto as Exhibit 24 (ix).
(x) A copy of a power of attorney for David F. Taplin is attached hereto
as Exhibit 24 (x).
(xi) A copy of a power of attorney for John F. Turben is attached hereto
as Exhibit 24(xi).
(27) Financial Data Schedules -- filed electronically for SEC information
purposes only.
X-9
<PAGE> 40
(99) Other exhibits not required to otherwise be filed.**
(i) Unaudited Consolidating Statement of Income and Comprehensive Income
of NACCO Industries, Inc. for the Year Ended December 31, 1999 is
attached hereto as Exhibit 99(i).
(ii) Unaudited Consolidating Balance Sheet of NACCO Industries, Inc. as
of December 31, 1999 is attached hereto as Exhibit 99(ii).
(iii) Unaudited Consolidating Statement of Cash Flows of NACCO Industries,
Inc. for the Year Ended December 31, 1999 is attached hereto as
Exhibit 99(iii).
(iv) Unaudited Consolidating Statement of Stockholders' Equity for the
Year Ended December 31, 1999 is attached hereto as Exhibit 99 (iv).
*Management contract or compensation plan or arrangement required to be
filed as an exhibit pursuant to Item 14(c) of this Annual Report on Form 10-K.
**Consolidating Financial Statements of NACCO Industries, Inc. are not
required disclosures and are included only for informational purposes. These
statements have not been audited by independent public accountants and are
presented only for purposes of additional analysis and not as a presentation of
the financial results or position of each component of the consolidated group,
and should be read accordingly.
X-10
<PAGE> 1
Exhibit 10(xx)
================================================================================
NACCO INDUSTRIES, INC.
2000 ANNUAL INCENTIVE COMPENSATION PLAN
================================================================================
1. PURPOSE OF THE PLAN
The purpose of the NACCO Industries, Inc. 2000 Annual Incentive
Compensation Plan (the "Plan") is to further the profits and growth of NACCO
Industries, Inc. (the "Company") by enabling the Company to attract and retain
key employees of the Company by offering annual incentive compensation to those
key employees who will be in a position to help the Company to meet its
financial and business objectives.
2. DEFINITIONS
(a) "Award" means cash paid to a Participant under the Plan for the
Award Term in an amount determined in accordance with Section 4.
(b) "Award Term" means the period from January 1, 2000 through December
31, 2000.
(c) "Base Amount" means for any Participant a dollar amount, which
shall be equal to the salary midpoint for the Salary Points assigned to the
Participant by the Committee for the Award Term multiplied by 60% of the
short-term incentive compensation target percent for those Salary Points.
Attached hereto as EXHIBIT A is a schedule listing the Base Amount for each
Participant for the Award Term.
(d) "Committee" means the Nominating, Organization and Compensation
Committee of the Company's Board of Directors or any other committee appointed
by the Company's Board of Directors to administer this Plan in accordance with
Section 3, so long as any such committee consists of not less than two directors
of the Company and so long as each member of the Committee is not an employee of
the Company or any of its subsidiaries.
(e) "Participant" means any salaried employee of the Company who in the
judgment of the Committee occupies a key position in which his efforts may
significantly contribute to the profits or growth of the Company; provided,
however, that the Committee may select any employee who is expected to
contribute, or who has contributed, significantly to the Company's profitability
to participate in the Plan and receive an Award hereunder; and further provided,
however, that following the end of the Award Term the Committee may make one or
more discretionary Awards to employees of the Company who are not Participants.
Directors of the Company who are also employees of the Company are eligible
<PAGE> 2
to participate in the Plan. Employees of the Company's subsidiaries shall not be
eligible to participate in the Plan. The Committee shall have the power to add
Participants at any later date in the Award Term if individuals subsequently
become eligible to participate in the Plan. Each Participant shall be notified
that he is eligible to receive an Award for such term and the amount of his Base
Amount. If a Participant receives a change in Salary Points, salary midpoint
and/or short-term incentive compensation target percent, such change and any
resulting change in his Base Amount will be reflected on an amended EXHIBIT A.
Unless otherwise determined by the Committee, a Participant must be both
employed by the Company and a Participant on December 31 of the Award Term, and
the amount of any Award to a Participant who was not also employed by the
Company and a Participant on the first day of the Award Term shall be not more
than the pro-rated amount based upon the number of days actually employed by the
Company in the Award Term. Attached hereto as EXHIBIT A is a schedule listing
the Participants for the Award Term.
(f) "Salary Points" means the salary points assigned to a Participant
by the Committee pursuant to the Hay salary point system, or any successor
salary point system adopted by the Committee.
3. ADMINISTRATION
This Plan shall be administered by the Committee. The Committee shall
have complete authority to interpret all provisions of this Plan consistent with
law, to prescribe the form of any instrument evidencing any Award granted or
paid under this Plan, to adopt, amend and rescind general and special rules and
regulations for its administration, and to make all other determinations
necessary or advisable for the administration of this Plan. A majority of the
Committee shall constitute a quorum, and the action of members of the Committee
present at any meeting at which a quorum is present or acts unanimously approved
in writing, shall be the act of the Committee. All acts and decisions of the
Committee with respect to any questions arising in connection with the
administration and interpretation of this Plan, including the severability of
any or all of the provisions hereof, shall be conclusive, final and binding upon
the Company and all present and former Participants, all other employees of the
Company, and their respective descendants, successors and assigns. No member of
the Committee shall be liable for any such act or decision made in good faith.
4. AWARDS
The Committee may, from time to time and upon such conditions as it may
determine, authorize Awards for Participants, which Awards shall be not
inconsistent with, and shall be subject to all of the requirements of, the
following provisions:
2
<PAGE> 3
(a) PERFORMANCE TARGETS. The Committee shall determine performance
target descriptions, weightings and targets for the Award Term, which shall be
attached hereto as EXHIBIT B. The Committee shall have the power to add, delete
and amend target descriptions, weightings and targets during the Award Term,
which shall be reflected on an amended EXHIBIT B. No performance targets used in
this Plan shall be used in the Company's Supplemental Annual Incentive
Compensation Plan in the same year.
(b) AWARDS. Following the end of the Award Term, the Committee shall
compare the actual performance against the performance targets for each of the
performance target descriptions. Based thereupon, the Committee shall determine
the total payout percentage under the Plan (the "Payout Percentage"). The
Committee shall then determine the Award for each Participant, which shall be
equal to the Participant's Base Amount, multiplied by the Payout Percentage, and
further adjusted by such other factors, including an individual performance
factor for each Participant, as the Committee shall determine are appropriate;
provided, however, that no Award may be made to any Participant which exceeds
150% of his Base Amount. Promptly following the approval of the final Awards,
the Company shall pay the amount of such Awards to the Participants in cash,
subject to all withholdings and deductions pursuant to Section 5; provided,
however, that no Award shall be payable to a Participant except as determined by
the Committee.
5. WITHHOLDING TAXES
Any Award paid to a Participant under this Plan, shall be subject to
standard federal, state and local income tax, social security and other standard
withholdings and deductions.
6. AMENDMENT AND TERMINATION
The Committee may alter or amend this Plan from time to time or
terminate it in its entirety; provided, however, that no such action shall,
without the consent of a Participant, affect the rights in an outstanding Award
of such Participant.
7. GENERAL PROVISIONS
(a) NO RIGHT OF EMPLOYMENT. Neither the adoption or operation of this
Plan, nor any document describing or referring to this Plan, or any part
thereof, shall confer upon any employee any right to continue in the employ of
the Company, or shall in any way affect the right and power of the Company to
3
<PAGE> 4
terminate the employment of any employee at any time with or without assigning a
reason therefor to the same extent as the Company might have done if this Plan
had not been adopted.
(b) GOVERNING LAW. The provisions of this Plan shall be governed by and
construed in accordance with the laws of the State of Delaware.
(c) MISCELLANEOUS. Headings are given to the sections of this Plan
solely as a convenience to facilitate reference. Such headings, numbering and
paragraphing shall not in any case be deemed in any way material or relevant to
the construction of this Plan or any provisions thereof. The use of the
masculine gender shall also include within its meaning the feminine. The use of
the singular shall also include within its meaning the plural, and vice versa.
8. EFFECTIVE DATE
This Plan shall become effective as of January 1, 2000.
4
<PAGE> 1
Exhibit 10(xxi)
AMENDMENT NO. 3
TO THE
RETIREMENT BENEFIT PLAN
FOR ALFRED M. RANKIN, JR.
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994)
NACCO Industries, Inc. hereby adopts this Amendment No. 3 to the Retirement
Benefit Plan for Alfred M. Rankin, Jr. (As Amended and Restated Effective
January 1, 1994), to be effective October 1, 1999. Words and phrases used herein
with initial capital letters which are defined in the Plan are used herein as so
defined.
SECTION 1
The second sentence of Section 6.4(a) of the Plan is hereby
amended in its entirety to read as follows:
"The Committee shall have discretion to interpret the
provisions of the Plan (including, without limitation, by
supplying omissions from, correcting deficiencies in or in
resolving inconsistencies or ambiguities in the language of
the Plan, to make factual findings with respect to any issue
arising under the Plan, to determine the rights and status
under the Plan of Participants and Beneficiaries and other
persons, to decide disputes arising under the Plan and to make
any determinations (including factual determinations) with
respect to benefits payable hereunder."
SECTION 2
Section 7.1 of the Plan is hereby amended in its entirety to
read as follows:
"SECTION 7.1 AMENDMENT. Subject to Section 7.3, the NACCO
Industries, Inc. Benefits Committee (the "Benefits Committee")
does hereby reserve the right to amend, at any time, any or
all of the provisions of the Plan, without the consent of the
Participant, Beneficiary or any other person. Any such
amendment shall be expressed in an instrument executed by an
officer of the Employer on the order of the Benefits Committee
and shall become effective as of the date designated in such
instrument or, if no such date is specified, on the date of
its execution."
<PAGE> 2
EXECUTED this 13TH day of SEPTEMBER, 1999.
NACCO INDUSTRIES, INC.
By: /S/ CHARLES A. BITTENBENDER
------------------------------
Title: Vice President, General
Counsel and Secretary
<PAGE> 1
Exhibit 10(xlv)
2000 INCENTIVE COMPENSATION PLAN
SUMMARY
The Incentive Compensation Plan (Plan) offers a highly attractive incentive
compensation opportunity to senior managers when all performance objectives
under their control or influence are achieved. This is accomplished through a
structure containing the following elements:
- Each participant is assigned an individual incentive target,
stated as a percentage of their salary midpoint, that
establishes the incentive compensation amount they will
receive when performance objectives are met.
- The individual target amount is allocated among the following
performance components:
- North American Coal (NAC) corporate performance.
- Bellaire Corporation cash flow.
- Business unit results.
- Individual achievement.
- Percentage weightings are assigned to each component, based on
the participant's accountabilities and their impact on each
component.
- One or more performance objectives will be established at the
beginning of the year for each performance component.
- A performance range, which defines the acceptable level of
results, from threshold to maximum, is created for each
performance objective.
- A payout range is defined, which provides for incentive
payments of up to 150 percent of the incentive target, except
to the extent the Committee elects to increase the actual pool
by up to 10 percent, as described below.
- A performance/payout schedule combines the two ranges into a
matrix that defines the level of incentive compensation
payment that will result from each level of performance.
- After audited financials are available, awards will be
calculated based on actual results against the established
objectives.
<PAGE> 2
- A final individual performance adjustment may be made, within
a range of +10 percent of the calculated award, based on a
judgment of the participant's overall performance.
This Incentive Compensation Plan will allow management and the Board to
establish, in advance, the performance expectations and related incentive
compensation potential that NAC's executives can expect for the year. At
year-end, the Plan focuses judgment of the management team's performance on
predetermined objectives that should produce fairness in the determination of
rewards.
PLAN STRUCTURE
INDIVIDUAL INCENTIVE TARGETS
----------------------------
The primary focus of the proposed Plan is the individual incentive
compensation target. Each participant is assigned a target, stated as a
percentage of the mid-point of base salary, which will be paid when all
relevant performance objectives are achieved. The Plan provides for
payments above or below the target to reflect acceptable variances from
performance objectives.
PERFORMANCE GOALS
-----------------
Four sets of goals are proposed:
INTENTIONALLY LEFT BLANK
INCENTIVE AWARD RANGE
---------------------
Actual performance results attained probably will not match the
established performance goals exactly. Therefore, the Plan is designed
to provide incentive compensation payouts of up to 150 percent of the
target award if actual results fall within a predetermined range of
acceptable performance.
The award range is defined as follows:
<TABLE>
<CAPTION>
% OF
AWARD LEVEL TARGET DESCRIPTION
------------------------ ---------------- ----------------------------------------------
<S> <C> <C>
Maximum 150% Highest level of incentive paid.
Target 100% Competitive incentive opportunity for
achieving all important goals.
Threshold 50% Incentive paid when results meet minimum
acceptable standards.
Below threshold 0% Performance does not merit incentive payment.
</TABLE>
<PAGE> 3
COMPONENT WEIGHTINGS
--------------------
Participants' potential incentive awards will be allocated between
performance components based on their individual impact on results. The
allocations allow for awards to be earned based on the achievement of
the performance objectives over which each executive has the most
control. Weightings will be stated as a percentage and total 100
percent for each participant. The weightings will be established each
year to reflect current organizational accountabilities and the
relative importance of the various performance components. Our
recommended weightings are as follows:
INTENTIONALLY LEFT BLANK
When there is more than one goal for a performance component, further
percentage weightings may be assigned, within the overall weightings,
to reflect the relative priority of each goal. For example, if the
individual component has a 40 percent weighting and there are five
individual goals, each individual goal might be assigned a priority
weighting of 20 percent.
PERFORMANCE RANGE
-----------------
A range of performance acceptable for incentive compensation payment
will be established for each performance objective. For quantitative
goals, the range may be set as a percentage of the objective. For goals
that cannot be quantified, the range will be defined in narrative form.
The following general definitions will apply. The percentage ranges
indicated are only guidelines; specific percentage ranges or narrative
descriptions should be determined for each goal based on the
definitions.
<TABLE>
<CAPTION>
PERFORMANCE
PERFORMANCE PERCENTAGE
LEVEL GUIDELINE DEFINITION
------------------------ ------------------- ----------------------------------------------
<S> <C> <C>
Threshold 75% Minimum acceptable results justifying
payment of incentives.
Objective 100% Results meet high performance demands justifying
fully competitive rewards.
Maximum 125% Highest foreseeable level of performance.
</TABLE>
<PAGE> 4
Combining the performance and payout ranges yields a performance/
payout schedule as in the following example:
<TABLE>
<CAPTION>
PERFORMANCE DEFINITION RESULTS AWARD LEVELS PAYOUT
-------------------- ---------------------------- ----------- ------------------- -----------
<S> <C> <C> <C> <C>
Threshold Minimum 75% Threshold 50%
Objective On plan 100% Target 100%
Maximum Exceeding expectations 125% Maximum 150%
</TABLE>
This schedule is applied separately to the results of each established
performance element to determine the incentive amount earned in
accordance with assigned weightings. Performance that falls between the
defined levels would result in proportionally adjusted payouts, which
may be calculated mathematically or determined judgmentally.
CORPORATE PERFORMANCE THRESHOLD
-------------------------------
No incentive compensation awards will be earned under the Plan in any
year unless the threshold level of the corporate performance component
is achieved. Once the corporate performance threshold is attained, each
performance objective is separate and distinct. This means that partial
awards can be earned for the attainment of one performance objective
even if another is not sufficient to generate a payout.
INDIVIDUAL ADJUSTMENT FACTOR
----------------------------
Each individual award, as calculated above, may be adjusted upward or
downward by as much as 10 percent of the total award, based on
management's' perceptions of each individual's overall performance.
PARTIAL AWARDS
--------------
Executives who are hired or promoted during the year to positions
eligible for participation in the Plan may be included in the Plan on a
prorata basis.
COMMITTEE DISCRETION
--------------------
It is the intent of the Plan that the total incentive compensation, as
determined above, will be the final total corporate incentive
compensation to be paid. However, the Committee, in its sole
discretion, may increase or decrease, by up to 10 percent, the total
incentive compensation or may approve an incentive compensation payment
where normally there would be no payment, due to corporate performance
which is below the criteria established for the year.
2000 PERFORMANCE TARGETS
See Plan Summary.
<PAGE> 1
Exihibit 10(iii)
AMENDMENT NO. 4
TO
THE NORTH AMERICAN COAL CORPORATION
SUPPLEMENTAL RETIREMENT BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 1, 1994)
-----------------------------------------------------
The North American Coal Corporation hereby adopts this
Amendment No. 4 to The North American Coal Corporation Supplemental Retirement
Benefit Plan (As Amended and Restated Effective September 1, 1994) (the "Plan"),
effective January 1, 2000. Words and phrases used herein with initial capital
letters which are defined in the Plan are used herein as so defined.
SECTION 1
---------
Section 3.1(1) of the Plan is hereby amended in its entirety
to read as follows:
"(1) IN GENERAL. Each Participant or Beneficiary of a deceased
Participant (a) whose benefits under the Pension Plan payable
on or after the Effective Date are reduced due to the Code
Limitations, or (b) who is a Participant in the North American
Coal Corporation Deferred Compensation Plan for Management
Employees who defers Compensation thereunder on or after the
Effective Date, shall be entitled to a Supplemental Retirement
Benefit, which shall be determined as hereinafter provided."
SECTION 2
---------
Section 3.3(2) of the Plan is hereby amended by replacing
"$5,000" with "$10,000" each time it appears therein.
SECTION 3
---------
Section 5.4 of the Plan is hereby amended by replacing the
phrase "the Committee" with the phrase "the NACCO Industries, Inc. Benefits
Committee" (the "Benefits Committee") wherever such phrase shall appear therein.
SECTION 4
---------
Section 6.1 of the Plan is hereby amended by replacing the
phrase "the Committee" with the phrase "the Benefits Committee" wherever such
phrase shall appear therein.
SECTION 5
---------
Section 6.2 of the Plan is hereby amended by replacing the
phrase "the Committee" with the phrase the Nominating, Organization and
Compensation Committee of the
-1-
<PAGE> 2
Board of Directors of the Company ("the Compensation Committee") wherever
such phrase shall appear therein.
EXECUTED this 8TH day of DECEMBER, 1999.
THE NORTH AMERICAN COAL
CORPORATION
By: /S/THOMAS A. KOZA
Title: Vice President-Law and
Administration and Secretary
-2-
<PAGE> 1
Exhibit 10(1xiii)
ANNUAL INCENTIVE COMPENSATION PLAN
----------------------------------
2000
GENERAL
- -------
NACCO Materials Handling Group, Inc., (the "Company") has established
an Annual Incentive Compensation Plan ("Plan") as part of a competitive
compensation program for the officers and key management employees of the
Company and its Subsidiaries.
PLAN OBJECTIVE
- --------------
The Company desires to attract and retain talented employees to enable
the Company to meet its financial and business objectives. The objective of the
Plan is to provide an opportunity to earn annual incentive compensation to those
employees whose performance has a significant impact on the Company's short-term
and long-term profitability.
ADMINISTRATION AND PARTICIPATION
- --------------------------------
The Plan is administered by the Nominating, Organization and
Compensation Committee of the Board of Directors of the Company (the
"Committee"). The Committee:
a. May amend, modify or discontinue the Plan.
b. Will approve participation in the Plan. Generally,
participants will include all employees in NACCO Materials
Handling Group salary grades 22 and above. However, the
Committee may select any employee who has contributed
significantly to the Company's profitability to participate in
the Plan and receive an annual incentive compensation award.
Subject to paragraphs g and h, below, no employee of NACCO
Materials Handling Group shall be eligible to be a participant
in the Plan, and no participant in
<PAGE> 2
the Plan shall be eligible to receive an award, unless such
individual is employed for at least 90 calendar days during
the year.
c. Will determine the annual performance criteria which generate
the incentive compensation pool.
d. Will determine the total amount of both the target and actual
annual incentive compensation pool.
e. Will approve individual incentive compensation awards to
officers and employees in NACCO Materials Handling Group above
salary grade 29.
f. May delegate to the Chief Executive Officer of the Company the
approval of incentive compensation awards to NACCO Materials
Handling Group employees in salary grade 29 and below.
g. May consider at the end of each year the award of a
discretionary bonus amount to non-participants as an addition
to the regular incentive compensation pool on a special
one-time basis to motivate individuals not eligible to
participate in the Plan.
h. May approve a pro-rate incentive compensation award for
participants in the Plan whose employment is terminated (1)
due to death, disability, retirement or facility closure, such
award to be determined pursuant to the provisions of
subparagraphs (e) and (f) above, or (2) under other
circumstances at the recommendation of the Chief Executive
Officer of the Company.
DETERMINATION OF CORPORATE INCENTIVE COMPENSATION POOL
- ------------------------------------------------------
Each participant in the Plan will have an individual target incentive
compensation percentage which is determined by the participant's salary grade.
This percentage is multiplied by the mid-point of the participant's salary grade
to determine his individual
<PAGE> 3
target incentive compensation award. The total of the target incentive
compensation awards of all participants equals the target corporate incentive
compensation pool ("Target Pool"). The Target Pool is approved each year by the
Committee.
The actual corporate incentive compensation pool ("Actual Pool") is
determined at the end of each year based on the Company's actual performance
against specific criteria established in the beginning of the year by the
Committee. The Target Pool is adjusted upwards or downwards by corporate
performance adjustment factors to determine the Actual Pool. In no event will
the Actual Pool exceed 150% of the Target Pool, except to the extent that the
Committee elects to increase the Actual Pool by up to 110%, as described below.
The Target and Actual Pools may consist of the sum of two or more
subpools, provided the subpools have individual objectives.
It is the intent of the Plan that the Actual Pool, as determined above,
will be the final total corporate incentive compensation pool. However, the
Committee, in its sole discretion, may increase or decrease by up to 10% the
Actual Pool or may approve an incentive compensation pool where there would
normally be no pool due to Company performance which is below the criteria
established for the year.
The Actual and Target Pools exclude the Marketing Incentive Plan for
regional parts, service, sales and national account managers. However, total
compensation or employees covered by the Marketing Incentive Plan will be based
on competitive levels.
DETERMINATION OF INDIVIDUAL INCENTIVE COMPENSATION AWARDS
- ---------------------------------------------------------
Salary grades and the corresponding target incentive percentages for
each participant in the Plan will be established at the beginning of each year
and approved by the Committee. Individual target incentive compensation will
<PAGE> 4
then be adjusted by the appropriate pool or subpool factor. Such adjusted
individual incentive compensation will then be further modified based on the
team performance to which an individual belongs compared to the team goals for
the year, and may be further modified based on a Participant's performance as
compared to their individual goals for the year.
The total of all individual incentive compensation awards must not
exceed the Actual Pool for the Year.
On the following page are examples of actual pool and individual award
calculations.
a. Example calculation for determination actual pool:
INTENTIONALLY OMITTED
<PAGE> 1
Exhibit 10(lxxix)
AMENDMENT NO. 1
TO THE
NACCO MATERIALS HANDLING GROUP, INC.
UNFUNDED BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1999)
NACCO Materials Handling Group, Inc. adopts this Amendment No. 1 to the
NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (As Amended and
Restated Effective January 1, 1999) (the "Plan"), effective as of June 5, 1999.
Words and phrases used herein with initial capital letters which are defined in
the Plan are used herein as so defined.
SECTION 1
Section 2.7 of the Plan is hereby amended in its entirety to read as
follows:
"SECTION 2.7. Compensation shall have the same meaning as under the
Profit Sharing Plan, except that (a) Compensation shall be deemed to
include (i) the amount of compensation deferred by the Participant
under this Plan, excluding, however, LTIP Deferral Benefits and (ii)
amounts in excess of the limitation imposed by Code Section 401(a)(17)
and (b) Compensation shall be deemed to exclude cash compensation which
is paid for special perquisites, such as country club dues and company
plane allowances. Notwithstanding the foregoing, cash allowances in
lieu of general perquisites that are paid to substantially all
Participants shall be included in the definition of Compensation
hereunder."
SECTION 2
Section 5.4(a) of the Plan is hereby amended in its entirety to read as
follows:
"(a) The NACCO Industries, Inc. Benefits Committee (the "Committee")
may change (but not suspend) the earnings rate credited on Accounts under the
Plan at any time upon at least 30 days advance notice to Participants."
SECTION 3
Section 10.6(a) of the Plan is hereby amended by deleting the phrase
"the Committee" and replacing it with the phrase "the Company" each time it
appears therein.
NACCO MATERIALS HANDLING
GROUP, INC.
By:/s/ Charles A. Bittenbender
------------------------------
Date: June 5, 1999 Title: Assistant Secretary
------------------
<PAGE> 1
Exhibit 10(lxxx)
AMENDMENT NO. 2
TO THE
NACCO MATERIALS HANDLING GROUP, INC.
UNFUNDED BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1999)
NACCO Materials Handling Group, Inc. adopts this Amendment No. 2 to the
NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (As Amended and
Restated Effective January 1, 1999) (the "Plan"), effective September 1, 1999.
Words and phrases used herein with initial capital letters which are defined in
the Plan are used herein as so defined.
SECTION 1
Section 2.8 of the Plan is hereby amended in its entirety to read as
follows:
"SECTION 2.8. EMPLOYER shall mean the Company, NACCO Industries, Inc.,
NACCO Materials Handling Group, Ltd., NACCO Materials Handling, B.V. and NACCO
Materials Handling, S.r.l.
SECTION 2
Section 2.14(d) of the Plan is hereby amended in its entirety to read
as follows:
"(d) For purposes of Section 3.6 of the Plan, the term 'Participant'
means an Employee (i) who is a participant in the LTIP Plan, (ii) who, both at
the time the deferral election is required and at the time the deferral becomes
effective, is (a) a U.S. citizen, (b) a nonresident alien who is covered on a
U.S. payroll or (c) a citizen or resident of the United Kingdom (referred to
herein as the 'UK Participants') and (ii) whose total annual Compensation from
the Controlled Group for the Plan Year in which a deferral election is required
was at least $100,000."
SECTION 3
Sections 3.6(a) and 3.6(a)(i) of the Plan are hereby amended in their
entirety to read as follows:
"(a) AMOUNT. Each Participant (as defined in Section 2.14(d)) may, with
the consent of the Company, by completing an approved deferral election form,
direct his Employer:
(i) to reduce an Award (as that term is defined in the LTIP Plan)
payable under the LTIP Plan by a specified dollar amount or percentage and
thereby extinguish his entitlement under the LTIP Plan to so much of an Award as
is covered by the election form; and".
SECTION 4
Section 4.1(e) of the Plan is hereby amended in its entirety to read as
follows:
<PAGE> 2
2
"(e) Credits to an LTIP Deferral Sub-Account for the LTIP Deferral
Benefits described in Section 3.6, which shall be credited to the Sub-Account as
soon as practicable following the time the Award would otherwise be payable to
the Participant under the LTIP Plan."
