Other Events and Transactions

HBBHC Spin-Off: On September 29, 2017, the Company spun-off HBBHC, a former wholly owned subsidiary. To complete the spin-off, the Company distributed one share of HBBHC Class A common stock and one share of HBBHC Class B common stock to NACCO stockholders for each share of NACCO Class A common stock or Class B common stock owned. The Company accounted for the spin-off based on the historical carrying value of HBBHC.

On September 28, 2017, prior to the spin-off, HBBHC paid NACCO a one-time $35.0 million cash dividend. This payment was in addition to $3.0 million in dividends HBBHC paid to NACCO from January 1, 2017 to June 30, 2017.

In connection with the spin-off of HBBHC, the Company and HBBHC entered into a Transition Services Agreement ("TSA"). Under the terms of the TSA, the Company will provide various services to HBBHC 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 expects to receive net aggregate fees of approximately $1.0 million over the term of the TSA from HBBHC.

As a result of the spin-off, the financial position, results of operations and cash flows of HBBHC are reflected as discontinued operations through the date of the spin-off in the Unaudited Condensed Consolidated Financial Statements. In connection with the spin-off of HBBHC, NACCO and Other recognized non-deductible expenses directly attributable to the spin-off of $1.7 million and $2.8 million for the three and nine months ended September 30, 2017, respectively, which are reflected as discontinued operations in the Unaudited Condensed Consolidated Financial Statements.

Discontinued operations includes the following results of HBBHC for the three and nine months ended September 30, 2017 and 2016:



	THREE MONTHS ENDED					NINE MONTHS ENDED
	SEPTEMBER 30					SEPTEMBER 30
	2017			2016		2017			2016
HBBHC Operating Statement Data:
Revenues	$	181,713		$	188,390	$	474,971		$	486,442
Cost of goods sold	133,586			138,329		353,436			364,052
Gross profit	48,127			50,061		121,535			122,390
Operating expenses ^(a)	40,697			36,583		114,379			110,117
Operating profit	7,430			13,478		7,156			12,273
Interest expense	423			286		1,300			1,115
Other expense, net	40			457		(939		)	288
Income before income taxes	6,967			12,735		6,795			10,870
Income tax expense	2,708			4,003		2,655			3,323
HBBHC net income	$	4,259		$	8,732	$	4,140		$	7,547
NACCO expenses related to the spin-off	1,664			—		2,759			—
NACCO discontinued operations income tax expense (benefit) adjustments	(2,472		)	7,041		—			9,643
NACCO discontinued operations	$	5,067		$	1,691	$	1,381		$	(2,096	)

(a) HBBHC's operating profit includes the recognition of $2.5 million of expenses related to the spin-off in the three and nine months ended September 30, 2017.

Centennial asset impairment charge: Centennial ceased coal production in the fourth quarter of 2015 and the Company began actively marketing Centennial's mine machinery and equipment. The Company classified these assets as held for sale during the fourth quarter of 2015 when management approved and committed to a formal plan of sale. The coal land and real estate did not meet the held-for-sale criteria and remained within property, plant and equipment as a long-lived asset. As a result of various unfavorable conditions, including but not limited to weakness in the U.S. and global coal markets and certain asset-specific factors, the Company determined the carrying value of Centennial's coal land and real estate were not recoverable. The Company also conducted a review of the carrying value of Centennial's mine machinery and equipment classified as assets held for sale. The fair values of these assets were calculated using a combination of a market and income approach and reduced the carrying value of coal land and real estate to zero and assets held for sale to approximately $5.0 million. The Company recognized an aggregate impairment charge of $17.4 million during the third quarter of 2016. The asset impairment charge was recorded as "Centennial asset impairment charge" in the Unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2016.