EX-99.1 4 nchbbspinoct2017ex991.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

NACCO INDUSTRIES, INC.
INTRODUCTION TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma consolidated financial information of NACCO Industries, Inc. ("NACCO") and its wholly-owned subsidiaries (collectively, the "Company") gives effect to the spin-off ("the spin-off") of Hamilton Beach Brands Holding Company ("Hamilton Beach Holding" or "HBBHC"), which occurred on September 29, 2017. To complete the spin-off, NACCO paid a dividend of one share of Hamilton Beach Holding Class A common stock, par value $0.01 per share, and one share of Hamilton Beach Holding Class B common stock, par value $0.01 per share, after the close of trading on September 29, 2017 for each share of NACCO Class A common stock, par value $1.00 per share, and NACCO Class B common stock, par value $1.00 per share, outstanding as of 5:00 p.m. Eastern Time on the record date of September 26, 2017. Effective with the spin-off, Hamilton Beach Holding is accounted for as a discontinued operation in the Company's financial statements in accordance with Accounting Standards Codification 205, "Presentation of Financial Statements" ("ASC 205").

The historical financial information of the Company set forth below has been derived from the historical audited and unaudited consolidated financial statements of the Company included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 (the "Annual Report") and the Company's Quarterly Report on Form 10-Q for the six months ended June 30, 2017 (the "Quarterly Report"). The unaudited pro forma consolidated statements of income were prepared as if the spin-off occurred as of January 1, 2014. The unaudited pro forma consolidated balance sheet as of June 30, 2017 is prepared as if the spin-off occurred on that date. Pro forma income statements for the three most recently completed fiscal years are presented because the treatment of the spin-off has not yet been reflected as discontinued operations in the Company's historical information. The unaudited pro forma consolidated financial information does not include the impact of the transition services agreement that was entered into with Hamilton Beach Holding. Under the terms of the transition services agreement, NACCO will provide services to Hamilton Beach Holding on a transitional basis, as needed, for varying periods after the spin-off date. None of the transition services are expected to exceed one year. NACCO or Hamilton Beach Holding may extend the initial transition period for a period of up to three months for any service upon 30 days written notice to the other party prior to the initial termination date. Hamilton Beach Holding expects to pay net aggregate fees of approximately $1 million over the initial term of the transition services agreement.

The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable as of the date of this filing. However, actual adjustments may differ materially from the information presented and the pro forma adjustments may differ from those that will be calculated to report Hamilton Beach Holding as a discontinued operation by NACCO in future filings. The adjustments are directly attributable to the spin-off and are expected to have a continuing impact on the financial position and results of operations of the Company. The statements of income do not reflect any adjustments for non-recurring items. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma consolidated financial information of the Company has been made.

The unaudited pro forma consolidated financial information, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its Annual Report and its Quarterly Report. The unaudited pro forma consolidated financial statements presented do not purport to represent what the Company's results of operations or financial position would actually have been had the spin-off occurred on the dates presented, nor is it intended to be indicative of the Company's future results of operations or financial position.     





NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
 
 
 
Proforma adjustments
 
 
 
As Reported NACCO
JUNE 30, 2017
 
Hamilton Beach Holding spin-off (1)
 
Other (2)
 
Proforma NACCO
JUNE 30, 2017
 
(In thousands, except share data)
 
 
ASSETS
 

 
 
 
 
 
 
Cash and cash equivalents
$
60,209

 
$
(5,328
)
 
$
—

 
$
54,881

Accounts receivable, net
85,025

 
(69,857
)
 
—

 
15,168

Accounts receivable from unconsolidated subsidiaries
11,270

 
—

 
—

 
11,270

Accounts receivable from affiliates
—

 
(946
)
 
2,915

 
1,969

Inventories, net
163,759

 
(135,397
)
 
—

 
28,362

Assets held for sale
1,373

 
—

 
—

 
1,373

Prepaid expenses and other
22,323

 
(9,073
)
 