SECTION 5
Section 6.1(a) of the Plan is hereby amended (a) by adding the phrase
"Subject to the provisions of the following sentence, " to the beginning
thereof, and (b) adding the following new sentence to the end thereof to read as
follows:
"Notwithstanding the foregoing, a UK Participant shall always be 100%
vested in the amounts credited to his LTIP Deferral Sub-Account but
this does not give rise to any right or entitlement (whether legal,
equitable or otherwise) to payment or distribution otherwise than in
accordance with Article VII or Article VIII of the Plan."
SECTION 6
Section 9.2 of the Plan is hereby amended by adding the following
provisions to the end thereof, to read as follows:
"The amount standing to the credit of any UK Participant's Sub-Account
is purely notional and affects only the calculation of benefits payable
to or in respect of him. It does not give the UK Participant any right
or entitlement (whether legal, equitable or otherwise) to any
particular assets held for the purposes of the Plan or otherwise."
NACCO MATERIALS HANDLING
GROUP, INC.
By: /s/ Michael L. Smith
-----------------------------
Date: 10/8/99 Title: VP Finance
---------------
<PAGE> 1
Exhibit 10(lxxxi)
AMENDMENT NO. 3
TO THE
NACCO MATERIALS HANDLING GROUP, INC.
UNFUNDED BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1999)
NACCO Materials Handling Group, Inc. adopts this Amendment No. 3 to the
NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (As Amended and
Restated Effective January 1, 1999) (the "Plan"), effective as of the close of
business on August 31, 1999. Words and phrases used herein with initial capital
letters which are defined in the Plan are used herein as so defined.
SECTION 1
Section 1.2 of the Plan is hereby amended in its entirety to read as
follows:
"SECTION 1.2. PURPOSE OF THE PLAN. The purpose of this Plan is (a) to
allow certain employees to defer the receipt of certain long-term
incentive compensation award payments, (b) to provide for certain
Employees the benefits they would have received under the Qualified
Plans but for (i) the dollar limitation on Compensation taken into
account under the Qualified Plans as a result of Section 401(a)(17) of
the Code, (ii) the limitations imposed under Section 415 of the Code,
and (iii) the limitations under Sections 402(g), 401(k)(3) and 401(m)
of the Code, and (c) to provide for the continued deferral of certain
frozen benefits."
SECTION 2
Section 2.1 of the Plan is hereby amended in its entirety to read as
follows:
"SECTION 2.1. ACCOUNT shall mean the record maintained by the Employer
in accordance with Section 4.1 as the sum of the Participant's Excess
Profit Sharing Sub-Account, Excess 401(k) Sub-Account, Excess Matching
Sub-Account, Excess Deferral Sub-Account, LTIP Deferral Sub-Account and
Yale Short-Term Deferral Sub-Account."
SECTION 3
Section 2.9 of the Plan is hereby amended to add the words "Yale
Short-Term Deferral Benefit" following the words "LTIP Deferral Benefit"
therein.
SECTION 4
Section 2.14 of the Plan is hereby amended by renumbering Subsection
2.14(e) as Subsection 2.14(f) and by adding a new Subsection 2.14(e) thereto to
read as follows:
<PAGE> 2
"(e) For purposes of Section 3.7 of the Plan, the term "Participant"
means any person who was entitled to receive benefits under the Yale
Short-Term Plan on August 31, 1999."
SECTION 5
A new Section 2.24 is hereby added to the Plan to read as follows:
"SECTION 2.24. YALE SHORT-TERM PLAN shall mean the Yale Materials
Handling Corporation Short-Term Incentive Compensation Deferral Plan, a
plan that was frozen prior to 1992. The Yale Short-Term Plan was merged
into the Plan effective August 31, 1999."
SECTION 6
The heading which states "SECTION 3.5. LTIP DEFERRAL BENEFITS." is
hereby deleted and replaced with the reading "SECTION 3.6. LTIP DEFERRAL
BENEFITS".
SECTION 7
A new Section 3.7 is hereby added to the Plan, immediately following
Section 3.6, to read as follows:
"SECTION 3.7 YALE SHORT-TERM DEFERRAL BENEFITS.
Prior to 1992, certain Employees of a corporate predecessor to the
Company were permitted to elect to defer specified amounts of their short-term
incentive compensation under the Yale Short-Term Plan. Effective August 31,
1999, the Yale Short-Term Plan was merged into the Plan and amounts credited
under the Yale Short-Term Plan were credited to the "Yale Short-Term Deferral
Sub-Account" hereunder.
SECTION 8
Section 4.1 of the Plan is hereby amended by renumbering Subsection
4.1(f) as 4.1(g) and 4.1(g) as 4.1(h) and by adding a new Subsection 4.2(f)
thereto to read as follows:
"(f) Credits to Yale Short-Term Deferral Sub-Account for the Yale
Short- Term Deferral Benefits described in Section 3.7."
SECTION 9
Section 5.2 of the Plan is hereby amended in its entirety to read as
follows:
"5.2 EARNINGS ON ADDITIONAL SUB-ACCOUNTS AND THE YALE SHORT-TERM
DEFERRAL SUB-ACCOUNT. Subject to Section 5.4, at the end of each
calendar month during the Plan Year, the Additional Excess Deferral
Sub-Account, Additional Excess
-2-
<PAGE> 3
401(k) Sub-Account, Additional Excess Matching Sub-Account and Yale
Short-Term Deferral Sub-Account of each Participant shall be credited
with an amount determined by multiplying such Participant's average
Sub-Account balance during such month by the blended rate earned during
such month by the Fixed Income Fund. The earnings calculation for the
month in which the Participant receives a distribution from his
Sub-Account shall be based on the blended rate earned during the
preceding month by the Fixed Income Fund."
SECTION 10
Section 5.2 of the Plan is hereby amended by adding the words "and Yale
Short-Term Deferral Sub-Account" after the words "Additional Excess Matching
Sub-Account" wherever such words shall appear therein.
SECTION 11
Section 6.1(a) of the Plan is hereby amended in its entirety to read as
follows:
" (a) EXCESS DEFERRAL SUB-ACCOUNT, EXCESS 401(K) SUB-ACCOUNT, EXCESS
MATCHING SUB-ACCOUNT, LTIP DEFERRAL SUB-ACCOUNT AND YALE SHORT-TERM
SUB-ACCOUNT. Subject to the provisions of the following sentence, a
Participant shall always be 100% vested in the amounts credited to his
Excess Deferral Sub-Account, his Excess 401(k) Sub-Account, his Excess
Matching Sub-Account, his LTIP Sub-Account and his Yale Short-Term
Sub-Account hereunder.
SECTION 12
Section 7.1 of the Plan is hereby amended by renumbering Section 7.1(c)
as Section 7.1(d) and Section 7.1(d) as Section 7.1(e) and by adding a new
Section 7.1(c) to read as follows:
"(c) YALE SHORT-TERM DEFERRAL SUB-ACCOUNT. The Yale Short-Term Deferral
Sub-Account shall be commence to be paid to the Participant (i) in the
form of five annual installments with each installment being based on
the value of the Yale Short-Term Deferral Sub-Account on the Valuation
Date on which such installment is to be paid and being a fraction of
such value in which the numerator is one and the denominator is the
total number of remaining installments to be paid, and (ii) commencing
in the January following the date on which the Participant ceases to be
an Employee of the Controlled Group."
SECTION 13
Section 8.1(c) of the Plan is hereby amended to read as follows:
"the Beneficiary of a Participant for his Excess Deferral Benefits, his
LTIP Deferral Benefits and his Yale Short-Term Deferral Benefits shall
be his surviving spouse or, if none, his estate."
-3-
<PAGE> 4
SECTION 14
Section 8.3 of the Plan is hereby amended by adding the words "and Yale
Short-Term Deferral Benefit" after the words "LTIP Deferral Benefit" wherever
such words appear therein.
EXECUTED this 27TH day of AUGUST, 1999.
NACCO MATERIALS HANDLING
GROUP, INC.
Date: 8/27/99 By: /s/ Michael L. Smith
----------------------- -------------------------
Title:VP Finance-Americas
-4-
<PAGE> 1
Exhibit 10 (lxxxii)
AMENDMENT NO. 4
TO THE
NACCO MATERIALS HANDLING GROUP, INC.
UNFUNDED BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1999)
NACCO Materials Handling Group, Inc. adopts this Amendment No. 4 to the
NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (As Amended and
Restated Effective January 1, 1999) (the "Plan"), effective on the dates
indicated herein. Words and phrases used herein with initial capital letters
which are defined in the Plan are used herein as so defined.
SECTION 1
Effective January 1, 2000, Section 1.2(a) of the Plan is hereby amended
in its entirety to read as follows:
"(a) to allow certain employees to defer the receipt of Compensation or
the receipt of certain long-term incentive compensation award payments."
SECTION 2
Effective as of January 1, 1999, Sections 2.14(b) and 2.14(c) of the
Plan are hereby amended in their entirety to read as follows:
"(b) For purposes of Section 3.2 of the Plan, the term 'Participant'
means an Employee who is a Participant in the profit sharing portion of the
Profit Sharing Plan (i) whose profit sharing benefit for a Plan Year is limited
by the application of section 401(a)(17) or 415 of the Code and (ii) whose total
annual compensation from the Controlled Group for such Plan Year was at least
$100,000.
(c) For purposes of Section 3.4 and 3.5 of the Plan, the term
'Participant' means a 401(k) Employee (i) who is unable to make all of the
Before-Tax Contributions that he has elected to make to the Profit Sharing Plan,
or is unable to receive the maximum amount of Matching Employer Contributions
under the Profit Sharing Plan because of the limitations of Section 402(g),
401(a)(17), 401(k)(3) or 401(m) of the Code and (ii) whose total annual
compensation from the Controlled Group for the Plan Year in which a deferral
election is required is at least $100,000."
SECTION 3
Effective January 1, 2000, Section 2.14 of the Plan is hereby amended
by relettering Subsections (c) through (e) thereof as Subsections (d) through
(f) thereof and adding the following new Subsection (c) thereof to read as
follows:
<PAGE> 2
2
"(c) For purposes of Section 3.3 of the Plan, the term 'Participant'
means (i) any Employee of the Company who made Excess Deferrals under the Plan
prior to January 1, 1996 and (ii) any Employee of the Company whose total annual
Compensation from the Controlled Group for the Plan Year in which a deferral
election is required was at least $100,000, who is listed on Exhibit A hereto
and who is eligible to make Excess Deferrals on or after January 1, 2000."
SECTION 4
Effective January 1, 2000, Section 3.3 of the Plan is hereby amended in
its entirety to read as follows:
"SECTION 3.3. BASIC AND ADDITIONAL EXCESS DEFERRAL BENEFITS.
(a) PRE-1996 EXCESS DEFERRAL BENEFITS. Prior to January 1, 1996,
certain Employees of the Company were permitted to elect to defer specified
amounts of salary and bonus of up to 7% of compensation (the "Basic Excess
Deferrals") which are credited to the Basic Excess Deferral Sub-Account
hereunder and in excess of 7% of compensation (the "Additional Excess
Deferrals") which are credited to the Additional Excess Deferral Sub-Account
hereunder. At the time the Basic and Additional Excess Deferrals were elected,
the Participant irrevocably designated the date of commencement of the payment
of such Excess Deferrals by choosing one of the following dates: (i) the date on
which he ceases to be an Employee of the Controlled Group, (ii) the date on
which he attains an age specified in the election form, or (iii) the earlier or
later of such dates.
(b) POST-1999 EXCESS DEFERRAL BENEFITS. Each Participant
described in Section 2.14(c)(ii) may, prior to the first day of any Plan Year,
by completing an approved deferral election form, direct the Company to reduce
his Compensation for such Plan Year and, subject to Subsection (d) below,
subsequent Plan Years, by an amount equal to between 1% and 17% of his
Compensation for the Plan Year (in 1% increments). The first 7% of Compensation
deferred by a Participant will be classified as the Basic Excess Deferrals which
are credited to the Basic Excess Deferrals Sub-Account and Compensation deferred
in excess of 7% of Compensation will be classified as the Additional Excess
Deferrals and will be credited to the Additional Excess Deferral Sub-Account.
(c) DEFERRAL PERIOD FOR POST-1999 EXCESS DEFERRAL BENEFITS. The
deferral election form shall also contain the Participant's irrevocable election
regarding the time of the commencement of payment of the Participant's entire
Basic and Additional Excess Deferral Sub-Accounts. The Participant may elect to
commence payment of such Sub-Accounts on (i) the date on which he ceases to be
an Employee of the Controlled Group, (ii) the date on which he attains an age
specified in the form, or (iii) the earlier or later of such dates.
<PAGE> 3
3
(d) EFFECT AND DURATION OF DEFERRAL ELECTION FOR POST-1999 EXCESS
DEFERRAL BENEFITS. Any direction by a Participant to defer Compensation under
Subsection (b) above shall be effective with respect to Compensation otherwise
payable to the Participant during the Plan Year for which the deferral election
form is effective, and the Participant shall not be eligible to receive such
Compensation. Instead, such amounts shall be credited to the Participant's Basic
or Additional Excess Deferral Sub-Account (as applicable). Any directions made
in accordance with Subsection (b) shall be irrevocable and shall remain in
effect for subsequent Plan Years unless changed or terminated by the Participant
for Plan Years commencing after such change or termination on the appropriate
form provided by the Plan Administrator, prior to the first day of any
subsequent Plan Year.
(e) AUTOMATIC TERMINATION OF DEFERRAL ELECTION FOR POST-1999
EXCESS DEFERRAL BENEFITS. A Participant's direction to defer Compensation under
Subsection (b) shall automatically terminate on the earlier of the date on which
(i) the Participant ceases employment with the Employers, (ii) the Participant's
Employer is deemed Insolvent, (iii) the Participant ceases to satisfy the
requirements of Section 2.14(c)(ii), or (iv) the Plan is terminated. In
addition, the Plan Administrator may, in its sole and absolute discretion,
pursuant to nondiscriminatory rules adopted by the Plan Administrator, reduced
and/or cease the deferral of Compensation under Subsection (b) by one or more
Participants, to the extent deemed necessary or desirable in order to satisfy
the requirements of any applicable law (including, without limitation, federal
securities laws)."
SECTION 5
Effective January 1, 2000, Sections 3.6(a) and 3.6(d)(i) are
hereby amended by deleting the phrase "Section 2.14(d)" and replacing it with
the phrase "Section 2.14(e)" each time it appears therein.
SECTION 6
Effective January 1, 2000, Section 4.1(b) of the Plan is hereby
amended in its entirety to read as follows:
"(b) Credits to a Basic or Additional Excess Deferral Sub-Account
for the Basic and Additional Excess Deferrals described in Section 3.3, which
shall be credited to the Sub-Account as soon as practicable after the time the
Compensation would otherwise have been paid to the Participant."
SECTION 7
Effective October 1, 1999, Section 6.1(b) of the Plan is hereby
amended in its entirety to read as follows:
<PAGE> 4
4
"(b) EXCESS PENSION BENEFIT AND EXCESS PROFIT SHARING BENEFITS.
The Excess Pension Benefit and Excess Profit Sharing Benefits of all
Participants who are employed on or after October 1, 1999 shall be immediately
100% vested and nonforfeitable."
SECTION 8
Effective January 1, 2000, a new Exhibit A is hereby added to the
end of the Plan, to read as follows:
"Exhibit A
----------
Employees Eligible to Make Post-1999 Excess Deferrals
Colin Wilson"
NACCO MATERIALS HANDLING
GROUP, INC.
By: /s/ Charles A. Bittenbender
---------------------------------
Date: September 24, 1999 Title: Assistant Secretary
-----------------------
<PAGE> 1
Exhibit 10(lxxxiii)
AMENDMENT NO. 4 TO THE
NACCO MATERIALS HANDLING GROUP, INC.
LONG-TERM INCENTIVE COMPENSATION PLAN
-------------------------------------
NACCO Materials Handling Group, Inc. hereby adopts this Amendment
No. 4 to the NACCO Materials Handling, Inc. Long-Term Incentive Compensation
Plan (the "Plan"), effective as of August 1, 1999. Words and phrases used herein
with initial capital letters which are defined in the Plan are used herein as so
defined.
SECTION 1
---------
Section 5.1(c) of the Plan is hereby amended by adding the
following provisions to the end thereof, to read as follows:
"Notwithstanding any provision of this Plan to the contrary,
prior to the vesting of an Award under this Section 5.2, to the extent
determined by the Company in its sole and absolute discretion and subject to the
terms and conditions of the NACCO Materials Handling Group, Inc. Unfunded
Benefit Plan (the "Unfunded Plan"), a grantee shall be permitted to make an
irrevocable election to defer receipt of all or part of an Award under and into
the Unfunded Plan. Any such election shall thereby extinguish his entitlement
under this Plan to so much of an Award as is covered by such deferral election."
EXECUTED this 8TH day of OCT., 1999.
NACCO MATERIALS HANDLING GROUP, INC.
By:/s/ Michael L. Smith
-----------------------
Title:VP Finance
<PAGE> 1
Exhibit 10(1xxxiv)
AMENDMENT NO. 5 TO THE
NACCO MATERIALS HANDLING GROUP, INC.
LONG-TERM INCENTIVE COMPENSATION PLAN
NACCO Materials Handling Group, Inc. hereby adopts this Amendment No. 5 to
the NACCO Materials Handling, Inc. Long-Term Incentive Compensation Plan (the
"Plan"), effective as of December 31, 1999. Words and phrases used herein with
initial capital letters which are defined in the Plan are used herein as so
defined.
SECTION 1
The first two sentences of Section 5.2(f) of the Plan is hereby deleted in
their entirety and replaced with the following sentences:
"At any time following the fifth anniversary of the date of
any Award which has not yet vested under this Plan, a grantee may
annually request in writing that the Committee permit the grantee to
exercise and receive payment of up to 20% of the number of Book Value
Appreciation Units originally granted in such Award if such funds are
required due to an 'Unforeseeable Emergency;' provided, however, that
such grantee will not receive an Award of any replacement Units with
respect to the Units exercised for a period of two years from the
grantee's payment effective date; and further provided, however, that
replacement Units, if any, awarded under this Plan shall equal no more
than the same number of Units which were exercised. Payments of amounts
because of an Unforeseeable Emergency shall be made at the sole
discretion of the Committee and shall be permitted only to the extent
reasonably necessary to satisfy the emergency need. For this purpose,
an Unforeseeable Emergency shall mean an event which results (or will
result) in severe financial hardship to the grantee as a consequence of
an unexpected illness or accident or loss of the grantee's property due
to casualty or other similar extraordinary or unforeseen circumstances
out of the control of the grantee. A grantee may make any number of
requests pursuant to this Section 5.2(f) so long as (y) no more than
one request shall be granted in each calendar year and (z) the total
amount paid over the life of the Award pursuant to this Section 5.2(f)
does not exceed the amount represented by 40% of the Units originally
granted in such Award."
SECTION 2
Section 8 of the Plan is hereby amended by deleting the phrase "The
Committee" therefrom and replacing it with the phrase "The Committee (or the
NACCO Industries, Inc. Benefits Committee, as applicable)."
EXECUTED this 20th day of Dec., 1999.
NACCO MATERIALS HANDLING GROUP, INC.
By: /s/ Charles A. Bittenbender
--------------------------------
Title: Assistant Secretary
<PAGE> 1
Exhibit 10(xc)
AMENDMENT NO. 1
TO THE
HAMILTON BEACH/PROCTOR-SILEX, INC.
UNFUNDED BENEFIT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1999)
Hamilton Beach/Proctor-Silex, Inc. adopts this Amendment No. 1 to the
Hamilton Beach/Proctor-Silex, Inc. Unfunded Benefit Plan (As Amended and
Restated Effective January 1, 1999) (the "Plan"), effective on December 31,
1999. Words and phrases used herein with initial capital letters which are
defined in the Plan are used herein as so defined.
SECTION 1
Section 5.1 of the Plan is hereby amended in its entirety to read as
follows:
"SECTION 5.1. Vesting. All Participants who are employed on or after
December 31, 1999 shall be immediately 100% vested in their Excess Pension
Benefit, Excess Profit Sharing Benefit and the amounts credited to their Excess
401(k) Sub-Account and Excess Matching Sub-Account hereunder."
HAMILTON BEACH/PROCTOR-SILEX, INC.
By: /s/ A.G. Mason Dirickson
------------------------------------
Date:12/22/99 Title:Vice President-Human Resources
--------
<PAGE> 1
Exhibit 10(cxx)
HAMILTON BEACH/PROCTOR-SILEX, INC.
PROCTOR-SILEX CANADA, INC.
ANNUAL INCENTIVE COMPENSATION PLAN - 2000
GENERAL
- -------
Hamilton Beach/Proctor-Silex, Inc. (the "Company") has established an Annual
Incentive Compensation Plan (the "Plan") as part of a competitive compensation
program for the Officers and key management employees of the Company and its
Subsidiaries. Proctor-Silex Canada, Inc. is a subsidiary of the Company.
PLAN OBJECTIVE
- --------------
The Company desires to attract and retain talented employees to enable the
Company to meet its financial and business objectives. The objective of the Plan
is to provide an opportunity to earn annual incentive compensation to those
employees whose performance has a significant impact on the Company's short-term
and long-term profitability.
ADMINISTRATION AND PARTICIPATION
- --------------------------------
The Plan is administered by the Nominating, Organization and Compensation
Committee of the Board of Directors of the Company (the "Committee"). The
Committee:
a. May amend, modify, or discontinue the Plan.
b. Will approve participation in the Plan. Generally,
participants will include all employee in Hay Salary Job
Grades 14 and above. Employees who voluntarily terminate their
employment prior to year-end are not entitled to an award, and
employees joining the Company after August of any year will
not be entitled to an award. However, the Committee may select
any employee who has contributed significantly to the
Company's profitability to participate in the Plan and receive
an annual incentive compensation award.
c. Will determine the annual performance criteria which generates
the incentive compensation pool.
d. Will determine the total amount of both the target and actual
annual incentive compensation pool.
e. Will approve individual incentive compensation awards to
Officers and employees above Hay Salary Job Grade 17.
f. May delegate to the Chief Executive Officer of the Company the
power to approve incentive compensation awards to employees in
and below Hay Salary Job Grade 17.
g. May consider at the end of each year the award of a
discretionary bonus amount to non-participants as an addition
to the regular incentive compensation pool on a special
one-time basis to motivate individuals not eligible to
participate in the Plan.
h. May approve a pro rata incentive compensation award for
participants in the Plan whose employment is terminated (1)
due to death, disability, retirement or facility closure,
such award to be determined pursuant to the provisions of
subparagraphs e. and f. above or (2) under other
circumstances at the recommendation of the Chief Executive
Officer of the Company.
<PAGE> 2
DETERMINATION OF CORPORATE INCENTIVE COMPENSATION POOL
- ------------------------------------------------------
Each participant in the Plan will have an individual target incentive
compensation percentage which is determined by the participant's Salary Job
Grade. This percentage is multiplied by the midpoint of the participant's Salary
Job Grade to determine his individual target incentive compensation award. The
total of the target incentive compensation awards of all participants equals the
target corporate incentive compensation pool (the "Target Pool"). The Target
Pool is approved each year by the Committee.
The actual corporate incentive compensation pool (the "Actual Pool") is
determined at the end of each year based on the Company's actual performance
against specific criteria established in the beginning of the year by the
Committee. The Target Pool is adjusted upwards or downwards by corporate
performance adjustment factor to determine the Actual Pool. In no event will the
Actual Pool exceed 150% of the Target Pool, except to the extent that the
Committee elects to increase the Actual Pool by up to 10%, as described below.
It is the intent of the Plan that the Actual Pool, as determined above, will be
the final total corporate incentive compensation pool. However, the Committee,
in its sole discretion, may increase or decrease by up to 10% the Actual Pool or
may approve an incentive compensation pool where there would normally be no pool
due to Company performance which is below the criteria established for the year.
The Actual and Target Pools exclude commission personnel as salespersons,
regional general manager and manufacturing representatives.
DETERMINATION OF INDIVIDUAL INCENTIVE COMPENSATION AWARDS
- ---------------------------------------------------------
Salary Job Grades and the corresponding target incentive percentage for each
participant in the Plan will be established at the beginning of each year and
approved by the Committee. Individual target incentive compensation will then be
adjusted by the appropriate pool factor. Such adjusted individual incentive
compensation will then be further modified based on a participant's performance
as compared to his individual goals for the year. The total of all individual
incentive compensation awards must not exceed the Actual Pool for the year.
PERFORMANCE TARGETS - See Plan Summary.
- -------------------
<PAGE> 1
Exhibit 10(cxxiv)
AMENDMENT NO. 1 TO THE
HAMILTON BEACH/PROCTOR-SILEX, INC.
LONG-TERM INCENTIVE COMPENSATION PLAN
Hamilton Beach/Proctor-Silex, Inc. hereby adopts this Amendment No. 1 to
the Hamilton Beach/Proctor-Silex, Inc. Long-Term Incentive Compensation Plan
(the "Plan"), effective as of December 31, 1999. Words and phrases used herein
with initial capital letters which are defined in the Plan are used herein as so
defined.
SECTION 1
The first two sentences of Section 5.2(f) of the Plan is
hereby deleted in their entirety and replaced with the following sentences:
"At any time following the fifth anniversary of the date of
any Award which has not yet vested under this Plan, a grantee may
annually request in writing that the Committee permit the grantee to
exercise and receive payment of up to 20% of the number of Book Value
Appreciation Units originally granted in such Award if such funds are
required due to an 'Unforeseeable Emergency;' provided, however, that
such grantee will not receive an Award of any replacement Units with
respect to the Units exercised for a period of two years from the
grantee's payment effective date; and further provided, however, that
replacement Units, if any, awarded under this Plan shall equal no more
than the same number of Units which were exercised. Payments of amounts
because of an Unforeseeable Emergency shall be made at the sole
discretion of the Committee and shall be permitted only to the extent
reasonably necessary to satisfy the emergency need. For this purpose,
an Unforeseeable Emergency shall mean an event which results (or will
result) in severe financial hardship to the grantee as a consequence of
an unexpected illness or accident or loss of the grantee's property due
to casualty or other similar extraordinary or unforeseen circumstances
out of the control of the grantee. A grantee may make any number of
requests pursuant to this Section 5.2(f) so long as (y) no more than
one request shall be granted in each calendar year and (z) the total
amount paid over the life of the Award pursuant to this Section 5.2(f)
does not exceed the amount represented by 40% of the Units originally
granted in such Award."
SECTION 2
Section 8 of the Plan is hereby amended by deleting the phrase "The
Committee" therefrom and replacing it with the phrase "The Committee (or the
NACCO Industries, Inc. Benefits Committee, as applicable)."
EXECUTED this 20th day of Dec., 1999.
HAMILTON BEACH/PROCTOR-SILEX, INC.
By:/s/ Charles A. Bittenbender
-----------------------------
Title: Assistant Secretary
<PAGE> 1
Exhibit 13
[LOGO]SELECTED FINANCIAL AND OPERATING DATA
NACCO Industries,Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------------------------
(In millions,except per share and employee data)
<S> <C> <C> <C> <C> <C>
Total revenues ........................... $ 2,602.8 $ 2,536.2 $ 2,246.9 $ 2,273.2 $ 2,204.5
Operating profit ......................... $ 131.3 $ 198.1 $ 132.0 $ 131.2 $ 148.7
Income before extraordinary items and
cumulative effect of accounting change $ 54.3 $ 102.3 $ 61.8 $ 50.6 $ 65.5
Extraordinary items:
Extraordinary gain,net-of-tax ......... - - - - 32.3
Extraordinary charges,net-of-tax ...... - - - - (3.4)
Cumulative effect of accounting change,
net-of-tax ............................ (1.2) - - - -
----------- ----------- ----------- ----------- -----------
Net income ............................... $ 53.1 $ 102.3 $ 61.8 $ 50.6 $ 94.4
=========== =========== =========== =========== ===========
Total assets ............................. $ 2,013.0 $ 1,898.3 $ 1,729.1 $ 1,708.1 $ 1,833.8
Long-term debt ........................... $ 326.3 $ 256.4 $ 230.2 $ 333.3 $ 320.2
Stockholders' equity ..................... $ 562.2 $ 518.3 $ 425.1 $ 379.3 $ 370.1
Basic earnings per share:
Income before extraordinary items and
cumulative effect of accounting change $ 6.67 $ 12.56 $ 7.56 $ 5.67 $ 7.31
Extraordinary items:
Extraordinary gain,net-of-tax ....... - - - - 3.61
Extraordinary charges,net-of-tax .... - - - - (0.38)
Cumulative effect of accounting change,
net-of-tax .......................... (0.15) - - - -
----------- ----------- ----------- ----------- -----------
Net income ............................ $ 6.52 $ 12.56 $ 7.56 $ 5.67 $ 10.54
=========== =========== =========== =========== ===========
Diluted earnings per share:
Income before extraordinary items and
cumulative effect of accounting change $ 6.66 $ 12.53 $ 7.55 $ 5.67 $ 7.30
Extraordinary items:
Extraordinary gain,net-of-tax ....... - - - - 3.60
Extraordinary charges,net-of-tax .... - - - - (0.38)
Cumulative effect of accounting change,
net-of-tax .......................... (0.15) - - - -
----------- ----------- ----------- ----------- -----------
Net income ............................ $ 6.51 $ 12.53 $ 7.55 $ 5.67 $ 10.52
=========== =========== =========== =========== ===========
Per share data:
Cash dividends ........................ $ 0.850 $ 0.810 $ 0.773 $ 0.743 $ 0.710
Market value at December 31 ........... $ 55.56 $ 92.00 $ 107.19 $ 53.50 $ 55.50
Stockholders' equity .................. $ 68.92 $ 63.83 $ 52.13 $ 46.34 $ 41.28
Average shares outstanding ............... 8.150 8.147 8.171 8.920 8.963
Total employees .......................... 14,400 14,100 13,400 11,800 12,300
</TABLE>
[BAR GRAPH]
TOTAL REVENUES
(in billions)
$2.2 $2.3 $2.2 $2.5 $2.6
1995 1996 1997 1998 1999
[BAR GRAPH]
DILUTED EARNINGS PER SHARE BEFORE EXTRAORDINARY ITEMS
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE
$7.30 $5.67 $7.55 $12.53 $6.66
1995 1996 1997 1998 1999
1
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
FINANCIAL SECTION
<TABLE>
<CAPTION>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
<S> <C>
Financial Summary .......................................................... 24
The North American Coal Corporation ........................................ 25
NACCO Materials Handling Group ............................................. 28
NACCO Housewares Group ..................................................... 33
NACCO and Other ............................................................ 36
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Income and
Comprehensive Income .................................................. 40
Consolidated Balance Sheets ................................................ 41
Consolidated Statements of Cash Flows ...................................... 42
Consolidated Statements of
Stockholders' Equity .................................................. 43
Notes to Consolidated Financial Statements ................................. 44
</TABLE>
FINANCIAL SUMMARY
NACCO Industries, Inc. ("NACCO," the parent company) has four operating
subsidiaries (collectively, the"Company") that function in three principal
industries: lignite mining, lift trucks and housewares. The North American Coal
Corporation ("NACoal") mines and markets lignite primarily as fuel for power
generation by electric utilities. NMHG Holding Co. and its majority owned
subsidiaries (collectively, "NMHG") consists of NACCO Materials Handling Group,
Inc. ("NMHG Wholesale") and NMHG Distribution Co. ("NMHG Retail"). NMHG
Wholesale primarily designs, engineers, manufactures and sells a full line of
lift trucks and replacement parts marketed worldwide under the Hyster(R)and
Yale(R)brand names. NMHG Retail primarily sells and services Hyster and Yale
lift trucks and replacement parts through a network of wholly owned Hyster or
Yale retail dealerships. NACCO Housewares Group ("Housewares") consists of
Hamilton Beach*Proctor-Silex, Inc. ("HB*PS"), a leading manufacturer and
marketer of small electric motor and heat-driven appliances as well as
commercial products for restaurants, bars and hotels, and The Kitchen
Collection, Inc. ("KCI"), a national specialty retailer of brand-name
kitchenware, small electrical appliances and related accessories.
In 1999, the Company recognized the cumulative effect of a required
change in accounting for start-up costs of $1.2 million, net-of-tax.
Consolidated income before the cumulative effect of this accounting change was
$54.3 million, or $6.66 diluted earnings per share. This compares with income
before the cumulative effect of accounting change, which was equal to net income
of $102.3 million, or $12.53 diluted earnings per share, in 1998; and $61.8
million, or $7.55 diluted earnings per share, in 1997. In 1999, consolidated net
income was $53.1 million, or $6.51 diluted earnings per share.
The following schedule identifies the components of the changes in
consolidated revenues, operating profit and net income for 1999 compared with
1998:
Operating Net
Revenues Profit Income
-------- ------ ------
1998 ................................. $2,536.2 $ 198.1 $ 102.3
Increase (decrease)
in 1999 from:
NACoal .............................. (7.7) (1.6) (2.6)
NMHG Wholesale ...................... (95.9) (59.9) (38.2)
NMHG Retail ......................... 111.2 (14.0) (13.2)
Housewares .......................... 59.1 7.2 6.0
NACCO & Other ....................... (.1) 1.5 -
Cumulative effect
of accounting
change ............................. - - (1.2)
-------- -------- --------
1999 ................................. $2,602.8 $ 131.3 $ 53.1
======== ======== ========
NACCO's subsidiaries function in three distinct industries and,
therefore, results of operations and financial condition are discussed
separately for the industry groups, as defined above: NACoal, NMHG and
Housewares. Results by segment are also summarized in Note Eighteen to the
Consolidated Financial Statements.
24
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
THE NORTH AMERICAN COAL CORPORATION
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 1.9 billion tons, with 1.1
billion tons committed to electric utility customers pursuant to long-term
contracts. NACoal operates five lignite mines, including three project mining
subsidiaries ("Coteau,""Falkirk"and "Sabine"), a NACoal division ("San Miguel")
and a joint venture ("Red River"). NACoal also provides dragline mining services
("Florida dragline operations") for a limerock quarry near Miami, Florida. The
operating results for the Florida dragline operations, San Miguel and Red River
are included in Other mining operations.
During 1997, the Mississippi Lignite Mining Company was formed as a joint
venture between NACoal and Phillips Coal Company. This joint venture, in which
NACoal has a 25 percent interest, was formed to develop and mine lignite at the
Red Hills lignite mine near Ackerman, Mississippi. Development of the mine site
began in 1998 and continued through 1999. Initial production is expected to
begin during the fourth quarter of 2000. NACoal accounts for its minority
ownership in the Mississippi Lignite Mining Company using the equity method of
accounting.
FINANCIAL REVIEW
NACoal's three project mining subsidiaries (Coteau, Falkirk and Sabine),
which represent a significant portion of NACoal's operations, mine lignite for
utility customers pursuant to long-term contracts at prices based on actual cost
plus an agreed pre-tax profit per ton. Due to the cost-plus nature of these
contracts, revenues and operating profits are affected by increases and
decreases in operating costs, as well as by tons sold. 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 three mines,
operating results are best analyzed in terms of lignite tons sold, income before
taxes and net income.
Lignite tons sold by NACoal's five operating lignite mines were as follows
for the year ended December31:
1999 1998 1997
---- ---- ----
Coteau Properties ..................... 16.4 16.4 15.9
Falkirk Mining ........................ 7.2 7.0 6.9
Sabine Mining ......................... 3.6 3.8 4.1
San Miguel ............................ 3.4 3.5 2.0
Red River Mining ...................... .7 1.0 1.0
------ ------ ------
Total lignite ..................... 31.3 31.7 29.9
====== ====== ======
The Florida dragline operations mined 8.4 million, 8.3 million and 7.6
million cubic yards of limerock for the years ended December 31, 1999, 1998 and
1997, respectively.
Revenues, income before taxes, provision for taxes and net income were as
follows for the year ended December 31:
1999 1998 1997
-------- -------- --------
Revenues
Project mines ................ $ 239.9 $ 240.0 $ 227.4
Other mining
operations ................. 35.1 39.1 29.7
------- ------- -------
275.0 279.1 257.1
Royalties and
other ...................... 2.7 6.3 5.8
------- ------- -------
$ 277.7 $ 285.4 $ 262.9
======= ======= =======
Income before taxes
Project mines ................ $ 25.9 $ 25.2 $ 24.7
Other mining
operations ................. 2.7 5.5 5.2
------- ------- -------
Total income from
operatingmines ................. 28.6 30.7 29.9
Royalty and other
income, net .................... 1.2 4.8 3.2
Other operating
expenses ....................... (7.6) (8.1) (6.0)
------- ------- -------
22.2 27.4 27.1
Provision for taxes ............. 4.5 7.1 8.1
------- ------- -------
Income before
cumulative effect of
accounting change .............. 17.7 20.3 19.0
Cumulative effect of
accounting change .............. (1.2) -- --
------- ------- -------
Net income .................... $ 16.5 $ 20.3 $ 19.0
======= ======= =======
25
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
1999 COMPARED WITH 1998
The following schedule identifies the components of the changes in
revenues, income before taxes and net income for 1999 compared with 1998:
Income
Before Net
Revenues Taxes Income
-------- ----- ------
1998 ................................... $285.4 $ 27.4 $ 20.3
Increase (decrease)
in 1999 from:
Project mines
Tonnage volume ....................... (1.4) (.3) (.2)
Pass-through costs ................... .3 -- --
Agreed profit per ton ................ 1.0 1.0 .7
Other mining
operations
Tonnage volume ....................... (4.6) (4.6) (3.0)
Averagesellingprice .................. .6 .6 .4
Operating costs ...................... -- .2 .1
Other ................................ -- 1.0 .7
------ ------ ------
Changes from
operating mines ...................... (4.1) (2.1) (1.3)
Royalties and other
income, net .......................... (3.6) (3.6) (2.4)
Other operating
expenses ............................. -- .5 .3
Cumulative effect of
accounting change .................... -- -- (1.2)
Difference between
effective and statutory
tax rates ............................ -- -- .8
------ ------ ------
1999 .................................... $277.7 $ 22.2 $ 16.5
====== ====== ======
Revenues for 1999 decreased as compared with 1998 primarily due to decreased
tons sold and reduced royalties. Tons sold declined at Red River due to the
customer's planned power plant outage during the second quarter of 1999 and a
decline in customer demand, which is expected to continue in 2000. Other slight
changes in tons sold at all other mines resulted from fluctuations in customer
demand. Income before taxes for1999 declined as compared with 1998 due to: (i)
reduced royalty income,(ii)decreasedtonssoldatRedRiver,whichis not operated on a
cost-plus basis, and (iii) increased costs at the San Miguel mine resulting from
higher than expected maintenance costs. The decline in income before taxes was
partially offset by reduced operating costs at Red River and increased profit
per ton at each of the project mines and Red River. Net income declined
primarily due to the factors affecting income before taxes and a one-time
cumulative effect charge recognized in the first quarter of1999 as a result of a
change in accounting for start-up costs.
Royalty income continued to decline in 1999 due to decreased demand for coal
from NACoal's Eastern underground reserves. Near-term profits generated by the
San Miguel mine are expected to be lower than 1999 profits because of increased
maintenance and other administrative expenses.
1998 COMPARED WITH 1997
The following schedule identifies the components of the changes in revenues,
income before taxes and net income for 1998 compared with 1997:
Income
Before Net
Revenues Taxes Income
-------- ----- ------
1997 ................................. $262.9 $ 27.1 $ 19.0
Increase (decrease)
in 1998 from:
Project mines
Tonnage volume ..................... .8 .2 .1
Pass-through costs ................. 11.9 -- --
Agreed profit per ton .............. (.1) .3 .2
Other mining
operations
Tonnage volume ..................... 8.4 8.6 5.6
Averageselling price ............... 1.0 .9 .6
Operating costs .................... -- (9.4) (6.1)
Other .............................. -- .2 .1
------ ------ ------
Changes from
operating mines .................... 22.0 .8 .5
Royalties and other
income, net ........................ .5 1.6 1.0
Other operating
expenses ........................... -- (2.1) (1.3)
Difference between
effective and statutory
tax rates .......................... -- -- 1.1
------ ------ ------
1998 ................................. $285.4 $ 27.4 $ 20.3
====== ====== ======
At the project mines, operating results for 1998 improved as compared with
1997 due to increased tons sold, primarily at Coteau, partially offset by
decreased tons sold at Sabine due to a customer's planned power plant outage.
Results from other mining operations improved due to a full year of production
at the San Miguel lignite mining operation, which began operations in July 1997.
Increased income from royalties was offset completely by the increased costs of
pursuing new international mining opportunities.
26
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
OTHER INCOME, EXPENSE AND INCOME TAXES: The components of other income
(expense) and the effective tax rate are as follows for the year ended December
31:
1999 1998 1997
------- ------- -------
Interest expense
Project mines .................. $ (17.6) $ (13.0) $ (12.7)
Other mining
operations .................... -- (.6) (2.1)
------- ------- -------
$ (17.6) $ (13.6) $ (14.8)
======= ======= =======
Other-net
Project mines .................. $ .1 $ .7 $ (.4)
Other mining
operations .................... .3 .5 (1.6)
------- ------- -------
$ .4 $ 1.2 $ (2.0)
======= ======= =======
Effective tax rate .............. 19.1% 25.9% 29.9%
Interest expense at the project mines increased in 1999 as compared with
1998 and 1997 primarily due to additional interest charged on advances from
customers.
In 1997, other-net from other mining operations includes a non-recurring
write-off of certain non-productive assets. The effective tax rate continued to
decline in 1999 and 1998 due to increasing amounts of percentage depletion
eligible to reduce NACoal's effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
NACoal has in place a $50.0 million revolving credit facility. The
expiration date of this facility, which is September 2002, may be extended
annually, for one-year periods, upon the mutual consent of NACoal and the bank
group. NACoal had $34.8 million of its revolving credit facility available at
December 31, 1999.
The financing of the project mining subsidiaries, which is either provided
or guaranteed by the utility customers, includes long-term equipment leases,
notes payable and advances from customers. The obligations of the project mining
subsidiaries do not affect the short-term or long-term liquidity of NACoal and
are without recourse to NACCO or NACoal. These arrangements allow the project
mining subsidiaries to pay dividends to NACoal in amounts equal to their
retained earnings. NACoal believes that funds available under its revolving
credit agreement, operating cash flows and financing provided by the project
mining subsidiaries' customers are sufficient to finance all of its operating
needs and commitments arising during the foreseeable future.
NACoal anticipates spending approximately $30.9 million for property, plant
and equipment in 2000, of which $30.5 million relates to the development,
establishment and improvement of the project mining subsidiaries' mines and is
financed or guaranteed by the utility customers. Planned expenditures primarily
include costs to build infrastructure and to replace aging assets. The 2000
planned expenditures compare with capital expenditures of $12.7 million incurred
in 1999 and $19.6 million incurred in 1998. Increased planned expenditures for
2000 as compared to actual expenditures in 1999 are primarily due to increased
capital projects at Coteau and projects at Sabine that were delayed in 1999.
Also during 1999 and 1998, NACoal invested $17.6 million and $10.5 million,
respectively, in the Mississippi Lignite Mining Company, its joint venture with
Phillips Coal Company, to develop the Red Hills lignite mine in Mississippi.
During 2000, NACoal anticipates investing an additional $7.6 million in this
joint venture.
NACoal's capital structure, excluding the project mining subsidiaries, is
presented below:
December 31
-----------
1999 1998
---- ----
Investment in project
mining subsidiaries ....................... $ 3.7 $ 3.6
Other net tangible
assets .................................... 32.0 14.2
------- -------
Net tangible assets ...................... 35.7 17.8
Advances to (from)
parent company ............................ 2.7 (2.5)
Debt related to parent
advances .................................. (2.7) --
Other debt ................................. (12.5) (.2)
------- -------
Total debt ............................... (15.2) (.2)
------- -------
Stockholder's equity ....................... $ 23.2 $ 15.1
======= =======
Debt to total capitalization ............... 40% 1%
The increase in Other net tangible assets is primarily due to a $17.6
million increase in the investment in the Mississippi Lignite Mining Company.
Borrowings increased to finance investments in the Mississippi Lignite Mining
Company and loans to NACCO.
27
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
NACCO MATERIALS HANDLING GROUP
NMHG, through NMHG Wholesale and NMHG Retail, designs, manufactures, sells
and services forklift trucks and replacement parts marketed worldwide under the
Hyster(R) and Yale(R) brand names.
During 1999, the legal structure of the forklift business was reorganized to
create NMHG Holding Co., a wholly owned subsidiary of NACCO, which indirectly
owns 100 percent of NMHG Wholesale and directly owns 100 percent of NMHG Retail.
Previously, NACCO indirectly owned 98 percent of NMHG Wholesale. However, in
1999, the Company purchased from Sumitomo Heavy Industries the remaining 2
percent indirect minority interest in NMHG Wholesale for its book value of $11.3
million. The Consolidated Balance Sheet at December 31, 1999 included in this
Annual Report reflects the corresponding decrease in NACCO's minority interest
liability as a result of this transaction. As a result of this transaction and
the legal reorganization, NMHG Wholesaleis now indirectly wholly owned by NMHG
Holding Co. The new legal structure was formed primarily to distinguish the
wholesale operations from the retail operations of NMHG.
During 1998, NMHG, through NMHG Retail, began a strategy of acquiring retail
dealerships on a permanent basis to strengthen Hyster's and Yale's positions in
the lift truck business. Previously, NMHG Wholesale had purchased dealerships on
a temporary basis, primarily for the purpose of strengthening the financial
position of that dealership. See also Note Twenty-One to the Consolidated
Financial Statements for a discussion of retail acquisitions.
As of December 31, 1999, NMHG had acquired and consolidated two lift truck
dealerships in the United States, 11 dealerships in Europe and nine
dealershipsin Asia-Pacific. These acquisitions increased revenues by $111.2 and
$31.3 million in 1999 and 1998, respectively, and reduced net income by $13.2
and $2.1 million in 1999 and 1998, respectively. The impact of retail
acquisitions includes the effect of the elimination of intercompany
transactions. NMHG intends to expand further its retail operations over the next
several years through acquisitions, principally outside the United States,and
growth of its existing dealerships. See also Note Eighteen to the Consolidated
Financial Statements for additional financial information related to the retail
and wholesale segments of NMHG.
The results of operations for NMHG Retail, net of intercompany eliminations,
were as follows for the year ended December 31:
1999 1998 1997
-------- -------- --------
Revenues ............................ $ 142.5 $ 31.3 $ --
Operating loss ...................... $ (16.2) $ (2.2) $ --
Operating loss
excluding goodwill
amortization ....................... $ (15.6) $ (2.1) $ --
-------- -------- --------
Net loss ............................ $ (15.3) $ (2.1) $ --
======== ======== ========
FINANCIAL REVIEW
The results of operations for NMHG, including both the wholesale and retail
operations, were as follows for the year ended December31:
1999 1998 1997
-------- -------- --------
Revenues
Americas .................... $1,155.4 $1,177.1 $1,015.4
Europe, Africa
and Middle East ............ 482.7 478.6 398.9
Asia-Pacific ................ 90.2 57.3 73.7
-------- -------- --------
$1,728.3 $1,713.0 $1,488.0
======== ======== ========
Operating profit (loss)
Americas .................... $ 66.5 $ 103.7 $ 52.3
Europe, Africa
and Middle East ............ (3.2) 32.4 22.6
Asia-Pacific ................ (5.0) (3.9) (4.4)
-------- -------- --------
$ 58.3 $ 132.2 $ 70.5
======== ======== ========
Operating profit (loss)
excluding goodwill
amortization
Americas .................... $ 74.6 $ 111.5 $ 60.2
Europe, Africa
and Middle East ............ .7 36.0 26.2
Asia-Pacific ................ (4.8) (3.6) (4.2)
-------- -------- --------
$ 70.5 $ 143.9 $ 82.2
======== ======== ========
Net income .................. $ 23.7 $ 75.1 $ 38.7
======== ======== ========
1999 NMHG Revenues By Geographic Region
[PIE GRAPH]
Americas - 67%
Europe, Africa,
& Middle East -28%
Asia-Pacific - 5%
28
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
[BAR GRAPH]
<TABLE>
<CAPTION>
NMHG Revenues
<S> <C> <C> <C> <C> <C>
WHOLESALES ................. $1,510.1 $1,560.1 $1,488.0 $ 1,681.7 $ 1,585.8
RETAIL ..................... -- -- -- $ 31.3 $ 142.5
1995 1996 1997 1998 1999
</TABLE>
1999 COMPARED WITH 1998
The following schedule identifies the components of the changes in NMHG's
revenues, operating profit and net income for 1999 compared with 1998. The
effect of NMHG Retail, including the elimination of intercompany profit, is
reflected below on the line "Retail operations, net of intercompany." All other
line items reflect changes from the operations of NMHG Wholesale.
Operating
Revenues Profit Income
-------- ------ ------
1998 ................................ $1,713.0 $ 132.2 $ 75.1
Increase (decrease)
in 1999 from:
Unit volume ........................ (29.0) (5.1) (3.3)
Sales mix .......................... (20.9) (12.4) (8.1)
Average sales price ................ (33.2) (33.2) (21.6)
Service parts ...................... (1.0) (3.2) (2.1)
Foreign currency ................... (11.8) (25.0) (16.3)
Retail operations, net
of intercompany ................... 111.2 (14.0) (13.2)
Manufacturing cost ................. -- 4.9 3.2
Other operating
expense ........................... -- 14.1 9.2
Other income and
expense ........................... -- -- (1.0)
Difference between
effective and
statutory tax rates ............... -- -- 1.8
-------- -------- --------
1999 ................................. $1,728.3 $ 58.3 $ 23.7
======== ======== ========
At NMHG, revenues increased as a result of retail sales made by recently
acquired dealerships, almost completely offset by a decrease in revenue from
wholesaleoperations. Operating income and net income declined primarily due to a
reduction in the average sales price, adverse currency effects and an
unfavorable sales mix at NMHG Wholesale and increased losses from NMHG Retail.
NMHG WHOLESALE: Revenues declined primarily due to reduced pricing,
decreased volume and an unfavorable product mix. The average sales price
declined, predominately in the Americas. Pricing deteriorated close to 3 percent
in the Americas due to aggressive competition. In addition, European pricing was
adverselyaffected by unfavorable movements in the British pound sterling against
the Euro.
NMHG Wholesale's worldwide volume decreased 2 percent to 76,055 units
shipped during 1999 from 77,636 units shipped during 1998. Volumes improved in
the fourth quarter of 1999 as compared with the fourth quarter of 1998 primarily
due to increased production in theAmericas. This increase allowed theshipmentof
approximately1,300 units delayed from the third quarter as a result of
September's Hurricane Floyd. However, the fourth quarterimprovement was not
enough to offset declining volumes experienced during the first nine months of
1999. For the year, unit volume decreased in both the Americas and Europe due to
a decline in Hyster demand. Volumes in Asia-Pacific improved 10 percent in 1999
as comparedwith 1998. An unfavorable product mix negatively affected both
revenues and operating profit due to increased sales of both lower-priced and
lower-margin units.
Operating profit declined primarily due to a reduction in the average sales
price, adverse currency movements and an unfavorable sales mix. Adverse currency
movements resulted from both (i) a strengthening of the Japanese yen against the
U.S. dollar and the British pound sterling, resulting in increased costs of
Japanese-sourced products, and (ii) adverse movements of the British pound
sterling against European currencies, resulting in decreased margins on products
manufactured in the United Kingdom and sold to other European countries.
The decline in operating profit was somewhat offset by a reduction in
manufacturing costs and other operating expenses. Manufacturing costs declined
primarily due to favorable materials pricing. Other operating expenses declined
primarily due to reduced variable compensation expense. Net income declined
primarily as a result of these factors and a reduction in income from legal
settlements of $2.4 million after-tax.
The backlog level increased to 21,500 units at December 31, 1999 from 20,000
units at September 30, 1999 and 19,500 units at December 31, 1998. The increase
primarily arose from continued strong bookings in the Americas during the fourth
quarter of 1999.
NMHG Retail: Comparisons between years are not meaningful due to
acquisitions of retail dealerships throughout 1999 and 1998, with the exception
of two retail dealerships acquired toward the end of 1997. In 1997, these
dealerships were considered "temporarily held" and,
29
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
thus, were accounted for using the equity method of accounting. They were
consolidated in 1998 when the Company made the strategic decision to acquire
retail dealerships on a permanent basis. Revenues at these two comparable
dealerships increased $4.8 million in 1999, while operating loss and net loss
increased $3.1 million and $2.5 million, respectively. Increased revenues were
primarily due to volume growth. Increased operatingloss and net loss was
primarily due to reduced gross margins resulting primarily from price
competition.
Excluding the effect of comparable retail dealerships, revenues increased
due to a full year of operating results from retail dealerships acquired in 1998
and the acquisition of 11 retail dealerships during 1999. Operating and net loss
increased due to (i) operating losses at these newly acquired dealerships as a
result of integration and start-up costs, (ii) increased interest and goodwill
amortization expenses, and (iii) intercompany eliminations to defer profits on
sales from NMHG Wholesale to NMHG Retail.
1998 COMPARED WITH 1997
The following schedule identifies the components of the changes in NMHG's
revenues, operating profit and net income for 1998 compared with 1997. The
effect of NMHG Retail, including the elimination of intercompany profit, is
reflected below on the line "Retail operations, net of intercompany." All other
line items reflect changes from the operations of NMHG Wholesale.