—

 
13,250

Total current assets
343,959

 
(220,601
)
 
2,915

 
126,273

Property, plant and equipment, net
132,126

 
(16,550
)
 
—

 
115,576

Goodwill
6,253

 
(6,253
)
 
—

 
—

Other Intangibles, net
51,062

 
(6,590
)
 
—

 
44,472

Deferred income taxes
23,839

 
(15,477
)
 
—

 
8,362

Investments in unconsolidated subsidiaries
27,254

 
—

 
—

 
27,254

Deferred costs
10,598

 
(8,609
)
 
—

 
1,989

Other non-current assets
26,169

 
(3,102
)
 
—

 
23,067

Total assets
$
621,260

 
$
(277,182
)
 
$
2,915

 
$
346,993

LIABILITIES AND EQUITY
 

 
 
 
 
 
 
Accounts payable
$
104,794

 
$
(98,480
)
 
$
—

 
$
6,314

Accounts payable to affiliates
—

 
(1,969
)
 
2,915

 
946

Revolving credit agreements of subsidiaries
22,276

 
(22,276
)
 
—

 
—

Current maturities of long-term debt of subsidiaries
1,212

 
—

 
—

 
1,212

Accrued payroll
20,332

 
(10,998
)
 
—

 
9,334

Accrued cooperative advertising
6,898

 
(6,898
)
 
—

 
—

Other current liabilities
30,537

 
(14,133
)
 
—

 
16,404

Total current liabilities
186,049

 
(154,754
)
 
2,915

 
34,210

Long-term debt of subsidiaries
99,918

 
(32,000
)
 
—

 
67,918

Asset retirement obligations
39,153

 
—

 
—

 
39,153

Pension and other postretirement obligations
13,386

 
—

 
—

 
13,386

Other long-term liabilities
51,794

 
(27,467
)
 
—

 
24,327

Total liabilities
390,300

 
(214,221
)
 
2,915

 
178,994

Stockholders' equity
 

 
 
 
 
 
 
Common stock:
 

 
 
 
 
 
 
Class A, par value $1 per share, 5,266,268 shares outstanding
5,266

 
—

 
—

 
5,266

Class B, par value $1 per share, convertible into Class A on a one-for-one basis, 1,570,448 shares outstanding
1,570

 
—

 
—

 
1,570

Capital in excess of par value
—

 
—

 
—

 
—

Retained earnings
248,239

 
(78,508
)
 
—

 
169,731

Accumulated other comprehensive loss
(24,115
)
 
15,547

 
—

 
(8,568
)
Total stockholders' equity
230,960

 
(62,961
)
 
—

 
167,999

Total liabilities and equity
$
621,260

 
$
(277,182
)
 
$
2,915

 
$
346,993


See notes to pro forma unaudited condensed consolidated financial statements.





NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
As Reported NACCO
 
Pro Forma adjustments
 
Pro Forma NACCO
 
Six Months Ended June 30, 2017
 
Hamilton Beach Holding spin-off (1)
 
Six Months Ended June 30, 2017
 
(In thousands, except per share data)
Revenues
$
349,658

 
$
(293,258
)
 
$
56,400

Cost of sales
267,095

 
(219,850
)
 
47,245

Gross profit
82,563

 
(73,408
)
 
9,155

Earnings of unconsolidated mines
28,430

 
—

 
28,430

Operating expenses
 
 
 
 
 
Selling, general and administrative expenses
94,192

 
(73,011
)
 
21,181

 (Gain)/loss on sale of assets

(3,044
)
 
19

 
(3,025
)
Amortization of intangible assets
1,896

 
(690
)
 
1,206

 
93,044

 
(73,682
)
 
19,362

Operating profit
17,949

 
274

 
18,223

Other expense (income)
 
 
 
 
 
Interest expense
2,737

 
(877
)
 
1,860

Income from other unconsolidated affiliates
(619
)
 