Operating Net
Revenues Profit Income
-------- ------ ------
1997 ................................... $1,488.0 $ 70.5 $ 38.7
Increase (decrease)
in 1998 from:
Unit volume ........................... 195.7 32.2 20.9
Sales mix ............................. (4.2) 17.7 11.5
Average sales price ................... (4.9) (4.9) (3.2)
Service parts ......................... 23.7 1.7 1.1
Foreign currency ...................... (16.6) (9.0) (5.9)
Retail operations, net
of intercompany ...................... 31.3 (2.2) (2.1)
Manufacturing cost .................... -- 29.7 19.4
Other operating
expense .............................. -- (3.5) (2.3)
Other income and
expense .............................. -- -- 5.1
Difference between
effective and
statutory tax rates .................. -- -- (8.1)
-------- -------- --------
1998 ................................... $1,713.0 $ 132.2 $ 75.1
======== ======== ========
Revenues increased as a result of increased wholesale volume of units and
service parts and the addition of retail sales made by recently acquired retail
dealerships, partially offset by adverse currency movements and, to a lesser
degree, by an adverse sales mix and reduced pricing from wholesale operations.
Operating profit and net income improved primarily due to improvements from NMHG
Wholesale, partially offset by losses from newly acquired retail dealerships.
NMHG WHOLESALE: Worldwide wholesale volume increased 16 percent to 77,636
units shipped during 1998 from 66,833 units shipped during 1997. Increased
demand in the Americas and Europe, fueled by the strong economies in those
regions, contributed to this volume growth. Unit shipments in Asia-Pacific,
however, declined as a result of the continued weak economies in that region.
Revenues were negatively affected by a reduction in higher-priced units shipped
in Europe and Asia-Pacific. Pricing declined moderately, especially during the
fourth quarter of 1998, in response to increased competition.
Operating profit improved due to increased unit volume, decreased
manufacturing costs and improved sales mix, partially offset by adverse currency
movements and increased operating costs. Manufacturing costs decreased
significantly in 1998 due to reduced materials pricing, savings from ongoing
process re-engineering programs ("VIP") and higher factory throughput resulting
in increased overhead absorption. Although sales mix adversely affected
revenues, operating profit improved as a result of a shift in the mix to higher
margin units shipped in the Americas and a shift to higher margin European
markets.
Foreign currency fluctuations negatively affected operating profit due to
the strengthening of the British pound sterling against other European
currencies, which caused price and margin pressure on pound sterling- based lift
trucks. The decrease to operating profit caused by the stronger pound sterling
was partially offset by the reduced cost of Japanese yen-based materials as a
result of the weakening of the yen against the U.S. dollar and the pound
sterling. Other operating expenses increased during 1998 due to increased
incentive compensation and costs to support sales volume growth, partially
offset by employee attrition resulting from NMHG's restructuring program. See
Note Three to the Consolidated Financial Statements for a discussion of the NMHG
restructuring program, which began in 1997 and was substantially completed in
1998.
30
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
Although service parts contributed significantly to revenues, the
contribution to operating profit was negligible due to margin erosion in Europe
from increased competition and a shift to lower margin geographic markets.
Net income improved as a result of the factors affecting operating profit
and from income from legal settlements, partially offset by non-recurring
favorable tax adjustments recognized in 1997. See also the discussion of other
income, expense and income taxes to follow.
As a result of increased production and a slight reduction in the rate of
incoming orders, the backlog declined to 19,500 at December 31, 1998, compared
with 22,100 units at December 31, 1997.
NMHG RETAIL: Comparisons between years are not meaningful due to
acquisitions of retail dealerships during 1998. In 1998, NMHG began a strategy
of acquiring Hyster and Yale retail dealerships on a permanent basis to
strengthen its position in the lift truck business. Previously, NMHG had
purchased dealerships on a temporary basis, primarily for the purpose of
strengthening the financial position of that dealership. This newly adopted
strategy resulted in the acquisition and consolidation of several lift truck
dealerships in 1998. Although these acquisitions were not material to the
financial position or operating results of NMHG, they did result in a net
increase in revenues of $31.4 million and a reduction in net income of $2.1
million, which also reflects the elimination of intercompany transactions.
Losses from retail dealerships during 1998 are primarily due to integration and
start-up costs.
OTHER INCOME, EXPENSE AND INCOME TAXES: The components of other income
(expense) and the effective tax rate for NMHG are as follows for the year ended
December 31:
1999 1998 1997
------- ------- -------
Interest expense ................. $ (19.0) $ (14.0) $ (14.5)
Other-net ........................ 1.8 2.2 (3.7)
------- ------- -------
$ (17.2) $ (11.8) $ (18.2)
======= ======= =======
Effective tax rate ............... 44.8% 38.4% 26.0%
Interest expense increased in 1999, as compared with 1998 and 1997,
primarily due to increased debt levels in 1999, which were necessary to finance
acquisitions of retail dealerships and an intercompany loan to NACCO.
In 1999 and 1998, other-net includes non-recurring income of $0.9 million
and $4.6 million, respectively, for settlements from legal proceedings.
Other-net in 1999 also includes various improvements over 1998 and 1997 results,
suchas increased income from unconsolidated affiliates, reduction in the loss on
the sale of assets, improved results from currency hedging and other
miscellaneous refunds. Equity in the earnings of unconsolidated affiliates,
including Sumitomo-NACCO Materials Handling Group ("S-N"), a 50 percent-owned
joint venture, were $2.3 million in 1999, $1.5 million in 1998 and a loss of
$0.3 million in 1997. Discounts on the sale of receivables included in other-net
were $3.8 millionin 1999, $3.2 million in 1998 and $4.3 million in 1997.
The effective tax rate in 1997 includes certain one- time adjustments. In
1997, an adjustment to reverse the reserve for taxes on unremitted foreign
earnings and the recognition of a valuation allowance against certain deferred
tax assets resulted in an 18 percent reduction in the effective tax rate. The
1999 and 1998 effective tax rates reflect the absence of a provision for certain
deferredtaxes on unremitted foreign earnings in accordance with the Company's
policy established in 1997. In addition, the effective tax rate in 1998 was
reduced by a shift in income to jurisdictions with lower tax rates and the
effectof a fixed amount of nondeductible goodwill amortizationon an increased
level of pre-tax income. Conversely, in 1999, the effective tax rate increased
due tothe effect of a fixed amount of nondeductible goodwill amortization on a
decreased level of pre-tax income.
31
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
LIQUIDITY AND CAPITAL RESOURCES
NMHG Wholesale has a $350.0 million revolving credit facility (the
"Facility") that expires in June 2002, but may be extended annually, for
one-year periods, with the consent of the bank group. In addition, the Facility
has performance-based pricing which sets interest rates based upon the
achievement of certain financial performance targets. The Facility permits NMHG
Wholesale to advance funds to NMHG Retail. Advances from NMHG Whole-sale are
the primary sources of financing for NMHG Retail. At December 31, 1999, NMHG
Wholesale had available $123.5 million of its $350.0 million revolving credit
facility.
NMHG also has separate credit facilities totaling $48.7 million, of which
$25.4 million was available at December 31, 1999, and maintains additional
uncommitted lines of credit totaling $40.0 million, of which $20.3 million was
available at December 31, 1999. In addition, NMHG Wholesale has entered into
various agreements to sell certain accounts receivable on a revolving basis. See
also Note Four to the Consolidated Financial Statements for further discussion.
NMHG believes that funds available under its credit facilities and operating
cash flows are sufficient to finance all of its operating needs and commitments
arising during the foreseeable future.
NMHG anticipates spending approximately $68.5 million for property, plant
and equipment in 2000, compared with capital expenditures of $46.2 million in
1999 and $63.9 million in 1998. Planned expenditures in 2000 include investments
in worldwide information systems, manufacturing facilities, existing retail
operations and tooling for new products. Capital expenditures in 1999 and 1998
included new plants constructed in Mexico and China, additions to existing
buildings and investments in machinery and equipment. In 2000, NMHG also
anticipates continuing investments in business acquisitions in amounts which may
exceed the 1999 acquisition investment of $62.4 million. The principal sources
of financing for these capital expenditures and acquisitions are expected to be
internally generated funds and facility borrowings.
[BAR GRAPH]
NMHG'S CAPITAL EXPENDITURES
HAVE OUTPACED DEPRECIATION EXPENSE
CAPITAL EXPENDITURES.......... $ 39.4 $ 42.3 $ 25.3 $ 63.9 $ 46.2
DEPRECIATION EXPENSE.......... $ 21.0 $ 22.0 $ 23.0 $ 26.0 $ 41.7
1995 1996 1997 1998 1999
NMHG's capital structure is presented below:
December 31
-----------
1999 1998
------- -------
Total net tangible assets ............. $ 374.0 $ 300.0
Advances to parent
company .............................. 10.0 18.0
Goodwill at cost ...................... 478.7 454.0
------- -------
Net assets before
goodwill amortization ............. 862.7 772.0
Accumulated goodwill
amortization ......................... (119.2) (105.9)
Total debt ............................ (270.7) (200.2)
Minority interest ..................... (4.1) (3.9)
------- -------
Stockholders' equity .................. $ 468.7 $ 462.0
======= =======
Debt to total capitalization .......... 36% 30%
The increase in net tangible assets of $74.0 million is primarily due to
acquisitions of retail dealerships, which increased net tangible assets by
approximately $42.4 million. The remaining $31.6 million increase in net
tangible assets is primarily due to a reduction in accounts payable and other
current liabilities of $41.3 million, an increase in inventory of $4.7 million
and an increase in other current assets of $10.4 million, partially offset by a
decrease in accounts receivable of $25.4 million. Decreased accounts payable and
other current liabilities are primarily due to decreased accruals for current
taxes payable, payroll and incentive compensation. Inventory increased due to a
build up of inventory to fill increased incoming orders. Other current assets
increased due to an increase in prepaid expenses, primarily prepaid tax expense.
Accounts receivable declined due to a decrease in revenues during the fourth
quarter of 1999 as compared with the fourth quarter of 1998.
Goodwill and debt have increased primarily due to acquisitions of retail
dealerships during 1999.
32
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
NACCO HOUSEWARES GROUP
The Housewares segment of the Company includes HB*PS, a leading manufacturer
and marketer of small electric motor and heat-driven appliances as well as
commercial products for restaurants, bars and hotels, and KCI, a national
specialty retailer of brand-name kitchenware, small electrical appliances and
related accessories. 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 to retailers and consumers increase significantly
for the fall holiday selling season.
FINANCIAL REVIEW
The results of operations for Housewares were as follows for the year ended
December 31:
1999 1998 1997
------- ------- -------
Revenues ......................... $ 596.7 $ 537.6 $ 495.8
Operating profit ................. $ 41.8 $ 34.6 $ 26.1
Operating profit
excluding goodwill
amortization .................. $ 44.8 $ 37.6 $ 30.2
Net income ....................... $ 21.2 $ 15.2 $ 10.5
[BAR GRAPH]
HOUSEWARES OPERATING PROFIT BEFORE GOODWILL AMORTIZATION
$31.2 $31.3 $30.2 $37.6 $44.8
1995 1996 1997 1998 1999
[BAR GRAPH]
HB-PS UNIT VOLUME
(in millions)
29.4 29.6 33.4 36.6 39.4
1995 1996 1997 1998 1999
1999 COMPARED WITH 1998
The following schedule identifies the components of the changes in revenues,
operating profit and net income for 1999 compared with 1998:
Operating Net
Revenues Profit Income
-------- ------ ------
1998 ............................... $537.6 $ 34.6 $ 15.2
Increase (decrease)
in 1999 from:
Unit volume and
sales mix ........................ 60.7 20.0 13.0
Average sales price ............... (7.1) (7.1) (4.6)
Retail sales ...................... 5.5 .8 .6
Manufacturing cost ................ -- (2.1) (1.4)
Other operating
expense .......................... -- (4.4) (2.9)
Other income and
expense .......................... -- -- .3
Difference between
effective and
statutory tax rates .............. -- -- 1.0
------ ------ ------
1999 ................................ $596.7 $ 41.8 $ 21.2
====== ====== ======
Housewares' revenues improved in 1999 as compared with 1998 primarily due to
unit volume growth at HB*PS. Unit volume at HB*PS increased 7.7 percent to 39.4
million units sold in 1999 from 36.6 million units sold in 1998 primarily due to
increased demand for indoor grills, blenders, slow cookers and irons. Operating
profit and net income increased during 1999 due to unit volume growth and a more
profitable sales mix, partially offset by a decrease in the average sales price
as a result of increased competition and an increase in manufacturing and other
operating costs.
Housewares' gross profit improved slightly in 1999 to 21.6 percent of
revenues, up from 21.5 percent of revenues in 1998. Although the standard
production cost of manufacturing declined during 1999 compared with 1998 as a
result of increased production in lower-cost Mexican facilities, unfavorable
manufacturing variances significantly reduced the benefits of utilizing these
facilities in Mexico. Increased manufacturing variances were due to (i)
continued start-up inefficiencies at
33
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
HB*PS' Mexican facilities, (ii) the introduction of new product lines in Mexico
and (iii) wind-down expenses at HB*PS' North Carolina plants. Manufacturing
costs also increased due to increased transportation costs and additional
start-up expenses associated with the new consolidated distribution center in
Memphis. Increased manufacturing costs were partially offset by a decrease in
employee severance of $2.0 million year-over-year and favorable Canadian
exchange rates.
Housewares' operating profit improved in 1999 to 7.0 percent of revenues up
from 6.4 percent of revenues in 1998. Other operating expenses, especially
marketing, advertising and engineering expenses, increased to support sales
growth. However, administrative costs, as a percent of revenues, decreased,
especially at KCI.
Retail sales at KCI increased as a result of both increases in the size of
an average sales transaction and the number of customer transactions. Increased
revenues at KCI contributed to increased operating profit and net income. KCI
operated 150 stores at December 31, 1999, compared with 146 stores at December
31, 1998.
HB-PS SALES MIX IMPROVED IN 1999 WITH INCREASED SALES OF
PRODUCTS IN THE "BETTER" AND "BEST" CATEGORIES
[PIE GRAPH] [PIE GRAPH]
Good - 46% Good - 52%
Better - 29% Better - 28%
Best - 25% Best - 20%
1999 1998
1998 COMPARED WITH 1997
The following schedule identifies the components of the changes in revenues,
operating profit and net income for 1998 compared with 1997:
Operating Net
Revenues Profit Income
-------- ------ ------
1997 ................................. $495.8 $ 26.1 $ 10.5
Increase (decrease)
in 1998 from:
Unit volume and
sales mix ......................... 42.9 14.6 9.5
Average sales price ................ (3.7) (3.7) (2.4)
Retail sales ....................... 2.6 .5 .2
Manufacturing cost ................. -- .5 .3
Other operating
expense ........................... -- (3.4) (2.2)
Other income and
expense ........................... -- -- (.2)
Difference between
effective and
statutory tax rates ............... -- -- (.5)
------ ------ ------
1998 .................................. $537.6 $ 34.6 $ 15.2
====== ====== ======
Housewares' revenues improved in 1998 compared with 1997 primarily due to
unit volume growth at HB*PS. Unit volume at HB*PS increased 9.6 percent to 36.6
million units sold in 1998 from 33.4 million units sold in 1997, primarily due
to increased demand for indoor grills, blenders, toasters and irons. Operating
profit and net income improved due to unit volume growth, improved sales mix to
higher-margin products and decreased manufacturing costs, partially offset by
continued price decreases due to competition and by increased operating costs.
The strengthening of the U.S. dollar against the Canadian dollar resulted in a
decrease to operating profit of approximately $2.5 million, primarily due to
translating Canadian dollar revenues to a stronger U.S. dollar. This decrease to
operating profit was partially mitigated by price increases introduced in the
Canadian market that increased revenue and operating profit by approximately
$0.3 million.
Manufacturing costs declined due to increased production at more
cost-efficient Mexican plants and reduced materials costs. These reduced
manufacturing expenses were partially offset by cost increases related to
transferring activities to manufacturing facilities in Mexico, including a $3.2
million pre-tax restructuring
34
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
charge recognized in 1998. Operating costs increased to support sales growth. In
addition, operating costs in 1998 include increased legal fees, advertising
costs and provisions for potential bad debts. Revenues and net income from KCI
improved slightly due to the addition of three new stores during 1998.
OTHER INCOME, EXPENSE AND INCOME TAXES: The components of other income
(expense) and the effective tax rate are as follows for the year ended December
31:
1999 1998 1997
------- ------- -------
Interest expense ................. $ (6.7) $ (7.0) $ (7.3)
Other-net ........................ (.4) (.7) (.2)
------- ------- -------
$ (7.1) $ (7.7) $ (7.5)
======= ======= =======
Effective tax rate ............... 38.9% 43.2% 43.7%
The decrease in interest expense for 1999 as compared with 1998 and 1997 is
due to lower average borrowings outstanding. The decrease in the effective tax
rate for 1999 as compared with 1998 and 1997 is primarily due to (i) the
utilization of foreign tax credits resulting from the repatriation of foreign
earnings previously taxed at a rate in excess of the U.S. statutory tax rate and
(ii) the effect of a constant level of nondeductible goodwill amortization on a
higher comparable level of pre-tax income.
LIQUIDITY AND CAPITAL RESOURCES
HB*PS' credit agreement provides for a revolving credit facility that: (i)
provides financing up to $160.0 million, (ii) is secured by substantially all of
HB*PS' assets, (iii) provides lower interest rates if HB*PS achieves certain
interest coverage ratios, (iv) allows for interest rates quoted under a
competitive bid option and (v) allows advances up to $10.0 million from HB*PS to
KCI. At December 31, 1999, HB*PS had $67.8 million available under this
facility, which expires in May 2003. In addition, HB*PS has separate uncommitted
facilities that permitted $10.1 million of additional borrowings at December 31,
1999. KCI's cash requirements are financed through advances from HB*PS.
Housewares believes that funds available under its credit facilities and
operating cash flows are sufficient to finance all of its operating needs and
commitments arising during the foreseeable future.
Housewares anticipates spending approximately $33.0 million for property,
plant and equipment in 2000, compared with capital expenditures of $16.5 million
in 1999 and $16.8 million in 1998. In 1999, HB*PS entered into an agreement to
develop products that will be sold to Wal*Mart under the GE brand name. Planned
expenditures for 2000 include approximately $9.5 million of capital expenditures
related to the development of the GE brand products. Remaining planned
expenditures for 2000, some of which were planned but delayed in 1999, include
tooling for new products and machinery and equipment, which will be used
primarily to reduce manufacturing costs and increase efficiency. These
expenditures are expected to be funded primarily from internally generated funds
and bank borrowings.
[Bar Graph]
HOUSEWARES' CAPITAL EXPENDITURES VS. DEPRECIATION EXPENSE
$ 11.1 $ 16.2 $ 18.3 $ 16.8 $ 16.5
$ 13.1 $ 14.3 $ 15.4 $ 13.7 $ 14.5
1995 1996 1997 1998 1999
Housewares' capital structure is presented below:
December 31
-------------------
1999 1998
------- -------
Total net tangible assets ............... $ 183.4 $ 153.3
Goodwill at cost ........................ 123.5 123.5
------- -------
Net assets before
goodwill amortization ............... 306.9 276.8
Accumulated goodwill
amortization ........................... (33.6) (30.6)
Total debt .............................. (109.4) (96.0)
------- -------
Stockholder's equity .................... $ 163.9 $ 150.2
======= =======
Debt to total capitalization ............ 40% 39%
Total net tangible assets increased $30.1 million primarily due to a $28.2
million increase in accounts receivable related to volume growth. Debt has
increased to support this increase in working capital.
35
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
NACCO AND OTHER
FINANCIAL REVIEW
NACCO and Other includes the parent company operations and Bellaire
Corporation ("Bellaire"), a non-operating subsidiary of NACCO. Although
Bellaire's operations are immaterial, it has significant long-term liabilities
related to closed mines, 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 historically have not been
material.
The results of operations at NACCO and Other were as follows for the year
ended December 31:
1999 1998 1997
------- ------- -------
Revenues .......................... $ .1 $ .2 $ .2
Operating loss .................... $ (9.2) $ (10.7) $ (8.5)
Other income
(expense), net ................... $ (3.2) $ (.2) $ (.4)
Net loss .......................... $ (8.3) $ (8.3) $ (6.4)
NACCO and Other's operating loss declined in 1999 as compared with 1998
primarily due to a decrease in incentive compensation expenses. Other expenses
increased in 1999 as compared with 1998 due to the write- off of costs mainly
for advisors related to the potential acquisition of the forklift business of
Nissan Motor Co., Ltd. ("Nissan"). As announced on January 24,2000, NACCO was
not able to reach an agreement with Nissan for the purchase of Nissan's forklift
operations.
LIQUIDITY AND CAPITAL RESOURCES
Although NACCO's subsidiaries have entered into substantial borrowing
agreements, NACCO has not guaranteed the long-term debt or any borrowings of its
subsidiaries.
The borrowing agreements at NMHG and Housewares allow for the payment to
NACCO of dividends and advances under certain circumstances. There are no
restrictions on the transfer of assets from NACoal. Dividends, advances and
management fees from its subsidiaries are the primary sources of cash for NACCO.
The Company believes that funds available under credit facilities,
anticipated funds generated from operations and the utility customers' funding
of the project mining subsidiaries are sufficient to finance all of its
operating needs and commitments arising during the foreseeable future.
NACCO's consolidated capital structure is presented below:
December 31
-----------
1999 1998
-------- --------
Total net tangible assets .......................... $ 593.5 $ 473.2
Goodwill at cost ................................... 602.2 577.5
-------- --------
Net assets before
goodwill amortization ........................... 1,195.7 1,050.7
Accumulated goodwill
amortization ...................................... (152.8) (136.5)
Total debt, excluding current
and long-term portion of
obligations of project mining
subsidiaries ...................................... (395.3) (296.4)
Closed mine obligations (Bellaire),
including UMWA, net-of-tax ........................ (73.9) (76.6)
Minority interest .................................. (11.5) (22.9)
-------- --------
Stockholders' equity ............................... $ 562.2 $ 518.3
======== ========
Debt to total capitalization ....................... 41% 35%
RECENTLY ISSUED ACCOUNTING STANDARDS
The Company has not yet adopted Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities." A
discussion of this new standard is included in Note Two to the Consolidated
Financial Statements.
EFFECTS OF FOREIGN CURRENCY AND INFLATION
NMHG and HB*PS operate internationally and enter into transactions
denominated in foreign currencies. As a result, the Company is subject to the
variability that arises from exchange rate movements. The effects of foreign
currency on operating results at NMHG and HB*PS were discussed previously. The
Company's use of foreign currency derivative contracts is discussed under the
heading, "Quantitative and Qualitative Disclosures about Market Risk."
The Company believes that inflation has not materially affected its results
of operations in 1999 and 1998 and does not expect inflation to be a significant
factor in 2000.
36
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
ENVIRONMENTAL MATTERS
The Company's manufacturing operations, like those of other companies
engaged in similar businesses, involve the use, disposal and cleanup of
substances regulated under environmental protection laws. The Company's NACoal
subsidiary is affected by the regulations of agencies under which it operates,
particularly the Federal Office of Surface Mining, the United States
Environmental Protection Agency and associated state regulatory authorities. In
addition, NACoal closely monitors proposed legislation concerning the Clean Air
Act Amendments of 1990, reauthorization of the Resource Conservation and
Recovery Act, the Clean Water Act, the Endangered Species Act and other
regulatory actions.
Compliance with these increasingly stringent standards could result in
higher expenditures for both capital improvements and operating costs. The
Company's policies stress environmental responsibility and compliance with these
regulations. Based on current information, management does not expect compliance
with these regulations to have a material adverse effect on the Company's
financial condition or results of operations.
YEAR 2000
The Company completed all phases of its year 2000 ("Y2K") compliance plan
prior to December 31, 1999. The Company did not experience any significant
malfunctions or errors in its operating or business systems when the date
changed from 1999 to 2000. Based on operations since January 1, 2000, the
Company does not expect any significant effect to its ongoing business as a
result of the Y2K issue. However, it is possible that the full impact of the
date change, which was of concern due to computer programs that use two digits
instead of four digits to define years, has not been fully recognized. For
example, it is possible that Y2K or similar issues such as leap year-related
problems may occur with billing payroll or financial closing at month, quarter
or year-end. The Company believes that any such problems are likely to be minor
and correctable. In addition, the Company could still be negatively affected if
Y2K or similar issues adversely affect its customers or suppliers. The Company
currently is not aware of any significant Y2K or similar problems that have
arisen for its customers and suppliers. Total costs incurred to date to address
the Y2K issue have been approximately $8.5 million. The Company does not expect
to incur any material additional costs related to this issue.
EURO CONVERSION
On January 1, 1999, 11 of the 15 countries that are members of the European
Union introduced a new currency unit called the "Euro," which will ultimately
replace the national currencies of these 11 countries. The conversion rates
between the Euro and the participating nations' currencies were fixed
irrevocably as of January 1, 1999, and participating national currencies will be
removed from circulation between January 1, 2002 and June 30, 2002 and replaced
by Euro notes and coinage. During the "transition period" from January 1, 1999
through December 31, 2001, public and private entities as well as individuals
may pay for goods and services using either checks, drafts or wire transfers
denominated in Euro or the participating country's national currency.
Under the regulations governing the transition to a single currency, there
is a "no compulsion, no prohibition" rule which states that no one is obligated
to use the Euro until the notes and coinage have been introduced on January 1,
2002. In keeping with this rule, as of January 1, 1999 the Company is now also
able to (i) receive Euro-denominated payments, (ii) invoice in Euros and (iii)
perform appropriate conversion and rounding calculations. Full conversion of all
affected country operations to the Euro is expected to be completed by the time
national currencies are removed from circulation. The cost of software and
business process conversion required to achieve such abilities is not expected
to be material.
Excluding adverse affects caused by the weakening of the Euro against the
Company's functional currencies, the introduction of the Euro, to date, has not
had--and the Company does not anticipate that the continued use of the Euro will
have--a material affect on the Company's foreign exchange and hedging activities
or the Company's use of derivative instruments, or a material adverse effect on
operating results or cash flows. However, the ultimate effect of the Euro on
competition due to price transparency and foreign currency risk cannot yet be
determined and may have an adverse effect, possibly material, on the Company's
operations, financial position or cash flows. Conversely, introduction of the
Euro may also have positive effects, such as lower foreign currency risk and
reduced prices of raw materials resulting from increased competition among
suppliers. The Company continues to monitor and assess the potential risks
imposed by the Euro.
37
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
OUTLOOK
NACOAL: NACoal's customers have forecasted that their overall lignite
requirements in 2000 will be slightly above 1999 levels. However, NACoal expects
decreased royalty income in 2000, compared with 1999, due to reduced third-party
mining activity at its Eastern underground coal reserves. NACoal expects to
continue incurring expenses in 2000 for the development of international mining
opportunities and for the new Red Hills Mine in Mississippi, in which it owns a
25 percent interest. The Red Hills Mine is expected to begin production in the
fourth quarter of 2000.
NMHG: NMHG expects the global lift truck industry to remain strong in 2000
at a shipment level in excess of 500,000 units. NMHG expects industry shipments
in the Americas market to recede from very strong 1999 levels, while industry
shipments in the European and Asia-Pacific lift truck markets are expected to
grow moderately. NMHG anticipates continued benefits from cost reduction
programs, including Value Improvement, Demand Flow Technology and increased
efficiency at its new Mexican manufacturing facility. NMHG also expects to
continue expanding its retail distribution network in 2000, principally outside
the United States, and to have a primary focus on improving the profitability of
its existing wholly owned dealerships. However, NMHG may continue to incur
losses related to existing and newly acquired dealerships and the elimination of
intercompany profits.
HOUSEWARES: HB*PS expects to realize cost reductions from its new
manufacturing facilities in Mexico and completion of the wind down of its North
Carolina facilities, as well as increased efficiency at its new distribution
center in Memphis. HB*PS anticipates incurring some start-up costs in 2000 to
develop products that will be sold to Wal*Mart under the General Electric brand
name. Continued price competition is also expected. HB*PS expects to introduce
additional Hamilton Beach((R))and Proctor-Silex((R)) brand product lines. KCI
expects to focus on increasing store profitability, growing its Internet
business and testing new store formats.
The statements contained in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere throughout this
Annual Report that are not historical facts are "forward- looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements are
made subject to certain risks and uncertainties which could cause actual results
to differ materially from those presented in these forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. The Company undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that arise after the date hereof. Such risks and uncertainties
with respect to each subsidiary's operations includes without limitation:
NACOAL: (1) weather conditions and other events that would change the level
of customers' fuel requirements, (2) weather or equipment problems that could
affect lignite deliveries to customers, (3) costs to pursue international
opportunities and (4) delays in the start-up of the Mississippi Lignite Mining
Company.
NMHG: (1) changes in demand for lift trucks and related service parts on a
worldwide basis, (2) changes in sales prices, (3) delays in delivery or
increased costs of raw materials or sourced products and labor, (4) delays in
manufacturing and delivery schedules, (5) exchange rate fluctuations, changes in
foreign import tariffs and monetary policies and other changes in the regulatory
climate in the foreign countries in which NMHG operates and/or sells products,
(6) product liability or other litigation, warranty claims or other returns of
products, (7) ability to acquire dealerships acceptable to NMHG, (8) costs
related to the integration of acquisitions and (9) increased competition,
foreign currency risk and/or operating costs resulting from the introduction of
the Euro.
HOUSEWARES: (1) delays or increased costs in the repositioning of operations
in Mexico and/or in the completion of restructuring programs, (2) bankruptcy of
or loss of major retail customers, (3) changes in the sales price, product mix
or levels of consumer purchases of kitchenware and small electric appliances,
(4) exchange rate fluctuations, changes in the foreign import tariffs and
monetary policies and other changes in the regulatory climate in the foreign
countries in which Housewares buys, operates and/or sells products, (5) product
liability or other litigation, warranty claims or other returns of products, (6)
increased competition, (7) increased costs or delays in the development of the
GE brand products to be sold to Wal*Mart and (8) weather conditions that would
affect the number of customers visiting KCI stores.
38
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share, Unit and Percentage Data)
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
The Company's subsidiaries, NMHG, HB*PS and NACoal, have entered into
certain financing arrangements that require interest payments based on floating
interest rates. As such, the Company's financial results are subject to changes
in the market rate of interest. To reduce the exposure to changes in the market
rate of interest, the Company has entered into interest rate swap agreements for
a portion of its floating rate financing arrangements. The Company does not
enter into interest rate swap agreements for trading purposes. Terms of the
interest rate swap agreements require the subsidiaries to receive a variable
interest rate and pay a fixed interest rate. See also Note Two and Note Twelve
to the Consolidated Financial Statements.
For purposes of specific risk analysis, the Company uses sensitivity
analysis to measure the potential loss in fair value of financial instruments
sensitive to changes in interest rates. Assuming a hypothetical 10 percent
decrease in the interest rates as of December 31, 1999 and 1998, the fair market
value of interest rate sensitive financial instruments, which primarily
represents interest rate swap agreements, would decline by $2.3 million and $1.9
million, respectively, as compared with their fair market value at December 31,
1999 and 1998, respectively.
FOREIGN CURRENCY RISK
NMHG and HB*PS operate internationally and enter into transactions
denominated in foreign currencies. As such, their financial results are subject
to the variability that arises from exchange rate movements. NMHG and HB*PS use
forward foreign currency exchange contracts to partially reduce risks related to
transactions denominated in foreign currencies and not for trading purposes.
These contracts mature within one year and require the companies to buy or sell
Japanese yen, Australian dollars, Canadian dollars or various European
currencies for the functional currency in which the applicable subsidiary
operates at rates agreed to at the inception of the contracts. See also Note Two
and Note Twelve to the Consolidated Financial Statements.
For purposes of specific risk analysis, the Company uses sensitivity
analysis to measure the potential loss in fair value of financial instruments
sensitive to changes in foreign currency exchange rates. Assuming a hypothetical
10 percent strengthening of the U.S. dollar as compared with other foreign
currencies at December 31, 1999 and 1998, the fair market value of foreign
currency-sensitive financial instruments, which primarily represents forward
foreign currency exchange contracts, would decline by $1.4 million and $3.8
million, respectively, as compared with their fair market value at December 31,
1999 and 1998, respectively. It is important to note that the loss in fair
market value indicated in this sensitivity analysis would be somewhat offset by
changes in the fair market value of the underlying receivables, payables and net
investments in foreign subsidiaries.
MARKET FOR NACCO INDUSTRIES, INC. COMMON STOCK AND RELATED SECURITY HOLDERS'
MATTERS
NACCO Industries, Inc. Class A common stock is traded on the New York Stock
Exchange under the ticker symbol NC. Because of transfer restrictions, no
trading market has developed, or is expected to develop, for the Company's Class
B common stock. The Class B common stock is convertible into Class A common
stock on a one-for-one basis. The high and low market prices for the Class A
common stock and dividends per share for both classes of common stock for each
quarter during the past two years are presented in the table below:
1999
--------------------------------
Sales Price
----------- Cash
High Low Dividend
---- --- --------
FIRST QUARTER ................ $ 97.00 $ 70.50 20.50(cent)
SECOND QUARTER ............... $ 93.50 $ 66.88 21.50(cent)
THIRD QUARTER ................ $ 89.00 $ 65.75 21.50(cent)
FOURTH QUARTER ............... $ 73.63 $ 44.50 21.50(cent)
1998
--------------------------------
Sales Price
----------- Cash
High Low Dividend
---- --- --------
First quarter ................ $137.81 $ 93.13 19.50(cent)
Second quarter ............... $177.00 $121.00 20.50(cent)
Third quarter ................ $157.50 $ 95.19 20.50(cent)
Fourth quarter ............... $112.81 $ 76.25 20.50(cent)
At December 31, 1999, there were approximately 500 Class A common
stockholders of record and 300 Class B common stockholders of record.
39
<PAGE> 18
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
NACCO Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------
1999 1998 1997
--------- --------- ---------
(In millions, except per share data)
<S> <C> <C> <C>
Revenues ................................................................... $ 2,602.8 $ 2,536.2 $ 2,246.9
Cost of sales .............................................................. 2,118.1 2,020.7 1,825.9
--------- --------- ---------
GROSS PROFIT ............................................................... 484.7 515.5 421.0
Selling, general and administrative expenses ............................... 337.0 301.1 265.2
Amortization of goodwill ................................................... 15.2 14.7 15.8
Restructuring charges ...................................................... 1.2 1.6 8.0
--------- --------- ---------
OPERATING PROFIT ........................................................... 131.3 198.1 132.0
Other income (expense)
Interest expense ....................................................... (43.3) (34.6) (36.6)
Other-net .............................................................. (1.4) 2.5 (6.3)
--------- --------- ---------
(44.7) (32.1) (42.9)
--------- --------- ---------
INCOME BEFORE INCOME TAXES, MINORITY INTEREST AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE ................................. 86.6 166.0 89.1
Provision for income taxes ................................................. 31.7 60.7 26.4
--------- --------- ---------
INCOME BEFORE MINORITY INTEREST AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE ................................. 54.9 105.3 62.7
Minority interest .......................................................... (.6) (3.0) (.9)
--------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE ....................... 54.3 102.3 61.8
Cumulative Effect of accounting change (net of $0.6 tax benefit) .......... (1.2) -- --
--------- --------- ---------
NET INCOME ................................................................. $ 53.1 $ 102.3 $ 61.8
========= ========= =========
Other comprehensive income
Foreign currency translation adjustment ................................ $ (11.9) $ 3.6 $ (8.5)
Minimum pension liability adjustment, net of $2.3 tax in 1999;
($1.4) tax in 1998; $0.4 tax in 1997 .............................. 3.8 (2.4) .6
--------- --------- ---------
(8.1) 1.2 (7.9)
--------- --------- ---------
COMPREHENSIVE INCOME ....................................................... $ 45.0 $ 103.5 $ 53.9
========= ========= =========
BASIC EARNINGS PER SHARE
Income Before Cumulative Effect of Accounting Change ....................... $ 6.67 $ 12.56 $ 7.56
Cumulative effect of accounting change, net-of-tax ......................... (.15) -- --
--------- --------- ---------
Net Income ................................................................. $ 6.52 $ 12.56 $ 7.56
========= ========= =========
DILUTED EARNINGS PER SHARE
Income Before Cumulative Effect of Accounting Change ....................... $ 6.66 $ 12.53 $ 7.55
Cumulative effect of accounting change, net-of-tax ......................... (.15) -- --
--------- --------- ---------
Net Income ................................................................. $ 6.51 $ 12.53 $ 7.55
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
40
<PAGE> 19
CONSOLIDATED BALANCE SHEETS
NACCO Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
December 31
-----------
1999 1998
-------- --------
(In millions)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............................................................... $ 36.2 $ 34.7
Accounts receivable, net of allowance of $16.7 in 1999 and $15.6 in 1998 ............... 292.2 275.1
Inventories ............................................................................. 390.3 356.2
Prepaid expenses and other .............................................................. 53.5 37.2
-------- --------
772.2 703.2
PROPERTY, PLANT AND EQUIPMENT, NET .......................................................... 625.4 593.4
DEFERRED CHARGES
Goodwill, net ........................................................................... 449.4 441.0
Deferred costs and other ................................................................ 66.7 70.3
Deferred income taxes ................................................................... 29.2 31.9
-------- --------
545.3 543.2
OTHER ASSETS ................................................................................ 70.1 58.5
-------- --------
TOTAL ASSETS ........................................................................ $2,013.0 $1,898.3
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ........................................................................ 254.4 $ 252.9
Revolving credit agreements ............................................................. 56.6 31.2
Current maturities of long-term debt .................................................... 32.5 28.4
Accrued income taxes .................................................................... 4.4 10.9
Accrued payroll ......................................................................... 47.0 44.7
Accrued warranty obligations ............................................................ 36.0 36.3
Other current liabilities ............................................................... 152.2 144.2
-------- --------
583.1 548.6
LONG-TERM DEBT - not guaranteed by the parent company ....................................... 326.3 256.4
OBLIGATIONS OF PROJECT MINING SUBSIDIARIES -
not guaranteed by the parent company or its NACoal subsidiary ........................... 289.2 313.2
SELF-INSURANCE RESERVES AND OTHER ........................................................... 240.7 38.9
MINORITY INTEREST ........................................................................... 11.5 22.9
STOCKHOLDERS' EQUITY
Common stock:
Class A, par value $1 per share, 8,156,878 shares outstanding
(1998 - 6,468,620 shares outstanding) .......................................... 6.5 6.5
Class B, par value $1 per share, convertible into Class A on a one-for-one basis,
1,647,428 shares outstanding (1998 - 1,651,615 shares outstanding) ............. 1.6 1.6
Capital in excess of par value .......................................................... 2.7 .2
Retained earnings ....................................................................... 554.4 504.9
Accumulated other comprehensive income:
Foreign currency translation adjustment ............................................. (3.0) 8.9
Minimum pension liability adjustment ................................................ -- (3.8)
-------- --------
562.2 518.3
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................................... $2,013.0 $1,898.3
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
41
<PAGE> 20
CONSOLIDATED STATEMENTS OF CASH FLOWS
NACCO Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------
1999 1998 1997
------- ------- -------
(In millions)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income ................................................................. $ 53.1 $ 102.3 $ 61.8
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, depletion and amortization ............................... 104.0 89.0 88.6
Deferred income taxes .................................................. 3.3 (13.2) (24.3)
Minority interest expense .............................................. .6 3.0 .9
Cumulative effect of accounting change ................................. 1.2 -- --
Other non-cash items ................................................... (2.9) 5.6 (.1)
Working capital changes, excluding the effect of business acquisitions:
Accounts receivable .................................................... (11.3) (11.5) (35.1)
Inventories ............................................................ (23.0) (32.7) (1.3)
Other current assets ................................................... (12.4) .3 (3.1)
Accounts payable and other liabilities ................................. 16.5 1.5 122.6
------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES .......................... 129.1 144.3 210.0
------- ------- -------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment ............................. (75.5) (100.3) (68.4)
Proceeds from the sale of property, plant and equipment .................... 1.0 4.8 3.4
Acquisitions of businesses, net of cash acquired ........................... (62.4) (16.6) (12.2)
Investments in unconsolidated affiliates ................................... (15.9) (10.5) (1.8)
Acquisition of minority interest ........................................... (11.3) -- --
Other-net .................................................................. 2.7 .8 1.0
------- ------- -------
NET CASH USED FOR INVESTING ACTIVITIES ............................. (161.4) (121.8) (78.0)
------- ------- -------
FINANCING ACTIVITIES
Additions to long-term debt and
revolving credit agreements ............................................ 81.1 12.1 --
Reductions of long-term debt and
revolving credit agreements ............................................ -- -- (123.9)
Additions to obligations of project
mining subsidiaries .................................................... 31.6 59.8 58.1
Reductions of obligations of project
mining subsidiaries .................................................... (58.8) (74.5) (79.1)
Financing of other short-term obligations .................................. (17.2) (3.9) (.5)
Stock repurchases .......................................................... -- (4.7) (2.8)
Cash dividends paid ........................................................ (7.0) (6.6) (6.3)
Capital grants ............................................................. 2.6 1.2 .7
Other-net .................................................................. 3.0 4.5 --
------- ------- -------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES ............... 35.3 (12.1) (153.8)
------- ------- -------
Effect of exchange rate changes on cash.................................... (1.5) .2 (1.9)
------- ------- -------
CASH AND CASH EQUIVALENTS
Increase (decrease) for the year ........................................... 1.5 10.6 (23.7)
Balance at the beginning of the year ....................................... 34.7 24.1 47.8
------- ------- -------
BALANCE AT THE END OF THE YEAR ............................................. $ 36.2 $ 34.7 $ 24.1
======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
42
<PAGE> 21
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
NACCO Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1999 1998 1997
------- ------- -------
(In millions, except per share data)
<S> <C> <C> <C>
CLASS A COMMON STOCK
Beginning balance ........................................ $ 6.5 $ 6.5 $ 6.5
Purchase of treasury shares .............................. -- (.1) (.1)
Other .................................................... -- .1 .1
------- ------- -------
6.5 6.5 6.5
------- ------- -------
CLASS B COMMON STOCK ......................................... 1.6 1.6 1.7
------- ------- -------
CAPITAL IN EXCESS OF PAR VALUE
Beginning balance ........................................ .2 .1 .1
Shares issued under stock
option and compensation plans ........................ 2.5 1.0 1.0
Purchase of treasury shares .............................. -- (.9) (1.0)
------- ------- -------
2.7 .2 .1
------- ------- -------
RETAINED EARNINGS
Beginning balance ........................................ 504.9 412.9 359.2
Net income ............................................... 53.1 102.3 61.8
Reconsolidation of Brazilian subsidiary (Note Twenty-Two) 3.4 -- --
Purchase of treasury shares .............................. -- (3.7) (1.8)
Cash dividends on Class A and Class B common stock:
1999 $.850 per share ............................. (7.0) -- --
1998 $.810 per share ............................. -- (6.6) --
1997 $.773 per share ............................. -- -- (6.3)
------- ------- -------
554.4 504.9 412.9
------- ------- -------
ACCUMULATED OTHER COMPREHENSIVE INCOME
Beginning balance ........................................ 5.1 3.9 11.8
Foreign currency translation adjustment .................. (11.9) 3.6 (8.5)
Minimum pension liability adjustment ..................... 3.8 (2.4) .6
------- ------- -------
(3.0) 5.1 3.9
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY ........................... $ 562.2 $ 518.3 $ 425.1
======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
43
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
NOTE ONE
PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS
The Consolidated Financial Statements include the accounts of NACCO
Industries, Inc. ("NACCO," the parent company) and its majority owned
subsidiaries (NACCO Industries, Inc. and Subsidiaries - the "Company").
Intercompany accounts and transactions are eliminated. The Company has four
operating subsidiaries that function in three principal industries: lift trucks,
housewares and lignite mining.
NMHG Holding Co., through its wholly owned subsidiaries, NACCO Materials
Handling Group, Inc. ("NMHG Wholesale") and NMHG Distribution Co. ("NMHG
Retail") (collectively "NMHG") designs, engineers, manufactures, sells and
services a full line of lift trucks and replacement parts marketed worldwide
under the Hyster(R) and Yale(R) brand names. The sale of replacement parts
represents approximately 17 percent, 17 percent and 18 percent of the total NMHG
revenues as reported for 1999, 1998 and 1997, respectively. NACCO Housewares
Group ("Housewares") consists of Hamilton Beach*Proctor-Silex, Inc. ("HB*PS"), a
leading manufacturer and marketer of small electric motor and heat-driven
appliances as well as commercial products for restaurants, bars and hotels, and
The Kitchen Collection, Inc. ("KCI"), a national specialty retailer of
brand-name kitchenware, small electrical appliances and related accessories. The
North American Coal Corporation ("NACoal") mines and markets lignite primarily
as fuel for power generation by electric utilities.
NOTE TWO
ACCOUNTING POLICIES
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
(if any) at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
CASH AND CASH EQUIVALENTS: Cash and cash equivalents include cash in banks
and highly liquid investments with original maturities of three months or less.
INVENTORIES: Inventories are stated at the lower of cost or market. Cost is
determined under the last-in, first-out (LIFO) method for manufacturing
inventories in the United States and for certain retail inventories. The
first-in, first-out (FIFO) method is used with respect to all other inventories.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are recorded at
cost. Depreciation, depletion and amortization are provided in amounts
sufficient to amortize the cost of the assets, including assets recorded under
capital leases, over their estimated useful lives using the straight-line
method. Buildings are depreciated using a 40-year life or, at NACoal, over the
life of the mines which range from 9 to 43 years. Estimated lives for machinery
and equipment range from 3 to 12 years and for land and building improvements
from 5 to 40 years. The units-of-production method is used to amortize certain
coal-related assets based on estimated recoverable tonnages.
GOODWILL: Goodwill represents the excess purchase price paid over the fair
value of the net assets acquired. The amortization of goodwill is provided on a
straight-line basis over a 40-year period. Accumulated amortization of goodwill
was $152.8 million and $136.5 million at December 31, 1999 and 1998,
respectively. Management regularly evaluates its accounting for goodwill,
considering such factors as historical and future profitability, and believes
that the asset is realizable and the amortization period remains appropriate.
SELF-INSURANCE RESERVES: The Company is generally self-insured for product
liability, environmental liability, medical and workers' compensation claims,
certain closed mine liabilities and obligations to the United Mine Workers of
America Combined Benefit Fund ("UMWA") arising as a result of the Coal Industry
Retiree Health Benefit Act of 1992 ("Coal Act"). For product liability,
catastrophic coverage is retained for potentially significant individual claims.
An estimated provision for claims reported and for claims incurred but not yet
reported under the self-insurance programs is recorded and revised annually
based on industry trends, historical experience and management judgment. Changes
in assumptions for such matters as legal actions, medical costs and actual
experience could cause estimates to change in the near term.
REVENUE RECOGNITION: Revenues are recognized when customer orders are
completed and shipped. Reserves for discounts, returns and product warranties
are maintained for anticipated future claims.
44
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
ADVERTISING COSTS: Advertising costs are expensed as incurred and amounted
to $45.3 million, $41.5 million and $36.8 million in 1999, 1998 and 1997,
respectively.
PRODUCT DEVELOPMENT COSTS: Expenses associated with the development of new
products and changes to existing products are charged to expense as incurred.
These costs amounted to $48.0 million, $44.1 million and $27.9 million in 1999,
1998 and 1997, respectively.
FOREIGN CURRENCY: Assets and liabilities of foreign operations are
translated into U.S. dollars at the fiscal year-end exchange rate. The related
translation adjustments are recorded as a separate component of stockholders'
equity. Revenues and expenses are translated using the monthly average exchange
rates prevailing during the year.
FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS: Financial
instruments held by the Company include cash and cash equivalents, accounts
receivable, accounts payable, revolving credit agreements, long-term debt,
interest rate swap agreements and forward foreign currency exchange contracts.
The Company does not hold or issue financial instruments or derivative financial
instruments for trading purposes.
The Company uses forward foreign currency exchange contracts to partially
reduce risks related to transactions denominated in foreign currencies. These
contracts hedge primarily firm commitments and, to a lesser degree, forecasted
transactions relating to cash flows associated with sales and purchases
denominated in currencies other than the subsidiaries' functional currency.
Generally, gains and losses from changes in the market value of these contracts
are recognized in cost of sales and offset the foreign exchange gains and losses
on the underlying transactions.
The Company uses interest rate swap agreements to partially reduce risks
related to floating rate financing agreements which are subject to changes in
the market rate of interest. Terms of the interest rate swap agreements require
the Company to receive a variable interest rate and pay a fixed interest rate.
The Company's interest rate swap agreements and its variable rate financings are
predominately based upon the three-month LIBOR (London Interbank Offered Rate).
Amounts to be paid or received under the interest rate swap agreements are
accrued as interest rates change and are recognized over the life of the swap
agreement as an adjustment to interest expense. The related amounts payable to,
or receivable from, the counterparties are included in other current
liabilities. Changes in the market value of the interest rate swap agreements
are not recognized in net income. However, in the event that the underlying debt
is extinguished, changes in the market value of interest rate swap agreements
that could not be designated as hedges of other assets, liabilities or
anticipated transactions would be recognized in net income over the remaining
life of the contract or upon termination of the contract.
NEW ACCOUNTING STANDARDS: As of January 1, 1999, the Company adopted the
American Institute of Certified Public Accountants' ("AICPA") Statement of
Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use," and SOP 98-5, "Reporting on the Costs of Start-Up
Activities." SOP 98-1 requires capitalization on a prospective basis of certain
development costs of software to be used internally. The Company does not expect
the change to this new accounting standard to have a material impact on its
financial position or results of operations in the foreseeable future.
SOP 98-5 requires start-up and organization costs to be expensed as incurred
and also requires previously deferred start-up costs to be recognized as a
cumulative effect adjustment in the statement of income upon adoption. Prior to
January 1, 1999, the Company's NACoal subsidiary had deferred certain start-up
costs related to the development of lignite mining activities and amortized
these costs over the estimated useful lives of the related coal lands. Under the
new accounting standard, these costs - primarily training, travel and
administrative expenses - are no longer allowed to be deferred, but, rather,
must be expensed as incurred. Therefore, the Company has recognized the effect
of expensing these previously deferred start-up costs of $1.2 million, net-of-
tax, as a cumulative effect of accounting change in the accompanying Statement
of Income and Comprehensive Income for the year ended December 31, 1999.
On December 3, 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 - Revenue Recognition in Financial Statements
("SAB 101"). SAB 101 summarizes certain of the SEC staff's views in applying
generally accepted accounting principals to revenue recognition in financial
statements. The Company has reviewed its revenue recognition policies and
procedures and believes that, as of December 31, 1999, it has complied with the
requirements of SAB 101. No significant changes to the Company's revenue
recognition policies were necessary to comply with SAB 101.
45
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
ACCOUNTING STANDARDS NOT YET ADOPTED: In June 1998, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities." This Statement establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires companies to
recognize all derivatives on the balance sheet as assets and liabilities,
measured at fair value. Gains or losses resulting from changes in the values of
those derivatives would be accounted for depending on the use of the derivative
and whether it qualifies for hedge accounting. In June 1999, the FASB delayed
the effective date of this Statement for one year to fiscal years beginning
after June 15, 2000. The FASB cited the reason for this delay was to address
concerns about a company's ability to modify its information systems and educate
its managers in time to apply this Statement. The Company will adopt this
Statement on January 1, 2001 and is in the process of determining the effect
that adoption will have on its financial statements.
RECLASSIFICATIONS: Certain amounts in the prior periods' Consolidated
Statements of Cash Flows have been reclassified to conform to the current
period's presentation.
NOTE THREE
SPECIAL CHARGES
RESTRUCTURING CHARGE: In 1998, HB*PS recorded a pre-tax charge of $3.2
million to recognize severance payments to be made to approximately 450
manufacturing employees in connection with transitioning activities to HB*PS'
Mexican facilities. During 1999, an additional $1.2 million pre-tax charge was
made for severance payments to be made to an additional 130 manufacturing
employees in connection with transitioning additional manufacturing activities
to HB*PS' Mexican facilities. Payments of $1.7 million have been made to
approximately 350 employees during 1999. These payments reduced the reserve for
restructuring to $2.7 million as of December 31, 1999. The timing of payments
has extended longer than originally anticipated due to unforeseen delays in the
movement of production to Mexico. The Company anticipates that payments relating
to these severance programs will be finalized by the end of 2000.
In 1997, NMHG recognized a restructuring charge of $8.0 million, primarily
related to employee severance and lease termination costs incurred in
conjunction with the consolidation of certain engineering, marketing and
administrative functions within the NMHG organization. In 1998, NMHG
substantially completed its restructuring plan, which resulted in the
construction of two new engineering and marketing facilities on Company-owned
property, the addition of one new leased administrative building and the closure
of one owned and four leased facilities. In addition, the plan resulted in the
termination of approximately 220 engineering, marketing and administrative
employees, which resulted in a net reduction of approximately 120 employee
positions after considering staffing requirements at remaining facilities. The
1997 charge to earnings of $8.0 million represented severance payments made in
1997 of $1.1 million to approximately 50 employees and the recognition of a $6.9
million accrual for additional severance payments and lease termination costs.
In 1998, $2.2 million of the severance accrual was reversed due to the
higher-than-anticipated number of employees willing to relocate. Final payments
related to this restructuring plan were made in early 1999.
The changes to HB*PS' restructuring accrual as provided in 1999 and 1998 and
to NMHG's restructuring accrual as announced in 1997 are as follows:
HB*PS NMHG
--------- --------------------
Employee Employee
Severance Severance Other Total
--------- --------- ----- -----
Balance at
December 31, 1997 ... $-- $5.9 $1.0 $6.9
Provision (reversal) 3.2 (2.2) .6 1.6
Payments ........... -- (3.3) (4.9)
---- ---- ---- ----
December 31, 1998 ... $3.2 $ .4 $-- $3.6
Provision .......... 1.2 -- -- 1.2
Payments ........... (1.7) (.4) -- (2.1)
---- ---- ---- ----
BALANCE AT
DECEMBER 31, 1999 ... $2.7 $ -- $ -- $2.7
==== ==== ==== ====
SPECIAL CHARGES: In addition to the restructuring charge and in connection
with the restructuring plan, NMHG recognized a charge of $8.3 million in 1997
related to commitments to provide relocation benefits to certain employees. In
1998, NMHG incurred an additional $4.5 million related to increases in temporary
labor, moving and training costs associated with the restructuring program.