—

 
(619
)
Closed mine obligations
735

 
—

 
735

Other, net, including interest income
(1,028
)
 
979

 
(49
)
 
1,825

 
102

 
1,927

Income before income tax provision (benefit)
16,124

 
172

 
16,296

Income tax provision (benefit)
4,358

 
53

 
4,411

Net income (loss)
$
11,766

 
$
119

 
$
11,885

 
 
 
 
 
 
Basic earnings per share
$
1.73

 

 
$
1.74

Diluted earnings per share
$
1.72

 

 
$
1.74

 
 
 
 
 
 
Dividends per share
$
0.5400

 
 
 
$
0.5400

 
 
 
 
 
 
Basic weighted average shares outstanding
6,818

 
 
 
6,818

Diluted weighted average shares outstanding
6,847

 
 
 
6,847


See notes to pro forma unaudited condensed consolidated financial statements.





NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 
As Reported NACCO
 
Pro Forma adjustments
 
Pro Forma NACCO
 
Year Ended
DECEMBER 31, 2016
 
Hamilton Beach Holding spin-off (1)

 
Year Ended
DECEMBER 31, 2016
 
(In thousands, except per share data)
Revenues
$
856,438

 
$
(745,357
)
 
$
111,081

Cost of sales
650,585

 
(551,586
)
 
98,999

Gross profit
205,853

 
(193,771
)
 
12,082

Earnings of unconsolidated mines
55,238

 
—

 
55,238

Operating expenses
 
 
 
 
 
Selling, general and administrative expenses
197,903

 
(149,040
)
 
48,863

Centennial asset impairment charge
17,443

 
—

 
17,443

 (Gain)/loss on sale of assets

146

 
24

 
170

Amortization of intangible assets
3,884

 
(1,381
)
 
2,503

 
219,376

 
(150,397
)
 
68,979

Operating profit
41,715

 
(43,374
)
 
(1,659
)
Other expense (income)
 
 
 
 
 
Interest expense
5,692

 
(1,374
)
 
4,318

Income from other unconsolidated affiliates
(1,221
)
 
—

 
(1,221
)
Closed mine obligations
(214
)
 
—

 
(214
)
Other, net, including interest income
2,988

 
(837
)
 
2,151

 
7,245

 
(2,211
)
 
5,034

Income before income tax provision (benefit)
34,470

 
(41,163
)
 
(6,693
)
Income tax provision (benefit)
4,863

 
(14,984
)
 
(10,121
)
Net income
$
29,607

 
$
(26,179
)
 
$
3,428

 
 
 
 
 
 
Basic earnings per share
$
4.34

 
 
 
$
0.50

Diluted earnings per share
$
4.32

 
 
 
$
0.50

 
 
 
 
 
 
Dividends per share
$
1.0650

 
 
 
$
1.0650

 
 
 
 
 
 
Basic weighted average shares outstanding
6,818

 
 
 
6,818

Diluted weighted average shares outstanding
6,854

 
 
 
6,854


See notes to pro forma unaudited condensed consolidated financial statements.





NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 
As Reported NACCO
 
Pro Forma adjustments
 
Pro Forma NACCO
 
Year Ended
DECEMBER 31, 2015
 
Hamilton Beach Holding spin-off (1)

 
Year Ended
DECEMBER 31, 2015
 
(In thousands, except per share data)
Revenues
$
915,860

 
$
(767,862
)
 
$
147,998

Cost of sales
736,364

 
(577,134
)
 
159,230

Gross profit
179,496

 
(190,728
)
 
(11,232
)
Earnings of unconsolidated mines
48,432

 
—

 
48,432

Operating expenses
 
 
 
 
 
Selling, general and administrative expenses
193,925

 
(153,820
)
 
40,105

 (Gain)/loss on sale of assets

(1,811
)
 
27

 
(1,784
)
Amortization of intangible assets
3,987

 
(1,381
)
 
2,606

 
196,101

 
(155,174
)
 
40,927

Operating profit (loss)
31,827

 
(35,554
)
 