These costs are classified as selling, general and administrative expenses in
the accompanying Consolidated Statements of Income and Comprehensive Income.
46
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
In 1999, the Company recognized a charge of $2.9 million, included in
other-net in the accompanying Consolidated Statements of Income and
Comprehensive Income, for the write-off of costs incurred to evaluate the
potential acquisition of the forklift business of Nissan. NACCO was not able to
reach an agreement with Nissan for the purchase of Nissan's forklift business.
NOTE FOUR
ACCOUNTS RECEIVABLE SECURITIZATION
NMHG Wholesale has an agreement to sell all of its domestic accounts
receivable, on a revolving basis, to Lift Truck Funding Company, LLC ("LTF"), a
wholly owned subsidiary of NMHG Wholesale. LTF was formed prior to the execution
of this agreement for the purpose of buying and selling accounts receivable and
is designed to be bankruptcy remote. NMHG Wholesale and LTF also have an
agreement with a financial institution whereby LTF can sell, on a revolving
basis, an undivided percentage ownership interest in certain eligible accounts
receivable, as defined, up to a maximum of $50.0 million. The one-year-term
agreements expire in August 2000. The Company intends to extend these agreements
or replace them with a similar arrangement.
This two-step transaction is accounted for as a sale of receivables.
Accordingly, the Company's Consolidated Balance Sheets reflect the portion of
receivables transferred to the financial institution as a reduction of accounts
receivable, net.
In addition to this domestic program, NMHG Wholesale also has agreements
with financial institutions outside of the United States which allow for the
sale, without recourse, of undivided interests in revolving pools of its foreign
trade accounts receivable. The maximum allowable amount of foreign trade
receivables to be sold was $70.9 million and $72.8 million at December 31, 1999
and 1998, respectively.
NMHG Wholesale continues to service the receivables sold and maintains an
allowance for doubtful accounts based upon the expected collectibility of all
NMHG Wholesale accounts receivable, including the portion of receivables sold.
The servicing liability incurred in connection with these transactions is not
material.
Gross proceeds of $655.0 million, $763.7 million and $543.5 million were
received during 1999, 1998 and 1997, respectively, and the balance of accounts
receivable sold at December 31, 1999 and 1998 was $63.6 million and $67.2
million, respectively. The discount and any other transaction gains and losses
are included in other-net in the Consolidated Statements of Income and
Comprehensive Income. The net effect of the sale of receivables during 1999,
1998 and 1997 was not material to the operating results of the Company.
NOTE FIVE
INVENTORIES
Inventories are summarized as follows:
December 31
-----------
1999 1998
------- -------
Manufactured inventories:
Finished goods and service parts-
NMHG .................................. $ 103.5 $ 106.2
Housewares ............................ 46.4 41.5
------- -------
149.9 147.7
Raw materials and work
in process -
NMHG Wholesale ........................ 150.1 136.6
Housewares ............................ 19.5 17.5
------- -------
169.6 154.1
------- -------
Total manufactured
inventories .......................... 319.5 301.8
Retail inventories -
NMHG Retail ........................... 30.0 19.1
Housewares ............................ 18.9 17.2
------- -------
Total retail inventories .............. 48.9 36.3
Coal - NACoal ............................ 9.6 9.5
Mining supplies - NACoal ................. 22.4 19.4
------- -------
Total inventories at FIFO ............. 400.4 367.0
LIFO reserve -
NMHG .................................. (13.2) (12.6)
Housewares ............................ 3.1 1.8
------- -------
(10.1) (10.8)
------- -------
$ 390.3 $ 356.2
======= =======
The cost of certain manufactured and retail inventories has been determined
using the LIFO method. At December 31, 1999 and 1998, 66 percent and 58 percent,
respectively, of total inventories were determined using the LIFO method.
47
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
NOTE SIX
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment includes the following:
December 31
-----------
1999 1998
-------- --------
Coal lands and real estate:
NMHG ...................................... $ 15.7 $ 10.0
Housewares ................................ 1.9 2.5
NACoal .................................... 15.9 15.4
Project mining subsidiaries
(Note Nine) ............................. 81.0 81.7
NACCO and Other ........................... .1 .1
-------- --------
114.6 109.7
-------- --------
Plant and equipment:
NMHG ...................................... 446.2 381.2
Housewares ................................ 169.2 157.8
NACoal .................................... 31.7 30.3
Project mining subsidiaries
(Note Nine) ............................. 472.5 456.4
NACCO and Other ........................... 4.6 4.6
-------- --------
1,124.2 1,030.3
-------- --------
Property, plant and
equipment, at cost .......................... 1,238.8 1,140.0
Less allowances for
depreciation, depletion and
amortization ................................ 613.4 546.6
-------- --------
$ 625.4 $ 593.4
======== ========
Total depreciation, depletion and amortization expense on property, plant
and equipment was $88.5 million, $74.0 million and $70.9 million during 1999,
1998 and 1997, respectively.
Proven and probable coal reserves approximated 1.9 billion and 2.0 billion
tons at December 31, 1999 and 1998, respectively.
NOTE SEVEN
REVOLVING CREDIT AGREEMENTS
Financing arrangements are obtained and maintained at the subsidiary level.
NACCO has not guaranteed the long-term debt or any borrowings of its
subsidiaries.
The following table summarizes the Company's available and outstanding
borrowings.
December 31
-----------
1999 1998
------- -------
Available borrowings, net
of limitations:
NMHG ........................................ $ 396.2 $ 411.4
Housewares .................................. 187.0 186.6
NACoal ...................................... 50.0 47.5
------- -------
$ 633.2 $ 645.5
======= =======
Current portion of borrowings
outstanding:
NMHG ........................................ $ 12.3 $ 5.5
Housewares .................................. 29.1 25.5
NACoal ...................................... 15.2 .2
------- -------
$ 56.6 $ 31.2
======= =======
Unused availability:(*)
NMHG ........................................ $ 169.2 $ 231.3
Housewares .................................. 77.9 91.1
NACoal ...................................... 34.8 47.3
------- -------
$ 281.9 $ 369.7
======= =======
Weighted average stated
interest rate:
NMHG ........................................ 6.4% 5.7%
Housewares .................................. 6.3% 5.7%
NACoal ...................................... 6.9% 6.5%
Weighted average effective
interest rate (including
interest swap agreements):
NMHG ........................................ 6.8% 6.8%
Housewares .................................. 6.3% 6.1%
NACoal ...................................... 6.9% 6.5%
* Unused availability is determined using the available borrowings, net of
limitations, reduced by the current portion and long-term portion (see Note
Eight) of revolving credit agreements outstanding.
48
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
NMHG: NMHG Wholesale's credit agreement provides for an unsecured revolving
credit facility (the "Facility") that permits advances up to $350.0 million.
However, the portion of domestic receivables sold reduces this availability.
(See Note Four for a discussion of the sale of domestic accounts receivable.)
The June 2002 expiration date of the Facility may be extended annually for one
additional year with the consent of the bank group. NMHG Wholesale does not
anticipate repayment of the outstanding balance in the subsequent fiscal year.
As such, the outstanding balance of this credit facility has been classified as
long-term debt.
In addition, the Facility has performance-based pricing which sets interest
rates based upon the achievement of certain financial performance targets. The
Facility currently provides for, at NMHG Wholesale's option, Euro-Dollar Loans
which bear interest at LIBOR plus 0.2 percent and Money Market Loans which bear
interest at Auction Rates (as defined in the agreement) and requires a 0.1
percent fee on the available borrowings. The Facility permits NMHG Wholesale to
advance funds to NMHG Retail. Advances from NMHG Wholesale are the primary
sources of financing for NMHG Retail.
NMHG also has separate facilities totaling $48.7 million and $50.1 million
at December 31, 1999 and 1998, respectively. Outstanding letters of credit
reduce amounts available under these facilities. At December 31, 1999 and 1998,
unused availability, net of limitations, under these facilities was $25.4
million and $38.6 million, respectively. NMHG also maintains various uncommitted
lines of credit, which permitted funding up to $40.0 million and $55.0 million
at December 31, 1999 and 1998. Under these facilities, unused availability was
$20.3 million and $35.4 million at December 31, 1999 and 1998, respectively.
HOUSEWARES: HB*PS' credit agreement provides for a revolving credit facility
("HB*PS Facility") that permits advances up to $160.0 million and is secured by
substantially all of the assets of HB*PS. A portion of the outstanding balance
is classified as long-term debt because it is not expected to be repaid during
the subsequent fiscal year. The HB*PS Facility, which expires in May 2003,
provides reduced interest rates if HB*PS achieves a certain interest coverage
ratio and allows interest rates quoted under a competitive bid option. The HB*PS
Facility currently provides for interest at LIBOR plus 0.3 percent and requires
a 0.2 percent facility fee on the available borrowings. In 1998, the HB*PS
Facility was amended to allow advances of up to $10.0 million from HB*PS to KCI.
As a result of this amendment, KCI's cash requirements are financed through
advances from HB*PS.
HB*PS also has separate uncommitted facilities, which may provide funding up
to $30.0 million. Outstanding letters of credit reduce amounts available under
these facilities. At December 31, 1999 and 1998, availability, net of
limitations, under these facilities was $10.1 million and $27.5 million,
respectively.
NACOAL: NACoal has in place a revolving credit facility ("NACoal Facility")
that permits advances up to $50.0 million and requires a 0.2 percent commitment
and facility fee. The September 2002 expiration date of the NACoal Facility may
be extended annually for one additional year with the consent of the bank group.
Borrowings bear interest at LIBOR plus 0.4 percent and availability is limited
by the amount of borrowings from NACCO, if any.
NOTE EIGHT
LONG-TERM DEBT
Subsidiary long-term debt, less current maturities, is as follows:
December 31
-----------
1999 1998
------- -------
NMHG:
Long-term portion of
revolving credit agreements .................. $ 214.7 $ 174.6
Capital lease obligations
and other .................................... 31.3 11.4
------- -------
246.0 186.0
HOUSEWARES:
Long-term portion of
revolving credit agreement ................... 80.0 70.0
Capital lease obligations
and other .................................... .3 .4
------- -------
80.3 70.4
------- -------
$ 326.3 $ 256.4
======= =======
As noted above, the NMHG Wholesale credit agreement expires in 2002, if
renewal options are not exercised, and the Housewares facility expires in 2003.
Interest paid on revolving credit agreements and long-term debt was $26.4
million, $21.5 million and $24.9 million during 1999, 1998 and 1997,
respectively.
49
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
The credit agreements for NMHG Wholesale, HB*PS and NACoal contain certain
covenants and restrictions. These covenants require, among other things, some or
all of the following: maintenance of certain minimum amounts of net worth and
certain specified ratios of working capital, debt to capitalization, interest
coverage and fixed charge coverage. These ratios are calculated at the
subsidiary level. Restrictions may also include limits on capital expenditures
and dividends. At December 31, 1999, the subsidiaries were in compliance with
the covenants in their credit agreements.
NOTE NINE
OBLIGATIONS OF PROJECT MINING SUBSIDIARIES
Three of NACoal's subsidiaries (the "project mining subsidiaries") operate
lignite mines under long-term contracts with various utility customers to sell
lignite at a price based on actual cost plus an agreed pre-tax profit per ton.
The utility customers have arranged and guaranteed the financing for the
development and operation of these subsidiary mines. The obligations of these
project mining subsidiaries included in the Company's Consolidated Balance
Sheets do not affect the short- or long-term liquidity of the Company and are
without recourse to NACCO and its NACoal subsidiary.
Obligations of project mining subsidiaries, less current maturities, consist
of the following:
December 31
-----------
1999 1998
--------- ---------
Capitalized lease obligations ................ $ 109.8 $ 120.2
Advances from customers ...................... 145.1 158.5
Promissory notes with interest
rates ranging from 5.3% to
8.7% in 1999 and 5.5% to
8.7% in 1998 ............................... 34.3 34.5
--------- ---------
$ 289.2 $ 313.2
========= =========
Advances from customers are used to develop, operate and provide for the
ongoing working capital needs of certain project mining subsidiaries. The
customers have established a repayment schedule for only a portion, or $97.4
million, of the total advances. In addition, portions of the advances are
non-interest- bearing. The annual maturities of advances from customers and
promissory notes are as follows: $19.3 million in 2000, $15.5 million in 2001,
$15.0 million in 2002, $10.2 million in 2003, $7.9 million in 2004 and $73.3
million thereafter. The current portion of advances from customers is included
in other current liabilities in the accompanying Consolidated Balance Sheets.
Interest paid was $17.7 million, $13.0 million and $12.8 million during
1999, 1998 and 1997, respectively. The cost of coal, which is passed through to
the utility customers, includes interest expense.
The project mining subsidiaries' capital lease obligations for mining
equipment have the following future minimum lease payments at December 31, 1999:
2000 ...................................... $ 22.8
2001 ...................................... 22.4
2002 ...................................... 20.7
2003 ...................................... 18.8
2004 ...................................... 17.2
Subsequent to 2004 ........................ 72.6
------
Total minimum lease payments ............... 174.5
Amounts representing interest .............. (50.8)
------
Present value of net minimum
lease payments ............................ 123.7
Current maturities ......................... (13.9)
------
$109.8
======
Interest expense and amortization in excess of annual lease payments are
deferred and recognized in years when annual lease payments exceed interest
expense and amortization.
Project mining assets recorded under capital leases are included in
property, plant and equipment and consist of the following:
December 31
-----------
1999 1998
------- -------
Plant and equipment ........................ $ 201.2 $ 202.1
Less accumulated
amortization .............................. 114.9 106.4
------- -------
$ 86.3 $ 95.7
======= =======
During 1999, 1998 and 1997, the project mining subsidiaries incurred capital
lease obligations of $3.8 million, $4.9 million and $6.4 million, respectively,
in connection with lease agreements to acquire plant and equipment.
The above obligations are secured by substantially all of the owned assets
of the respective project mining subsidiary and the assignment of all rights
under its coal sales agreement.
50
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
NOTE TEN
LEASE COMMITMENTS
The Company leases certain office, manufacturing and warehouse facilities,
retail stores and machinery and equipment under noncancelable operating leases
which expire at various dates through 2009. Future minimum operating lease
payments, excluding project mining subsidiaries, at December 31, 1999, are:
$37.0 million in 2000, $32.2 million in 2001, $27.3 million in 2002, $22.9
million in 2003, $18.0 million in 2004 and $32.7 million thereafter.
Rental expense for all operating leases, excluding project mining
subsidiaries, amounted to $32.6 million, $29.4 million and $25.6 million during
1999, 1998 and 1997, respectively.
NOTE ELEVEN
SELF-INSURANCE RESERVES AND OTHER
Self-insurance Reserves and Other consists of the following:
December 31
-----------
1999 1998
------- -------
Undiscounted
UMWA obligation ........................... $ 83.4 $ 86.1
Present value of other closed
mine obligations .......................... 16.4 17.3
Other self-insurance reserves .............. 140.9 135.5
------- -------
$ 240.7 $ 238.9
======= =======
The UMWA obligation and the other closed mine obligations relate to Bellaire
Corporation's ("Bellaire,"a wholly owned non-operating subsidiary of NACCO)
former eastern U.S. underground mining operations and the Indian Head Mine,
which ceased operations in 1992. The obligation to UMWA resulted from the Coal
Act, which requires Bellaire to incur additional costs for the medical expenses
of certain United Mine Worker retirees. Annual cash payments of up to $3.0
million after tax are expected relating to this obligation and could continue
for as long as 40 to 50 years. The Company has recorded this obligation on an
undiscounted basis. The other closed mine obligations include reserves for land
reclamation and site treatment at certain closed eastern underground and western
surface mines, as well as reserves for workers' compensation and black lung
benefit costs.
Other self-insurance reserves include product liability reserves, employee
retirement obligations and other miscellaneous reserves.
NOTE TWELVE
FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts receivable and
accounts payable approximate fair value due to the short-term maturities of
these instruments. The fair values of revolving credit agreements and long-term
debt were determined using current rates offered for similar obligations and
approximated carrying values at December 31, 1999 and 1998. Financial
instruments that potentially subject the Company to concentration of credit risk
consist principally of accounts receivable and derivatives. Concentration of
credit risk on accounts receivable is mitigated by the large number of customers
comprising the Company's customer base and their dispersion across many
different industries and geographies. To further reduce credit risk associated
with accounts receivable, the Company performs periodic credit evaluations of
its customers, but does not generally require advance payments or collateral.
The Company enters into derivative contracts with high-quality financial
institutions and limits the amount of credit exposure to any one institution.
DERIVATIVE FINANCIAL INSTRUMENTS
FOREIGN CURRENCY DERIVATIVES: NMHG and HB*PS held forward foreign currency
exchange contracts in the amounts of $91.1 million and $11.1 million,
respectively, at December 31, 1999, primarily denominated in Euros, British
pounds sterling, Japanese yen and Canadian dollars. At December 31, 1998, NMHG
and HB*PS held forward foreign currency exchange contracts in the amounts of
$72.4 million and $1.9 million, respectively, primarily denominated in Japanese
yen, French francs, Spanish pesetas and Canadian dollars. The amount of deferred
loss at December 31, 1999 and 1998 was not material. The fair market value of
these contracts was estimated based on quoted market sources and approximated a
net receivable of $0.3 million and $4.7 million at December 31, 1999 and 1998,
respectively.
51
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
INTEREST RATE DERIVATIVES: The following table summarizes the notional
amounts, related rates (including applicable margins) and remaining terms on
interest rate swap agreements active at December 31:
Notional Average
Amount Fixed Rate Remaining
-------------- ------------ Term at
1999 1998 1999 1998 Dec. 31, 1999
---- ---- ---- ---- -------------
NMHG. . . . . . $ 190.0 $160.0 6.9% 7.1% Various,
extending to
January 2004
Housewares. . $ 62.5 $ 80.0 6.5% 6.2% Various,
extending to
February 2002
NACoal. . . . . $ 33.0 $ 38.1 6.2% 6.2% Various,
extending to
June 2008
Interest rate swap agreements held by NMHG have terms that vary from
one-year to seven-year periods from inception. In addition to the interest rate
swap agreements reflected in the table, at December 31, 1999, NMHG holds certain
contracts that begin in January 2000 and extend to January 2003. These contracts
increase the notional amount outstanding to $215.0 million in 2000. Terms of
Housewares' interest rate swap agreements vary from one-year to three-year
periods. In addition to the interest rate swap agreements reflected in the
table, at December 31, 1999, Housewares holds certain contracts that begin in
March 2000 and extend to March 2003. These contracts increase the notional
amount outstanding to $80.0 million in 2000. At NACoal, the interest rate swap
agreements hedge promissory notes held by the project mining subsidiaries (see
Note Nine). Maturities of the NACoal interest rate swap agreements correspond
with the maturities of the hedged obligation. The related obligation is included
in obligations of project mining subsidiaries in the Consolidated Balance
Sheets. The net interest expense paid or received is included in the cost of
coal and passed through to the utility customers.
The fair market value of all interest rate swap agreements, which was
obtained from broker quotes, was a net receivable of $1.3 million at December
31, 1999 and a net payable of $7.5 million at December 31, 1998.
NOTE THIRTEEN
CONTINGENCIES
Various legal proceedings and claims have been or may be asserted against
NACCO and certain subsidiaries relating to the conduct of their businesses,
including product liability and environmental claims. These proceedings are
incidental to the ordinary course of business of the Company. Management
believes that it has meritorious defenses and will vigorously defend itself in
these actions. Any costs that management estimates will be paid as a result of
these claims are accrued when the liability is considered probable and the
amount can be reasonably estimated. Although the ultimate disposition of these
proceedings is not presently determinable, management believes, after
consultation with its legal counsel, that the likelihood is remote that material
costs will be incurred in excess of accruals already recognized.
NMHG is subject to recourse or repurchase obligations under various
financing arrangements for certain independently owned retail dealerships. Also,
certain dealer loans are guaranteed by NMHG. When NMHG is the guarantor of the
principal amount financed, a security interest is usually maintained in certain
assets of parties for whom NMHG is guaranteeing debt. Total amounts subject to
recourse or repurchase obligations at December 31, 1999 and 1998 were $157.3
million and $196.0 million, respectively. Losses anticipated under the terms of
the recourse or repurchase obligations are not significant and have been
reserved for in the accompanying Consolidated Financial Statements.
52
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
NOTE FOURTEEN
COMMON STOCK
The Class A common stock has one vote per share and the Class B common stock
has 10 votes per share. The total number of authorized shares of Class A common
stock and Class B common stock at December 31, 1999 was 25,000,000 shares and
6,756,176 shares, respectively. Treasury shares of Class A common stock totaling
1,626,964 and 1,663,607 at December 31, 1999 and 1998, respectively, have been
deducted from shares issued.
STOCK OPTIONS: The 1975 and 1981 stock option plans, as amended, provide for
the granting to officers and other key employees of options to purchase Class A
common stock and Class B common stock of the Company at a price not less than
the market value of such stock at the date of grant. Options become exercisable
over a four-year period and expire 10 years from the date of the grant. As of
December 31, 1999 all options that were granted under stock option plans have
been exercised or cancelled. No options remain outstanding.
At December 31, 1999, 1998 and 1997, there were 80,701 shares of Class A
common stock and 80,100 shares of Class B common stock available for grant.
However, no options were granted during 1999, 1998 and 1997. In addition, the
Company does not presently intend to issue additional stock options. In 1999,
options for 25,000 shares of Class A common stock were exercised at an option
price of $35.56. In 1998 and 1997, options for 1,800 and 4,000 shares,
respectively, of Class A common stocks were exercised at an option price of
$32.00. At December 31, 1997, there were options outstanding relating to 1,800
shares of Class A common stock with an option price of $32.00 that were granted
on January 12, 1989. At December 31, 1999 and 1998, there were no options
outstanding relating to this grant date. Also, at December 31, 1998 and 1997,
there were options outstanding related to 25,000 shares of Class A common stock
at an option price of $35.56 granted on March 1, 1989. At December 31, 1999,
there were no options outstanding relating to this grant date.
The Company applies AICPA Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," in accounting for stock options.
Because there have been no options granted subsequent to 1995, no additional pro
forma disclosures are required as provided in SFAS No. 123, "Accounting for
Stock-Based Compensation."
NOTE FIFTEEN
EARNINGS PER SHARE
For purposes of calculating the basic and diluted earnings per share, no
adjustments have been made to the reported amounts of net income. The share
amounts used for the year ended December 31 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Basic common shares
(weighted average) ............... 8.150 8.147 8.171
Dilutive stock options ............. .004 .019 .014
-------- -------- --------
Diluted common
shares ............................ 8.154 8.166 8.185
======== ======== ========
</TABLE>
NOTE SIXTEEN
INCOME TAXES
The components of income before income taxes and provision for income taxes
for the year ended December 31 are as follows:
1999 1998 1997
------- ------- -------
INCOME (LOSS) BEFORE
INCOME TAXES
Domestic .......................... $ 91.5 $ 137.9 $ 74.6
Foreign ........................... (4.9) 28.1 14.5
------- ------- -------
$ 86.6 $ 166.0 $ 89.1
======= ======= =======
PROVISION FOR INCOME
TAXES
Current tax expense:
Federal .......................... $ 27.7 $ 53.1 $ 38.5
State ............................ 5.3 9.7 7.4
Foreign .......................... 2.7 9.2 3.9
------- ------- -------
Total current ................... 35.7 72.0 49.8
------- ------- -------
Deferred tax benefit:
Federal .......................... (.3) (10.0) (24.3)
State ............................ (.5) (1.3) (2.6)
Foreign .......................... (4.4) (.8) (2.4)
------- ------- -------
Total deferred .................. (5.2) (12.1) (29.3)
------- ------- -------
Increase in valuation
allowance ......................... 1.2 .8 5.9
------- ------- -------
$ 31.7 $ 60.7 $ 26.4
======= ======= =======
Domestic income before income taxes has been reduced by substantially all
interest expense and the amortization of goodwill.
53
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
The Company made income tax payments of $44.2 million, $74.6 million and
$46.4 million during 1999, 1998 and 1997, respectively. During the same period,
income tax refunds totaled $1.4 million, $0.8 million and $2.1 million,
respectively.
A reconciliation of the federal statutory and effective income tax for the
year ended December 31 follows:
1999 1998 1997
------- ------- -------
Income before taxes ................. $ 86.6 $ 166.0 $ 89.1
======= ======= =======
Statutory taxes
at 35.0% .......................... $ 30.3 $ 58.1 $ 31.2
Amortization of
goodwill .......................... 5.2 4.9 4.9
State income taxes ................. 3.3 5.7 3.4
Valuation allowance ................ 1.2 .8 5.9
Unremitted foreign
earnings .......................... -- -- (15.3)
Percentage
depletion ......................... (3.6) (3.7) (1.6)
Foreign statutory
rate differences .................. (1.4) (1.6) (2.2)
Export benefits .................... (1.3) (1.4) (.8)
Earnings reported
net of taxes ...................... (.6) (1.2) (.4)
Other-net .......................... (1.4) (.9) 1.3
------- ------- -------
Provision for income
taxes .............................. $ 31.7 $ 60.7 $ 26.4
======= ======= =======
Effective rate ...................... 36.6% 36.6% 29.6%
======= ======= =======
The Company does not provide for deferred taxes on certain unremitted
foreign earnings. In 1997, management determined, and continues to conclude,
that the earnings of NMHG's foreign subsidiaries have been and will be
indefinitely reinvested in the Company's foreign operations and, therefore, a
reserve for unremitted foreign earnings is no longer required. As a result, an
income tax benefit of $15.3 million was recognized in 1997 relating to the
reversal of previously provided deferred taxes on NMHG's unremitted foreign
earnings. As of December 31, 1999, the unremitted earnings of the Company's
foreign subsidiaries are $165.5 million. It is impracticable to determine the
amount of unrecognized deferred taxes with respect to these earnings; however,
foreign tax credits would be available to reduce U.S. income taxes in the event
of a distribution.
A detailed summary of the total deferred tax assets and liabilities in the
Company's Consolidated Balance Sheets resulting from differences in the book and
tax basis of assets and liabilities follows:
December 31
-----------
1999 1998
------- -------
DEFERRED TAX ASSETS
Accrued expenses and
reserves ............................................ $ 68.4 $ 66.9
Reserve for UMWA ..................................... 30.5 31.7
Employee benefits .................................... 23.6 25.1
Net operating loss
carryforwards ....................................... 9.1 7.0
------- -------
Total deferred tax assets .......................... 131.6 130.7
Less: Valuation allowance .......................... (7.9) (6.7)
------- -------
123.7 124.0
------- -------
DEFERRED TAX LIABILITIES
Depreciation and depletion ........................... 48.8 46.3
Inventories .......................................... 14.8 16.3
Other ................................................ 12.7 12.3
------- -------
Total deferred tax liabilities ..................... 76.3 74.9
------- -------
Net deferred tax asset ........................... $ 47.4 $ 49.1
======= =======
The Company periodically reviews the need for a valuation allowance against
certain deferred tax assets and recognizes these assets to the extent that
realization is more likely than not. Based on a review of earnings history and
trends, forecasted earnings and expiration of carryforwards, the Company
provided a valuation allowance of $5.9 million in 1997, primarily against
foreign net operating loss carryforwards for which utilization is uncertain. In
1999 and 1998, this valuation allowance was increased to $7.9 million and $6.7
million, respectively. At December 31, 1999, the Company had $1.6 million of net
operating loss carryforwards that expire, if unused, in years 2000 through 2004
and $7.5 million that are not subject to expiration.
The tax returns of the Company and certain of its subsidiaries are being
examined by various taxing authorities. The Company has not been informed of any
material assessment resulting from these examinations and will vigorously
contest any material assessment. Management believes that any potential
adjustment would not materially affect the Company's financial condition or
results of operations.
54
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
NOTE SEVENTEEN
RETIREMENT BENEFIT PLANS
DEFINED BENEFIT PLANS: The Company maintains various defined benefit pension
plans covering most of its employees. These plans provide benefits based on
years of service and average compensation during certain periods. The Company's
policy is to make contributions to fund these plans within the range allowed by
the applicable regulations. Plan assets consist primarily of publicly traded
stocks, investment contracts and government and corporate bonds.
As of December 31, 1996, pension benefits were frozen for employees covered
under NMHG's and HB*PS' United States plans, except for those NMHG employees
participating in collective bargaining agreements. As a result, in the United
States only NACoal employees and certain NMHG employees covered under collective
bargaining agreements will earn retirement benefits under defined benefit
pension plans. Other employees of the Company, including NMHG and HB*PS
employees whose pension benefits were frozen as of December 31, 1996, will
receive retirement benefits under defined contribution retirement plans.
Set forth below is a detail of the net periodic pension expense and the
assumptions used in accounting for the United States and the United Kingdom
defined benefit plans for the years ended December 31. Assumptions used in
accounting for the United Kingdom plans changed significantly in 1998 as
compared with 1997 primarily due to changes in the economic climate in the
United Kingdom.
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
UNITED STATES PLANS
Service cost ................................ $ 3.3 $ 5.5 $ 3.5
Interest cost ............................... 10.1 9.7 9.3
Expected return on plan assets .............. (12.3) (10.7) (9.1)
Amortization of transition asset ............ (.4) (.4) (.4)
Amortization of prior service cost .......... .4 .4 .3
Recognized actuarial gain ................... (.2) (.2) --
-------- -------- --------
Net periodic pension expense .............. $ .9 $ 4.3 $ 3.6
======== ======== ========
ASSUMPTIONS:
Weighted average discount rates ........... 7.75% 7.00% 7.50%
Rate of increase in compensation levels ... 4.25% 4.00% 4.50%
Expected long-term rate of return on assets 9.00% 9.00% 9.00%
UNITED KINGDOM PLAN
Service cost ................................ $ 2.4 $ 2.2 $ 2.1
Interest cost ............................... 3.1 2.8 2.7
Expected return on plan assets .............. (3.7) (4.5) (3.8)
Amortization of transition asset ............ (.1) (.1) (.1)
Amortization of prior service cost .......... .1 .1 .1
Recognized actuarial (gain) loss ............ .4 (1.1) (.8)
-------- -------- --------
Net periodic pension (income) expense ..... $ 2.2 $ (.6) $ .2
======== ======== ========
ASSUMPTIONS:
Weighted average discount rates ........... 6.25% 5.75% 8.00%
Rate of increase in compensation levels ... 3.50% 3.50% 5.00%
Expected long-term rate of return on assets 7.50% 7.50% 9.00%
</TABLE>
55
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
The following sets forth the changes in the benefit obligation and the plan
assets during the year and reconciles the funded status of the defined benefit
plans with the amounts recognized in the Consolidated Balance Sheets at December
31:
<TABLE>
<CAPTION>
1999 1998
------------------ ----------------
UNITED UNITED United United
STATES KINGDOM States Kingdom
PLANS PLAN Plans Plan
----- ---- ----- ----
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year ....................... $148.0 $ 56.7 $127.3 $ 35.3
Service cost .................................................. 3.3 2.4 5.5 2.2
Interest cost ................................................. 10.1 3.1 9.7 2.8
Actuarial (gain) loss ......................................... (18.3) (7.9) 12.0 17.6
Benefits paid ................................................. (8.5) (1.0) (8.0) (1.4)
Plan amendments ............................................... -- -- 1.5 --
Foreign currency exchange rate changes ........................ -- (1.9) -- .2
------ ------ ------ ------
Benefit obligation at end of year ............................ $134.6 $ 51.4 $148.0 $ 56.7
------ ------ ------ ------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year ................ $135.7 $ 50.5 $138.4 $ 49.5
Actual return on plan assets .................................. 23.3 9.0 4.7 (.1)
Employer contributions ........................................ 1.4 2.7 .7 1.5
Employee contributions ........................................ -- -- -- .8
Benefits paid ................................................. (8.5) (1.0) (8.0) (1.4)
Foreign currency exchange rate changes ........................ -- (1.7) (.1) .2
------ ------ ------ ------
Fair value of plan assets at end of year ..................... $151.9 $ 59.5 $135.7 $ 50.5
------ ------ ------ ------
NET AMOUNT RECOGNIZED
Plan assets in excess of (less than) obligation ............... $ 17.3 $ 8.1 $(12.3) $ (6.2)
Unrecognized prior service cost ............................... 3.0 .9 3.4 1.1
Unrecognized actuarial (gain) loss ............................ (38.0) 1.6 (9.1) 16.0
Unrecognized net transition asset ............................. (.5) (.3) (1.0) (.5)
Contributions in fourth quarter ............................... -- .4 .3 .4
------ ------ ------ ------
Net amount recognized ........................................ $(18.2) $ 10.7 $(18.7) $ 10.8
====== ====== ====== ======
AMOUNTS RECOGNIZED IN THE CONSOLIDATED BALANCE SHEETS CONSIST OF:
Prepaid benefit cost ........................................... $ 7.6 $ 10.7 $ -- $ 10.8
Accrued benefit liability ...................................... (25.8) -- (28.0) --
Intangible asset ............................................... -- -- 2.9 --
Accumulated other comprehensive income ......................... -- -- 6.4 --
------ ------ ------ ------
Net amount recognized ........................................ $(18.2) $ 10.7 $(18.7) $ 10.8
====== ====== ====== ======
</TABLE>
DEFINED CONTRIBUTION PLANS: NACCO and its subsidiaries have defined
contribution (401(k)) plans for substantially all employees. For NACCO and those
subsidiaries, the applicable company matches employee contributions based on
plan provisions. In addition, NACCO and certain other subsidiaries have defined
contribution retirement plans whereby the applicable company's contribution to
participants is determined annually based on a formula which includes the effect
of actual compared to targeted operating results and the age and compensation of
the participants. Total costs, including Company contributions, for these plans
were $13.7 million, $20.7 million and $16.3 million in 1999, 1998 and 1997,
respectively.
56
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
NOTE EIGHTEEN
BUSINESS SEGMENTS
Financial information for each of NACCO's reportable segments, as defined by
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," is presented in the following table. Because of the Company's
continued acquisitions of Hyster and Yale retail dealerships during 1998 and
1999, the operating results of the retail segment of NMHG has met the
materiality thresholds for disclosure, as provided in SFAS No. 131. Therefore,
separate financial information has been provided for NMHG Wholesale and NMHG
Retail. NMHG Wholesale includes the manufacture and sale of lift trucks and
related service parts, primarily to independent and wholly owned Hyster and Yale
retail dealerships. NMHG Retail includes the sale and service of Hyster and Yale
lift trucks and related service parts by wholly owned retail dealerships.
Segment data for 1998 has been restated to reflect the addition of the NMHG
Retail segment. In 1997, the activity of retail dealerships was accounted for
using the equity method. Operating results in 1997 were insignificant and have
been included in other-net, income (expense).
See Note One for a discussion of the Company's other operating segments and
product lines. NACCO's non-operating segment, NACCO and Other, includes the
accounts of the parent company and Bellaire.
The accounting policies of the segments are the same as those described in
Note Two - Accounting Policies. NMHG Wholesale derives a portion of its revenues
from transactions with NMHG Retail. The amount of these revenues, which are
derived based on similar third party transactions, are indicated in the
following table on the line "NMHG Eliminations" in the revenue section. No other
intersegment sales transactions occur. Other intersegment transactions are
recognized based on similar third party transactions; that is, at current market
prices.
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
REVENUES FROM EXTERNAL CUSTOMERS
NMHG Wholesale ................................ $1,585.8 $1,681.7 $1,488.0
NMHG Retail ................................... 228.1 59.6 --
NMHG Eliminations ............................. (85.6) (28.3) --
-------- -------- --------
NMHG Consolidated ............................. 1,728.3 1,713.0 1,488.0
Housewares .................................... 596.7 537.6 495.8
NACoal ........................................ 277.7 285.4 262.9
NACCO and Other ............................... .1 .2 .2
-------- -------- --------
$2,602.8 $2,536.2 $2,246.9
======== ======== ========
GROSS PROFIT
NMHG Wholesale ................................ $ 255.7 $ 330.9 $ 264.1
NMHG Retail ................................... 49.3 15.2 --
NMHG Eliminations ............................. (1.5) (.4) --
-------- -------- --------
NMHG Consolidated ............................. 303.5 345.7 264.1
Housewares .................................... 128.7 115.6 102.8
NACoal ........................................ 52.7 54.4 54.2
NACCO and Other ............................... (.2) (.2) (.1)
-------- -------- --------
$ 484.7 $ 515.5 $ 421.0
======== ======== ========
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
NMHG Wholesale ................................ $ 169.6 $ 186.5 $ 173.9
NMHG Retail ................................... 63.9 16.9 --
NMHG Eliminations ............................. (.5) -- --
-------- -------- --------
NMHG Consolidated ............................. 233.0 203.4 173.9
Housewares .................................... 82.7 74.8 72.6
NACoal ........................................ 12.3 12.4 10.3
NACCO and Other ............................... 9.0 10.5 8.4
-------- -------- --------
$ 337.0 $ 301.1 $ 265.2
======== ======== ========
AMORTIZATION OF GOODWILL
NMHG Wholesale ................................ $ 11.6 $ 11.6 $ 11.7
NMHG Retail ................................... .6 .1 --
-------- -------- --------
NMHG Consolidated ............................. 12.2 11.7 11.7
Housewares .................................... 3.0 3.0 4.1
-------- -------- --------
$ 15.2 $ 14.7 $ 15.8
======== ======== ========
</TABLE>
57
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
OPERATING PROFIT (LOSS)
NMHG Wholesale ................................ $ 74.5 $ 134.4 $ 70.5
NMHG Retail ................................... (15.2) (1.8) --
NMHG Eliminations ............................. (1.0) (.4) --
-------- -------- --------
NMHG Consolidated ............................. 58.3 132.2 70.5
Housewares .................................... 41.8 34.6 26.1
NACoal ........................................ 40.4 42.0 43.9
NACCO and Other ............................... (9.2) (10.7) (8.5)
-------- -------- --------
$ 131.3 $ 198.1 $ 132.0
======== ======== ========
OPERATING PROFIT (LOSS) EXCLUDING GOODWILL
AMORTIZATION
NMHG Wholesale ................................ $ 86.1 $ 146.0 $ 82.2
NMHG Retail ................................... (14.6) (1.7) --
NMHG Eliminations ............................. (1.0) (.4) --
-------- -------- --------
NMHG Consolidated ............................. 70.5 143.9 82.2
Housewares .................................... 44.8 37.6 30.2
NACoal ........................................ 40.4 42.0 43.9
NACCO and Other ............................... (9.2) (10.7) (8.5)
-------- -------- --------
$ 146.5 $ 212.8 $ 147.8
======== ======== ========
INTEREST EXPENSE
NMHG Wholesale ................................ $ (16.9) $ (14.0) $ (14.5)
NMHG Retail ................................... (3.0) (1.2) --
NMHG Eliminations ............................. .9 1.2 --
-------- -------- --------
NMHG Consolidated ............................. (19.0) (14.0) (14.5)
Housewares .................................... (6.7) (7.0) (7.3)
NACoal ........................................ -- (.6) (2.1)
NACCO and Other ............................... (.7) (1.0) (2.3)
Eliminations .................................. .7 1.0 2.3
-------- -------- --------
(25.7) (21.6) (23.9)
Project mining subsidiaries ................... (17.6) (13.0) (12.7)
-------- -------- --------
$ (43.3) $ (34.6) $ (36.6)
======== ======== ========
INTEREST INCOME
NMHG Wholesale ................................ $ 8.2 $ 3.4 $ 2.2
NMHG Retail ................................... .2 -- --
NMHG Eliminations ............................. (3.6) (1.2) --
-------- -------- --------
NMHG Consolidated ............................. 4.8 2.2 2.2
Housewares .................................... .1 -- .1
NACoal ........................................ .7 1.2 3.1
Eliminations .................................. (.7) (1.1) (2.3)
-------- -------- --------
$ 4.9 $ 2.3 $ 3.1
======== ======== ========
OTHER-NET, INCOME (EXPENSE) - (EXCLUDING INTEREST
INCOME)
NMHG Wholesale ................................ $ (3.4) $ -- $ (4.3)
NMHG Retail ................................... .3 -- (1.6)
NMHG Eliminations ............................. .1 -- --
-------- -------- --------
NMHG Consolidated ............................. (3.0) -- (5.9)
Housewares .................................... (.5) (.7) (.3)
NACoal ........................................ (.3) -- (5.1)
NACCO and Other ............................... (2.5) .9 1.9
-------- -------- --------
$ (6.3) $ .2 $ (9.4)
======== ======== ========
</TABLE>
58
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
PROVISION FOR INCOME TAXES
NMHG Wholesale ................................ $ 24.4 $ 47.6 $ 13.6
NMHG Retail ................................... (4.9) (1.2) --
NMHG Eliminations ............................. (1.1) (.1) --
-------- -------- --------
NMHG Consolidated ............................. 18.4 46.3 13.6
Housewares .................................... 13.5 11.6 8.1
NACoal ........................................ 4.5 7.1 8.1
NACCO and Other ............................... (4.7) (4.3) (3.4)
-------- -------- --------
$ 31.7 $ 60.7 $ 26.4
======== ======== ========
NET INCOME (LOSS)
NMHG Wholesale ................................ $ 39.0 $ 77.2 $ 38.7
NMHG Retail ................................... (12.8) (1.9) --
NMHG Eliminations ............................. (2.5) (.2) --
-------- -------- --------
NMHG Consolidated ............................. 23.7 75.1 38.7
Housewares .................................... 21.2 15.2 10.5
NACoal ........................................ 16.5 20.3 19.0
NACCO and Other ............................... (8.3) (8.3) (6.4)
-------- -------- --------
$ 53.1 $ 102.3 $ 61.8
======== ======== ========
TOTAL ASSETS
NMHG Wholesale ................................ $1,040.5 $1,064.3 $ 942.4
NMHG Retail ................................... 185.0 87.8 --
NMHG Eliminations ............................. (46.9) (51.7) --
-------- -------- --------
NMHG Consolidated ............................. 1,178.6 1,100.4 942.4
Housewares .................................... 372.8 334.0 315.7
NACoal ........................................ 64.3 43.1 51.5
NACCO and Other ............................... 47.6 53.6 59.4
-------- -------- --------
1,663.3 1,531.1 1,369.0
Project mining subsidiaries ................... 392.0 418.6 423.4
-------- -------- --------
2,055.3 1,949.7 1,792.4
Consolidating eliminations .................... (42.3) (51.4) (63.3)
-------- -------- --------
$2,013.0 $1,898.3 $1,729.1
======== ======== ========
DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE
NMHG Wholesale ................................ $ 39.9 $ 36.1 $ 35.0
NMHG Retail ................................... 14.2 1.8 --
-------- -------- --------
NMHG Consolidated ............................. 54.1 37.9 35.0
Housewares .................................... 17.6 16.7 21.0
NACoal ........................................ 3.1 3.3 2.4
NACCO and Other ............................... .4 .4 .4
-------- -------- --------
75.2 58.3 58.8
Project mining subsidiaries ................... 28.8 30.7 29.8
-------- -------- --------
$ 104.0 $ 89.0 $ 88.6
======== ======== ========
CAPITAL EXPENDITURES
NMHG Wholesale ................................ $ 44.7 $ 57.9 $ 25.3
NMHG Retail ................................... 1.5 6.0 --
-------- -------- --------
NMHG Consolidated ............................. 46.2 63.9 25.3
Housewares .................................... 16.5 16.8 18.3
NACoal ........................................ 2.7 3.8 9.1
NACCO and Other ............................... .1 -- --
-------- -------- --------
65.5 84.5 52.7
Project mining subsidiaries ................... 10.0 15.8 15.7
-------- -------- --------
$ 75.5 $ 100.3 $ 68.4
======== ======== ========
</TABLE>
59
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
DATA BY GEOGRAPHIC AREA
No single country outside of the United States comprised 10 percent or more
of the Company's revenues from unaffiliated customers. The Other category below
includes Canada, Mexico, South America and Asia-Pacific. In addition, no single
customer comprised 10 percent or more of the Company's revenues from
unaffiliated customers.
<TABLE>
<CAPTION>
Europe,
United Africa and
States Middle East Other Consolidated
------ ----------- ----- ------------
<S> <C> <C> <C> <C>
1999
- -------------------------------------
REVENUES FROM UNAFFILIATED CUSTOMERS,
BASED ON THE CUSTOMER'S LOCATION ... $1,958.9 $ 484.9 $ 159.0 $2,602.8
======== ======== ======== ========
LONG-LIVED ASSETS ................... $ 926.9 $ 189.8 $ 94.0 $1,210.7
======== ======== ======== ========
1998
- -------------------------------------
Revenues from unaffiliated customers,
based on the customer's location ... $1,938.4 $ 478.8 $ 119.0 $2,536.2
======== ======== ======== ========
Long-lived assets ................... $ 917.5 $ 192.8 $ 52.8 $1,163.1
======== ======== ======== ========
1997
- -------------------------------------
Revenues from unaffiliated customers,
based on the customer's location ... $1,709.1 $ 402.2 $ 135.6 $2,246.9
======== ======== ======== ========
Long-lived assets ................... $ 896.5 $ 168.9 $ 39.9 $1,105.3
======== ======== ======== ========
</TABLE>
NOTE NINETEEN
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
A summary of the unaudited quarterly results of operations for the year
ended December 31 is as follows:
<TABLE>
<CAPTION>
1999
---------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES
NMHG ............................................. $ 438.5 $ 452.6 $ 391.1 $ 446.1
Housewares ....................................... 111.4 127.0 150.6 207.7
NACoal ........................................... 63.6 65.0 72.6 76.5
NACCO and Other .................................. -- .1 -- --
------- ------- ------- -------
613.5 644.7 614.3 730.3
------- ------- ------- -------
GROSS PROFIT ....................................... 115.7 124.1 112.5 132.4
------- ------- ------- -------
OPERATING PROFIT(LOSS)
NMHG ............................................. 24.8 22.8 5.7 5.0
Housewares ....................................... -- 8.3 9.9 23.6
NACoal ........................................... 9.2 8.6 11.4 11.2
NACCO and Other .................................. (2.6) (2.5) (2.4) (1.7)
------- ------- ------- -------
31.4 37.2 24.6 38.1
------- ------- ------- -------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 12.9 16.3 7.0 18.1
Cumulative effect of accounting change ............. (1.2) -- -- --
------- ------- ------- -------
NET INCOME ......................................... $ 11.7 $ 16.3 $ 7.0 $ 18.1
======= ======= ======= =======
BASIC AND DILUTED EARNINGS PER SHARE
Income before cumulative effect of accounting change $ 1.59 $ 2.00 $ 0.86 $ 2.22
Cumulative effect of accounting change ............. (.15) -- -- --
------- ------- ------- -------
Net income ......................................... $ 1.44 $ 2.00 $ 0.86 $ 2.22
======= ======= ======= =======
</TABLE>
60
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
<TABLE>
<CAPTION>
1998
----------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES
NMHG ............................................. $ 431.9 $ 437.2 $ 374.6 $ 469.3
Housewares ....................................... 99.0 112.9 136.8 188.9
NACoal ........................................... 68.4 64.0 72.3 80.7
NACCO and Other .................................. -- .1 -- .1
------- ------- ------- -------
599.3 614.2 583.7 739.0
------- ------- ------- -------
GROSS PROFIT ....................................... 119.0 120.2 118.2 158.1
------- ------- ------- -------
OPERATING PROFIT(LOSS)
NMHG ............................................. 41.3 38.7 23.6 28.6
Housewares ....................................... (.7) 2.4 11.6 21.3
NACoal ........................................... 10.9 8.6 10.7 11.8
NACCO and Other .................................. (2.4) (2.7) (2.6) (3.0)
------- ------- ------- -------
49.1 47.0 43.3 58.7
------- ------- ------- -------
NET INCOME ......................................... $ 24.1 $ 26.3 $ 20.4 $ 31.5
======= ======= ======= =======
BASIC EARNINGS PER SHARE ........................... $ 2.95 $ 3.22 $ 2.50 $ 3.88
======= ======= ======= =======
DILUTED EARNINGS PER SHARE ......................... $ 2.95 $ 3.21 $ 2.50 $ 3.87
======= ======= ======= =======
</TABLE>
NOTE TWENTY
PARENT COMPANY CONDENSED BALANCE SHEETS
The condensed balance sheets of NACCO, the parent company, at December 31
are as follows:
1999 1998
------- -------
ASSETS
Current assets ................................ $ .2 $ .6
Current intercompany accounts receivable, net . .4 5.5
Other assets .................................. .4 .2
Investment in subsidiaries
NMHG ....................................... 468.7 451.0
Housewares ................................. 163.9 150.1
NACoal ..................................... 23.2 15.1
Bellaire ................................... .5 .7
------- -------
656.3 616.9
Property, plant and equipment, net ............ 1.2 1.6
Deferred income taxes ......................... 20.6 21.8
------- -------
Total Assets ............................. $ 679.1 $ 646.6
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities ........................... $ 8.5 $ 10.0
Reserve for future interest on UMWA obligation 55.3 57.1
Note payable to Bellaire ...................... 36.0 38.4
Notes payable to other subsidiaries ........... 12.7 18.0
Deferred income taxes and other ............... 4.4 4.8
Stockholders' equity .......................... 562.2 518.3
------- -------
Total Liabilities and Stockholders' Equity $ 679.1 $ 646.6
======= =======
The credit agreements at NMHG and HB*PS allow the transfer of assets to
NACCO under certain circumstances. The amount of NACCO's investment in NMHG and
HB*PS that was restricted at December 31, 1999 totals approximately $489.7
million. There are no restrictions on the transfer of assets from NACoal.
Dividends and advances from subsidiaries are the primary sources of cash for
NACCO.
61
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NACCO Industries, Inc. and Subsidiaries (Tabular Amounts in Millions, Except
Per Share and Percentage Data)
NOTE TWENTY-ONE
ACQUISITIONS
ACQUISITIONS OF RETAIL DEALERSHIPS: In 1998, NMHG announced and began
implementation of a strategy to expand into the retail forklift distribution
business. As a result, 100 percent of either the stock or substantially all of
the assets of several independent Hyster and Yale retail dealerships were
acquired in 1999 and 1998. In addition, two retail dealerships were acquired in
1997. The combined preliminary purchase prices of retail dealerships acquired
during 1999 were approximately $62.4 million. The combined purchase prices of
retail dealerships acquired during 1998 and 1997 were $16.6 million and $12.2
million, respectively. Funds for the purchases were provided by either
borrowings advanced to NMHG Retail by NMHG Wholesale under existing NMHG
Wholesale facilities or by internally generated cash flows.
These acquisitions were accounted for as purchases and, accordingly, the
results of operations of the acquired businesses are included in the
accompanying financial statements from their respective dates of acquisition. On
a pro forma basis, as if the businesses had been acquired at the beginning of
fiscal 1999 and 1998, respectively, revenue, net income and earnings per share
would not differ materially from the amounts reported in the accompanying
consolidated financial statements for 1999 and 1998. Goodwill has been
recognized for the amount of the excess of the purchase price paid over the fair
market value of the net assets acquired and is amortized on a straight-line
basis over 40 years. Preliminary goodwill recognized in 1999 as a result of
these acquisitions was $24.7 million. Goodwill recognized in 1998 and 1997 was
$6.2 million and $4.1 million, respectively.
As a result of these acquisitions, certain liabilities were assumed as
follows:
1999 1998 1997
------- ------- -------
Noncash Investing
Activities
Fair value of assets
acquired .......... $ 89.6 $ 63.7 $ 16.7
Cash paid for the
net assets ........ (62.4) (16.6) (12.2)
------- ------- -------
Liabilities
assumed ........... $ 27.2 $ 47.1 $ 4.5
======= ======= =======
ACQUISITION OF MINORITY INTEREST: In 1999, the Company acquired the
remaining 2 percent minority interest in NMHG for book value of $11.3 million.
NOTE TWENTY-TWO
RECONSOLIDATION OF BRAZILIAN SUBSIDIARY
In 1989, NMHG acquired a majority interest in Hyster Brasil, Ltda.
(previously known as Companhia Hyster), a Brazilian manufacturer and marketer of
Hyster forklift trucks and related service parts. In 1990, NMHG deconsolidated
this subsidiary because it did not have effective control, given the uncertain
economic and political environment in Brazil at that time. Subsequently, income
from Hyster Brasil, Ltda. was recognized only when cash dividends were received.
The continued stability of the economic environment in Brazil, the ability
to receive dividends during the last few years and the Company's planned
expansion of operations in Brazil has led management to reassess its ability to
influence the performance of Hyster Brasil, Ltda. As of December 31, 1999, NMHG
has determined that it now has significant influence over Hyster Brasil, Ltda.
and therefore it is appropriate to consolidate its operations. Undistributed
earnings during the periods of deconsolidation, when NMHG did not have effective
control, have been credited directly to consolidated retained earnings in the
amount of $3.4 million at December 31, 1999. The consolidation of Hyster Brasil,
Ltda. as of December 31, 1999 was not material to the Company's financial
position or results of operations. It is the Company's intention to continue to
consolidate this subsidiary, but the Company will periodically assess its
ability to control the operations of Hyster Brasil, Ltda.
62
<PAGE> 41
NACCO INDUSTRIES, INC. REPORT OF MANAGEMENT
To the Stockholders of NACCO Industries, Inc.:
The management of NACCO Industries, Inc. is responsible for the preparation,
content and integrity of the financial statements and related information
contained within this report. The accompanying financial statements have been
prepared in accordance with generally accepted accounting principles and include
amounts that are based on informed judgments and estimates.