(3,727
)
Other expense (income)
 
 
 
 
 
Interest expense
6,924

 
(1,962
)
 
4,962

Income from other unconsolidated affiliates
(2,040
)
 
—

 
(2,040
)
Closed mine obligations
919

 
—

 
919

Other, net, including interest income
1,225

 
(1,556
)
 
(331
)
 
7,028

 
(3,518
)
 
3,510

Income (loss) before income tax provision (benefit)
24,799

 
(32,036
)
 
(7,237
)
Income tax provision (benefit)
2,815

 
(12,325
)
 
(9,510
)
Net income
$
21,984

 
$
(19,711
)
 
$
2,273

 
 
 
 
 
 
Basic earnings per share
$
3.14

 
 
 
$
0.32

Diluted earnings per share
$
3.13

 
 
 
$
0.32

 
 
 
 
 
 
Dividends per share
$
1.0450

 
 
 
$
1.0450

 
 
 
 
 
 
Basic weighted average shares outstanding
7,001

 
 
 
7,001

Diluted weighted average shares outstanding
7,022

 
 
 
7,022


See notes to pro forma unaudited condensed consolidated financial statements.





NACCO INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 
As Reported NACCO
 
Pro Forma adjustments
 
Pro Forma NACCO
 
Year Ended
DECEMBER 31, 2014
 
Hamilton Beach Holding spin-off (1)

 
Year Ended
DECEMBER 31, 2014
 
(In thousands, except per share data)
Revenues
$
896,782

 
$
(724,080
)
 
$
172,702

Cost of sales
711,710

 
(535,408
)
 
176,302

Gross profit
185,072

 
(188,672
)
 
(3,600
)
Earnings of unconsolidated mines
48,396

 
—

 
48,396

Operating expenses
 
 
 
 
 
Selling, general and administrative expenses
198,697

 
(160,797
)
 
37,900

Centennial long-live asset impairment charge
105,119

 
—

 
105,119

 (Gain)/loss on sale of assets

(7,339
)
 
360

 
(6,979
)
Amortization of intangible assets
3,300

 
(58
)
 
3,242

 
299,777

 
(160,495
)
 
139,282

Operating profit (loss)
(66,309
)
 
(28,177
)
 
(94,486
)
Other expense (income)
 
 
 
 
 
Interest expense
7,566

 
(1,504
)
 
6,062

Income from other unconsolidated affiliates
(161
)
 
—

 
(161
)
Closed mine obligations
2,582

 
—

 
2,582

Other, net, including interest income
277

 
(1,197
)
 
(920
)
 
10,264

 
(2,701
)
 
7,563

Income (loss) before income tax provision (benefit)
(76,573
)
 
(25,476
)
 
(102,049
)
Income tax provision (benefit)
(38,455
)
 
(7,273
)
 
(45,728
)
Net income (loss)
$
(38,118
)
 
$
(18,203
)
 
$
(56,321
)
 
 
 
 
 
 
Basic earnings (loss) per share
$
(5.02
)
 
 
 
$
(7.42
)
Diluted earnings (loss) per share
$
(5.02
)
 
 
 
$
(7.42
)
 
 
 
 
 
 
Dividends per share
$
1.0225

 
 
 
$
1.0225

 
 
 
 
 
 
Basic weighted average shares outstanding
7,590

 
 
 
7,590

Diluted weighted average shares outstanding
7,590

 
 
 
7,590


See notes to pro forma unaudited condensed consolidated financial statements.





NACCO INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Pro Forma Unaudited Condensed Consolidated Financial Statements

(1)     The Hamilton Beach Holding spin-off column represents the historical financial results of the Hamilton Beach Holding business as such operating results were included in NACCO's consolidated financial statements for the periods presented (and accordingly are reflected in the As Reported NACCO columns).

(2)    Represents intercompany accounts receivable and intercompany accounts payable between NACCO and Hamilton Beach Holding at June 30, 2017.