The Company's code of conduct, communicated throughout the organization,
requires adherence to high ethical standards in the conduct of the Company's
business.
NACCO Industries, Inc. and each of its subsidiaries maintain a system of
internal controls designed to provide reasonable assurance as to the protection
of assets and the integrity of the financial statements. These systems are
augmented by the selection of qualified financial management personnel. In
addition, an internal audit function periodically assesses the internal
controls.
Arthur Andersen LLP, independent certified public accountants, audits NACCO
Industries, Inc. and its subsidiaries' financial statements. Its audits are
conducted in accordance with generally accepted auditing standards and provide
an objective and independent assessment that helps ensure fair presentation of
the Company's operating results and financial position. The independent
accountants have access to all financial records and related data of the
Company, as well as to the minutes of stockholders' and directors' meetings.
The Audit Committee of the Board of Directors, composed of independent
directors, meets regularly with the independent auditors and internal auditors
to review the scope of their audit reports and to discuss any action to be
taken. The independent auditors and the internal auditors have free and direct
access to the Audit Committee. The Audit Committee also reviews the financial
reporting process and accounting policies of NACCO Industries, Inc. and each of
its subsidiaries.
/s/ Alfred M. Rankin, Jr.
Alfred M. Rankin, Jr.
Chairman, President and Chief Executive Officer
/s/ Kenneth C. Schilling
Kenneth C. Schilling
Vice President and Controller
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of NACCO Industries, Inc.:
We have audited the accompanying Consolidated Balance Sheets of NACCO
Industries, Inc. and Subsidiaries as of December 31, 1999 and 1998, and the
related Consolidated Statements of Income and Comprehensive Income,
Stockholders' Equity and Cash Flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of NACCO Industries, Inc. and
Subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
As explained in Note Two to the Consolidated Financial Statements, effective
January 1, 1999, the Company adopted the American Institute of Certified Public
Accountants Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" and changed its method of accounting for start-up activities.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Cleveland, Ohio,
February 8, 2000.
63
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF NACCO INDUSTRIES, INC.
As of the date of the Annual Report on Form 10-K to which this is an
Exhibit, the subsidiaries of NACCO Industries, Inc. were as follows:
NAME
- ----
INCORPORATION
-------------
Bellaire Corporation Ohio
The Coteau Properties Company Ohio
The Falkirk Mining Company Ohio
Hamilton Beach/Proctor-Silex, Inc. Delaware
Hamilton Beach/Proctor-Silex de Mexico, S.A. de C.V. Mexico
Housewares Holding Company Delaware
HB-PS Holding Company, Inc. Delaware
Hyster-Yale Materials Handling, Inc. Delaware (1)
The Kitchen Collection, Inc. Delaware
NACCO Materials Handling Group, Inc. Delaware
NACCO Materials Handling Group, Ltd. England
NACCO Materials Handling Group, Pty., Ltd. Australia
NACCO Materials Handling, B.V. Netherlands
NACCO Materials Handling, S.r.l. Italy
NACCO Materials Handling Limited England
NMH Holding, B.V. Netherlands
NMHG Deutschland GmbH Germany
NMHG Distribution B.V. Netherlands
NMHG Distribution Co. Delaware
NMHG Distribution Pty Limited Australia
NMHG Mauritius Mauritius
NMHG Holding Co. Delaware
NMHG Mexico S.A. de C.V. Mexico
The North American Coal Corporation Delaware
North American Coal Royalty Company Delaware
Powhatan Corporation Delaware
Proctor-Silex Canada, Inc. Ontario (Canada)
Proctor-Silex, S.A. de C.V. Mexico
The Sabine Mining Company Nevada
The Company has omitted the names of its subsidiaries which, considered in the
aggregate as a single subsidiary, would not constitute a "significant
subsidiary" within the meaning of Rule 1-02 contained in Regulation S-X.
<PAGE> 1
Arthur Andersen LLP
Exhibit 23(i)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included and incorporated by reference in this Form 10-K, into the
Company's previously filed Registration Statement (No. 33-3422) on Form S-4 and
Registration Statement (No. 33-52660) on Form S-8.
/s/Arthur Andersen LLP
Cleveland, Ohio,
March 29, 2000
<PAGE> 1
Exhibit 24(i)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Charles A. Bittenbender,
Kenneth C. Schilling and Constantine E. Tsipis, and each of them, as the true
and lawful attorney or attorneys-in-fact, with full power of substitution and
revocation, for the undersigned and in the name, place and stead of the
undersigned, to sign on behalf of the undersigned as Director of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended
December 31, 1999, and to sign any and all amendments to such Annual Report, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney or attorneys-in-fact, and each of them, full power and authority to do
so and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Owsley Brown II
---------------------------------------------------
Owsley Brown II
Date: March 15, 2000
<PAGE> 1
Exhibit 24(ii)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Charles A. Bittenbender,
Kenneth C. Schilling and Constantine E. Tsipis, and each of them, as the true
and lawful attorney or attorneys-in-fact, with full power of substitution and
revocation, for the undersigned and in the name, place and stead of the
undersigned, to sign on behalf of the undersigned as Director of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended
December 31, 1999, and to sign any and all amendments to such Annual Report, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney or attorneys-in-fact, and each of them, full power and authority to do
so and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Robert M. Gates
---------------------------------------------------
Robert M. Gates
Date: March 8, 2000
<PAGE> 1
Exhibit 24(iii)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Charles A. Bittenbender,
Kenneth C. Schilling and Constantine E. Tsipis, and each of them, as the true
and lawful attorney or attorneys-in-fact, with full power of substitution and
revocation, for the undersigned and in the name, place and stead of the
undersigned, to sign on behalf of the undersigned as Director of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended
December 31, 1999, and to sign any and all amendments to such Annual Report, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney or attorneys-in-fact, and each of them, full power and authority to do
so and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Leon J. Hendrix, Jr.
---------------------------------------------------
Leon J. Hendrix, Jr.
Date: March 8, 2000
<PAGE> 1
Exhibit 24(iv)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Charles A. Bittenbender,
Kenneth C. Schilling and Constantine E. Tsipis, and each of them, as the true
and lawful attorney or attorneys-in-fact, with full power of substitution and
revocation, for the undersigned and in the name, place and stead of the
undersigned, to sign on behalf of the undersigned as Director of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended
December 31, 1999, and to sign any and all amendments to such Annual Report, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney or attorneys-in-fact, and each of them, full power and authority to do
so and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ David H. Hoag
---------------------------------------------------
David H. Hoag
Date: March 8, 2000
<PAGE> 1
Exhibit 24(v)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Charles A. Bittenbender,
Kenneth C. Schilling and Constantine E. Tsipis, and each of them, as the true
and lawful attorney or attorneys-in-fact, with full power of substitution and
revocation, for the undersigned and in the name, place and stead of the
undersigned, to sign on behalf of the undersigned as Director of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended
December 31, 1999, and to sign any and all amendments to such Annual Report, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney or attorneys-in-fact, and each of them, full power and authority to do
so and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Dennis W. LaBarre
---------------------------------------------------
Dennis W. LaBarre
Date: March 8, 2000
<PAGE> 1
Exhibit 24(vi)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Charles A. Bittenbender,
Kenneth C. Schilling and Constantine E. Tsipis, and each of them, as the true
and lawful attorney or attorneys-in-fact, with full power of substitution and
revocation, for the undersigned and in the name, place and stead of the
undersigned, to sign on behalf of the undersigned as Director of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended
December 31, 1999, and to sign any and all amendments to such Annual Report, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney or attorneys-in-fact, and each of them, full power and authority to do
so and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Richard de J. Osborne
---------------------------------------------------
Richard de J. Osborne
Date: March 8, 2000
<PAGE> 1
Exhibit 24(vii)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Charles A. Bittenbender,
Kenneth C. Schilling and Constantine E. Tsipis, and each of them, as the true
and lawful attorney or attorneys-in-fact, with full power of substitution and
revocation, for the undersigned and in the name, place and stead of the
undersigned, to sign on behalf of the undersigned as Director of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended
December 31, 1999, and to sign any and all amendments to such Annual Report, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney or attorneys-in-fact, and each of them, full power and authority to do
so and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Ian M. Ross
---------------------------------------------------
Ian M. Ross
Date: March 8, 2000
<PAGE> 1
Exhibit 24(viii)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Charles A. Bittenbender,
Kenneth C. Schilling and Constantine E. Tsipis, and each of them, as the true
and lawful attorney or attorneys-in-fact, with full power of substitution and
revocation, for the undersigned and in the name, place and stead of the
undersigned, to sign on behalf of the undersigned as Director of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended
December 31, 1999, and to sign any and all amendments to such Annual Report, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney or attorneys-in-fact, and each of them, full power and authority to do
so and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ John C. Sawhill
---------------------------------------
John C. Sawhill
Date: March 8, 2000
<PAGE> 1
Exhibit 24(ix)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Charles A. Bittenbender,
Kenneth C. Schilling and Constantine E. Tsipis, and each of them, as the true
and lawful attorney or attorneys-in-fact, with full power of substitution and
revocation, for the undersigned and in the name, place and stead of the
undersigned, to sign on behalf of the undersigned as Director of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended
December 31, 1999, and to sign any and all amendments to such Annual Report, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney or attorneys-in-fact, and each of them, full power and authority to do
so and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Britton T. Taplin
-----------------------------------
Britton T. Taplin
Date: March 8, 2000
<PAGE> 1
Exhibit 24(x)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Charles A. Bittenbender,
Kenneth C. Schilling and Constantine E. Tsipis, and each of them, as the true
and lawful attorney or attorneys-in-fact, with full power of substitution and
revocation, for the undersigned and in the name, place and stead of the
undersigned, to sign on behalf of the undersigned as Director of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended
December 31, 1999, and to sign any and all amendments to such Annual Report, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney or attorneys-in-fact, and each of them, full power and authority to do
so and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ David F. Taplin
-----------------------------------
David F. Taplin
Date: March 8, 2000
<PAGE> 1
Exhibit 24(xi)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO
Industries, Inc. hereby constitutes and appoints Charles A. Bittenbender,
Kenneth C. Schilling and Constantine E. Tsipis, and each of them, as the true
and lawful attorney or attorneys-in-fact, with full power of substitution and
revocation, for the undersigned and in the name, place and stead of the
undersigned, to sign on behalf of the undersigned as Director of NACCO
Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section
13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended
December 31, 1999, and to sign any and all amendments to such Annual Report, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney or attorneys-in-fact, and each of them, full power and authority to do
so and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ John F. Turben
----------------------------------------
John F. Turben
Date: March 8, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 36
<SECURITIES> 0
<RECEIVABLES> 292
<ALLOWANCES> 17
<INVENTORY> 390
<CURRENT-ASSETS> 772
<PP&E> 625
<DEPRECIATION> 613
<TOTAL-ASSETS> 2,013
<CURRENT-LIABILITIES> 583
<BONDS> 0
0
0
<COMMON> 8
<OTHER-SE> 554
<TOTAL-LIABILITY-AND-EQUITY> 2,013
<SALES> 2,603
<TOTAL-REVENUES> 2,603
<CGS> 2,118
<TOTAL-COSTS> 2,472
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43
<INCOME-PRETAX> 87
<INCOME-TAX> 32
<INCOME-CONTINUING> 55
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 1
<NET-INCOME> 53
<EPS-BASIC> 6.52
<EPS-DILUTED> 6.51
</TABLE>
<PAGE> 1
<TABLE>
<CAPTION>
Exhibit 99(i)
NACCO Industries, Inc.
Unaudited Consolidating Statement of Income and Comprehensive Income
Year Ended December 31, 1999
(In millions)
NMHG
----------------------------------------------------
Wholesale Retail Elims Consolidated
----------- --------- --------- ------------
<S> <C> <C> <C> <C>
Net sales $ 1,585.8 $ 228.1 $ (85.6) 1,728.3
Other operating revenues - - - -
----------- --------- --------- --------
Total revenues 1,585.8 228.1 (85.6) 1,728.3
Cost of sales 1,330.1 178.8 (84.1) 1,424.8
----------- --------- --------- --------
Gross profit 255.7 49.3 (1.5) 303.5
Selling, general, and administrative expenses 169.6 63.9 (0.5) 233.0
Restructuring charges - - - -
Amortization of goodwill 11.6 0.6 - 12.2
----------- --------- --------- ---------
Operating profit(loss) 74.5 (15.2) (1.0) 58.3
Other income (expense)
Interest income 8.2 0.2 (3.6) 4.8
Interest expense (16.9) (3.0) 0.9 (19.0)
Other-net (3.4) 0.3 0.1 (3.0)
----------- --------- --------- ---------
(12.1) (2.5) (2.6) (17.2)
----------- --------- --------- ---------
Income before income taxes, minority interest and cumulative
effect of accounting change 62.4 (17.7) (3.6) 41.1
Provision for income taxes 24.4 (4.9) (1.1) 18.4
----------- --------- --------- ---------
Income before minority interest and cumulative effect of
accounting change 38.0 (12.8) (2.5) 22.7
Minority interest 1.0 - - 1.0
----------- --------- --------- ---------
Income before cumulative effect of accounting change 39.0 (12.8) (2.5) 23.7
Cumulative effect of accounting change - - - -
----------- --------- --------- ---------
Net income(loss) $ 39.0 $ (12.8) $ (2.5) $ 23.7
=========== ========= ========= =========
Change in comprehensive income (7.1) (2.0) - (9.1)
----------- --------- --------- ---------
Comprehensive income $ 31.9 $ (14.8) $ (2.5) $ 14.6
=========== ========= ========= =========
<CAPTION>
NACoal
-----------------------------------------
Project NACoal
Mines excl Proj
Subsidiaries Mines Consolidated Housewares
----------- --------- ------------ ----------
<S> <C> <C> <C> <C>
Net sales $ 239.9 $ 35.1 $ 275.0 $ 596.7
Other operating revenues - 2.7 2.7 -
----------- --------- --------- ---------
Total revenues 239.9 37.8 277.7 596.7
Cost of sales 193.7 31.3 225.0 468.0
----------- --------- --------- ---------
Gross profit 46.2 6.5 52.7 128.7
Selling, general, and administrative expenses 2.8 9.5 12.3 82.7
Restructuring charges - - - 1.2
Amortization of goodwill - - - 3.0
----------- --------- --------- ---------
Operating profit(loss) 43.4 (3.0) 40.4 41.8
Other income (expense) -
Interest income 0.3 0.4 0.7 0.1
Interest expense (17.6) - (17.6) (6.7)
Other-net (0.2) (0.1) (0.3) (0.5)
----------- --------- --------- ---------
(17.5) 0.3 (17.2) (7.1)
----------- --------- --------- ---------
Income before income taxes, minority interest and cumulative effect of
accounting change 25.9 (2.7) 23.2 34.7
Provision for income taxes 5.7 (1.2) 4.5 13.5
----------- --------- --------- ---------
Income before minority interest and cumulative effect of accounting change 20.2 (1.5) 18.7 21.2
Minority interest - (1.0) (1.0) -
----------- --------- --------- ---------
Income before cumulative effect of accounting change 20.2 (2.5) 17.7 21.2
Cumulative effect of accounting change (0.1) (1.1) (1.2) -
----------- --------- --------- ---------
Net income(loss) $ 20.1 $ (3.6) $ 16.5 $ 21.2
=========== ========= ========= =========
Change in comprehensive income - - - 0.7
----------- --------- --------- ---------
Comprehensive income $ 20.1 $ (3.6) $ 16.5 $ 21.9
=========== ========= ========= =========
<CAPTION>
NACCO & NACCO
Other Elims Consolidated
----------- --------- -------------
<S> <C> <C> <C>
Net sales $ - $ - $ 2,600.0
Other operating revenues 0.1 - 2.8
----------- --------- ---------
Total revenues 0.1 - 2,602.8
Cost of sales 0.3 - 2,118.1
----------- --------- ---------
Gross profit (0.2) - 484.7
Selling, general, and administrative expenses 9.0 - 337.0
Restructuring charges - - 1.2
Amortization of goodwill - - 15.2
----------- --------- ---------
Operating profit(loss) (9.2) - 131.3
Other income (expense)
Interest income - (0.7) 4.9
Interest expense (0.7) 0.7 (43.3)
Other-net (2.5) - (6.3)
----------- --------- ---------
(3.2) - (44.7)
----------- --------- ---------
Income before income taxes, minority interest and cumulative effect of
accounting change (12.4) - 86.6
Provision for income taxes (4.7) - 31.7
----------- --------- ---------
Income before minority interest and cumulative effect of accounting change (7.7) - 54.9
Minority interest (0.6) - (0.6)
----------- --------- ---------
Income before cumulative effect of accounting change (8.3) - 54.3
Cumulative effect of accounting change - - (1.2)
----------- --------- ---------
Net income(loss) $ (8.3) $ - $ 53.1
=========== ========= =========
Change in comprehensive income 0.3 - (8.1)
----------- --------- ----------
Comprehensive income $ (8.0) $ - $ 45.0
=========== ========= ==========
</TABLE>
<PAGE> 1
<TABLE>
<CAPTION>
Exhibit 99(ii)
NACCO Industries, Inc.
Unaudited Consolidating Balance Sheet
December 31, 1999
(In millions)
NACoal
---------------------------------------------------
Project NACoal
Mining excl Proj
NMHG Subsidiaries Mines Consolidated
--------------- ---------------- ------------- ----------------
Current Assets
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 31.1 $ 2.2 $ - $ 2.2
Accounts receivable, net 168.7 15.7 1.3 17.0
Intercompany accounts receivable - - 3.6 3.6
Intercompany note receivable 10.0 2.7 - 2.7
Inventories 270.4 29.9 2.1 32.0
Prepaid expenses and other 32.7 10.1 (7.8) 2.3
--------------- ---------------- ------------- ----------------
512.9 60.6 (0.8) 59.8
Property, Plant and Equipment, net 268.9 270.1 24.3 294.4
Deferred Charges
Goodwill, net 359.5 - - -
Deferred costs and other 17.5 39.5 9.5 49.0
Deferred income taxes 4.0 - - -
--------------- ---------------- ------------- ----------------
381.0 39.5 9.5 49.0
Other Assets 15.8 21.8 31.3 53.1
--------------- ---------------- ------------- ----------------
Total Assets $1,178.6 $ 392.0 $ 64.3 $ 456.3
=============== ================ ============= ================
Current Liabilities
Accounts payable $ 195.3 $ 10.7 $ 6.7 $ 17.4
Intercompany accounts payable (3.8) 0.9 - 0.9
Revolving credit agreements 12.3 - 15.2 15.2
Current maturities of long-term debt 12.4 20.1 - 20.1
Accrued income taxes - - 0.8 0.8
Accrued payroll 22.8 - 7.1 7.1
Accrued warranty obligations 35.8 - - -
Intercompany notes payable - - - -
Intercompany interest payable - - - -
Other current liabilities 91.8 25.4 (3.4) 22.0
--------------- ---------------- ------------- ----------------
366.6 57.1 26.4 83.5
Long-term Debt 246.0 - - -
Obligations of Project Mining Subsidiaries - 289.2 - 289.2
Self-insurance Reserves and Other 93.2 42.0 11.0 53.0
Minority Interest 4.1 - 7.4 7.4
Stockholders' Equity 468.7 3.7 19.5 23.2
--------------- ---------------- ------------- ----------------
Total Liabilities and Stockholders' Equity $1,178.6 $ 392.0 $ 64.3 $ 456.3
=============== ================ ============= ================
<CAPTION>
NACCO & Consolidated
Housewares Other Elims NACCO
--------------- ---------------- ------------- ----------------
Current Assets
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 2.9 $ - $ - $ 36.2
Accounts receivable, net 106.5 3.7 (3.7) 292.2
Intercompany accounts receivable 0.1 6.1 (9.8) -
Intercompany note receivable - 36.0 (48.7) -
Inventories 87.9 - - 390.3
Prepaid expenses and other 18.3 (35.8) 36.0 53.5
---------------- ------------- ------------- -------------
215.7 10.0 (26.2) 772.2
Property, Plant and Equipment, net 60.8 1.3 - 625.4
Deferred Charges
Goodwill, net 89.9 - - 449.4
Deferred costs and other 0.2 - - 66.7
Deferred income taxes 6.1 35.2 (16.1) 29.2
---------------- ------------- ------------- -------------
96.2 35.2 (16.1) 545.3
Other Assets 0.1 1.1 - 70.1
---------------- ------------- ------------- -------------
Total Assets $ 372.8 $ 47.6 $ (42.3) $ 2,013.0
================ ============= ============= =============
Current Liabilities
Accounts payable $ 43.3 $ 2.1 $ (3.7) $ 254.4
Intercompany accounts payable 4.3 8.4 (9.8) -
Revolving credit agreements 29.1 - - 56.6
Current maturities of long-term debt - - - 32.5
Accrued income taxes 1.4 2.2 - 4.4
Accrued payroll 13.8 3.3 - 47.0
Accrued warranty obligations 0.2 - - 36.0
Intercompany notes payable - 12.7 (12.7) -
Intercompany interest payable - - - -
Other current liabilities 30.1 8.3 - 152.2
---------------- ------------- ------------- -------------
122.2 37.0 (26.2) 583.1
Long-term Debt 80.3 - - 326.3
Obligations of Project Mining Subsidiaries - - - 289.2
Self-insurance Reserves and Other 6.4 104.2 (16.1) 240.7
Minority Interest - - - 11.5
Stockholders' Equity 163.9 (93.6) - 562.2
---------------- ------------- ------------- -------------
Total Liabilities and Stockholders' Equity $ 372.8 $ 47.6 $ (42.3) $ 2,013.0
================ ============= ============= =============
</TABLE>
<PAGE> 1
<TABLE>
<CAPTION>
Exhibit 99(iii)
NACCO Industries, Inc.
Unaudited Consolidating Statement of Cash Flows
For the Year Ended December 31, 1999
(In millions)
NACCO NACCO
NMHG NACoal Housewares and Other Consolidated
----------- ----------- ----------- ---------- -----------
Operating Activities
<S> <C> <C> <C> <C> <C>
Net income $ 23.7 $ 16.5 $ 21.2 $ (8.3) $ 53.1
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, depletion and amortization 54.1 31.9 17.6 0.4 104.0
Deferred income taxes 2.3 (0.9) (0.2) 2.1 3.3
Minority interest expense (1.0) 1.0 - 0.6 0.6
Cumulative effect of accounting change - 1.2 - - 1.2
Other non-cash items 0.7 2.5 (1.0) (5.1) (2.9)
Working capital changes, excluding the effect of business
acquisitions:
Intercompany receivable/payable (0.9) (1.3) (0.3) 2.5 -
Accounts receivable 12.0 4.5 (28.1) 0.3 (11.3)
Inventories (10.0) (3.1) (9.9) - (23.0)
Other current assets (9.7) (0.3) (2.7) 0.3 (12.4)
Accounts payable and other liabilities 8.2 (2.4) 12.7 (2.0) 16.5
----------- ----------- ----------- ---------- -----------
Net cash provided by (used for) operating activities 79.4 49.6 9.3 (9.2) 129.1
----------- ----------- ----------- ---------- -----------
Investing Activities
Expenditures for property, plant and equipment (46.2) (12.7) (16.5) (0.1) (75.5)
Proceeds from the sale of property, plant, and equipment (0.1) 1.1 - - 1.0
Acquisitions of businesses, net of cash acquired (62.4) - - - (62.4)
Investments in unconsolidated affiliates 1.7 (17.6) - - (15.9)
Acquisition of minority interest (11.3) - - - (11.3)
Intercompany loans 8.0 (5.2) - (2.8) -
Other - net 2.2 0.5 - - 2.7
----------- ----------- ----------- ---------- -----------
Net cash used for investing activities (108.1) (33.9) (16.5) (2.9) (161.4)
----------- ----------- ----------- ---------- -----------
Financing Activities
Additions to long-term debt and revolving credit agreements 52.6 15.0 13.5 - 81.1
Additions to obligations of project mining subsidiaries - 31.6 - - 31.6
Reductions of obligations of project mining subsidiaries - (58.8) - - (58.8)
Financing of other short-term obligations (17.2) - - - (17.2)
Cash dividends paid - (8.4) (8.1) 9.5 (7.0)
Capital grants 2.6 - - - 2.6
Other-net 1.4 (1.0) - 2.6 3.0
----------- ----------- ----------- ---------- -----------
Net cash provided by (used for) financing activities 39.4 (21.6) 5.4 12.1 35.3
----------- ----------- ----------- ---------- -----------
Effect of exchange rate changes on cash (1.8) - 0.3 - (1.5)
----------- ----------- ----------- ---------- -----------
Cash and Cash Equivalents
Increase (decrease) for the year 8.9 (5.9) (1.5) - 1.5
Balance at the beginning of the year 22.2 8.1 4.4 - 34.7
----------- ----------- ----------- ---------- -----------
Balance at the end of the year $ 31.1 $ 2.2 $ 2.9 $ - $ 36.2
=========== =========== =========== ========== ===========
</TABLE>
<PAGE> 1
<TABLE>
<CAPTION>
Exhibit 99(iv)
NACCO Industries, Inc.
Unaudited Consolidating Statement of Stockholders' Equity
Year Ended December 31, 1999
(In millions)
NACCO
NMHG NACoal Housewares NACCO & Other Elims Consolidated
----------- ---------- ---------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Class A Common Stock $ - $ - $ - $ 6.5 $ - $ 6.5
----------- ---------- ---------- ----------- ----------- ----------
Class B Common Stock - - - 1.6 - 1.6
----------- ---------- ---------- ----------- ----------- ----------
Capital In Excess of Par Value
Beginning balance 198.2 15.1 160.6 0.2 (373.9) 0.2
Shares issued under stock option and
compensation plans - - - 2.5 - 2.5
------------ ---------- ----------- ----------- ----------- -----------
198.2 15.1 160.6 2.7 (373.9) 2.7
Retained Earnings
Beginning balance 256.8 - (7.8) 504.9 (249.0) 504.9
Net income (loss) 23.7 16.5 21.2 (8.3) - 53.1
Reconsolidation of Brazilian subsidiary 3.4 - - - - 3.4
Repurchase of minority interest (11.3) - - - 11.3 -
Cash dividends - (8.4) (8.1) (7.0) 16.5 (7.0)
----------- --------- ---------- ---------- ---------- ----------
272.6 8.1 5.3 489.6 (221.2) 554.4
Accumulated Other Comprehensive Income
Beginning balance 7.0 - (2.7) - 0.8 5.1
Foreign currency translation adjustment and other (9.1) - 0.7 - 0.3 (8.1)
------------ ---------- ----------- ----------- ----------- -----------
(2.1) - (2.0) - 1.1 (3.0)
------------ ---------- ----------- ----------- ----------- -----------
Total Stockholders' Equity $ 468.7 $ 23.2 $ 163.9 $ 500.4 $ (594.0) $ 562.2
============ ========== =========== =========== =========== ===========
</TABLE>
