-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JhkYy6jNTNit6QvnqKU0xoWthYzpi0HdpFKD0AzGdd2nFKRq4IceGl9LKjijsv3O cAhZNiAXQz46HeF9Op1y5Q== 0000789933-95-000009.txt : 19951119 0000789933-95-000009.hdr.sgml : 19951119 ACCESSION NUMBER: 0000789933-95-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NACCO INDUSTRIES INC CENTRAL INDEX KEY: 0000789933 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL TRUCKS TRACTORS TRAILERS & STACKERS [3537] IRS NUMBER: 341505819 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09172 FILM NUMBER: 95592190 BUSINESS ADDRESS: STREET 1: 5875 LANDERBROOK DR CITY: MAYFIELD HTS STATE: OH ZIP: 44124-4017 BUSINESS PHONE: 2164499600 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-9172 NACCO Industries, Inc. (Exact name of registrant as specified in its charter) DELAWARE 34-1505819 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 5875 LANDERBROOK DRIVE, MAYFIELD HEIGHTS, OHIO 44124 (Address of principal executive offices) Zip code Registrant's telephone number, including area code (216) 449-9600 Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the last 90 days. YES X NO Number of shares of Class A Common Stock outstanding at October 31, 1995: 7,256,370 Number of shares of Class B Common Stock outstanding at October 31, 1995: 1,709,507 NACCO INDUSTRIES, INC. TABLE OF CONTENTS Part I. FINANCIAL INFORMATION Item 1 Financial Statements Consolidated Balance Sheets - September 30, 1995 and December 31, 1994 Unaudited Consolidated Statements of Income for the Three and Nine Months Ended September 30, 1995 and 1994 Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1995 and 1994 Notes to Unaudited Consolidated Financial Statements Item 2 Management's Discussion and Analysis of Results of Operations and Financial Condition Part II. OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K Exhibit Index PART I Item 1 - Financial Statements CONSOLIDATED BALANCE SHEETS NACCO INDUSTRIES, INC. AND SUBSIDIARIES
(Unaudited) (Audited) SEPTEMBER 30 DECEMBER 31 1995 1994 ---- ---- (In thousands) Current Assets Cash and cash equivalents .................................................................. $ 30,870 $ 19,541 Accounts receivable, net ................................................................... 267,512 236,215 Inventories ................................................................................ 422,479 298,987 Prepaid expenses and other ................................................................. 21,920 31,893 ---------- ---------- 742,781 586,636 Other Assets ................................................................................... 41,618 41,341 Property, Plant and Equipment, Net ............................................................. 518,392 485,314 Deferred Charges Goodwill, net .............................................................................. 466,159 471,574 Deferred costs and other ................................................................... 53,585 69,257 Deferred income taxes ...................................................................... 38,202 40,200 ---------- ---------- 557,946 581,031 ---------- ---------- Total Assets ......................................... $1,860,737 $1,694,322 ========== ==========
See notes to unaudited consolidated financial statements. CONSOLIDATED BALANCE SHEETS NACCO INDUSTRIES, INC. AND SUBSIDIARIES
(Unaudited) (Audited) SEPTEMBER 30 DECEMBER 31 1995 1994 ---- ---- (In thousands) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable ................................................................... $ 250,964 $ 226,892 Revolving credit agreements ........................................................ 66,106 30,760 Current maturities of long-term obligations ........................................ 14,681 63,509 Income taxes ....................................................................... 11,626 20,356 Accrued payroll .................................................................... 26,505 28,018 Other current liabilities .......................................................... 110,683 111,903 ---------- --------- 480,565 481,438 Notes Payable - not guaranteed by the parent company ................................................................. 390,302 286,717 Obligations of Project Mining Subsidiaries - not guaranteed by the parent company or its North American Coal subsidiary ................................................. 344,706 331,876 Obligation to United Mine Workers of America Combined Benefit Fund .............................................................. 152,153 154,959 Self-insurance Reserves and Other ...................................................... 129,658 119,399 Minority Interest ...................................................................... 42,816 40,542 Stockholders' Equity Common stock: Class A, par value $1 per share, 7,256,130 shares outstanding (1994 - 7,228,739 shares outstanding) .......................................................... 7,256 7,229 Class B, par value $1 per share, convertible into Class A on a one-for-one basis, 1,709,747 shares outstanding (1994 - 1,722,981 shares outstanding) ........................................ 1,710 1,723 Capital in excess of par value ..................................................... 3,559 2,788 Retained income .................................................................... 295,285 262,226 Foreign currency translation adjustment and other ....................................................................... 12,727 5,425 ---------- --------- 320,537 279,391 ---------- --------- Total Liabilities and Stockholders' Equity ...................................... $1,860,737 $1,694,322 ========== ==========
See notes to unaudited consolidated financial statements. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME NACCO INDUSTRIES, INC. AND SUBSIDIARIES
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 ---- ---- ---- ---- (In thousands, except per share data) Net sales ........................................... $ 536,414 $ 477,101 $ 1,550,668 $ 1,291,642 Other operating income .............................. 1,916 3,202 7,632 8,816 ----------- ----------- ----------- ----------- Total Revenues ........... 538,330 480,303 1,558,300 1,300,458 Cost of sales ....................................... 436,991 384,162 1,256,501 1,037,869 ----------- ----------- ----------- ---------- Gross Profit ........... 101,339 96,141 301,799 262,589 Selling, administrative and general expenses .................................. 63,494 58,455 190,690 167,067 Amortization of goodwill ............................ 3,422 3,427 10,266 10,300 ----------- ----------- ----------- ---------- Operating Profit ........... 34,423 34,259 100,843 85,222 Other income (expense) Interest income ................................. 287 453 2,578 1,215 Interest expense ................................ (13,459) (13,966) (39,866) (42,462) Other - net ..................................... 1,029 1,026 2,280 (364) ----------- ----------- ----------- ---------- (12,143) (12,487) (35,008) (41,611) ----------- ----------- ----------- ---------- Income Before Income Taxes, Minority Interest and Extraordinary Charge ........... 22,280 21,772 65,835 43,611 Provision for income taxes .......................... 7,526 9,852 22,852 19,699 ----------- ----------- ----------- ---------- Income Before Minority Interest and Extraordinary Charge ........... 14,754 11,920 42,983 23,912 Minority interest ................................... (1,096) (906) (1,788) (937) ----------- ----------- ----------- ---------- Income Before Extraordinary Charge ........... 13,658 11,014 41,195 22,975 Extraordinary charge, net-of-tax .................... (2,102) -- (3,382) (3,218) ----------- ----------- ----------- ---------- Net Income ........... $ 11,556 $ 11,014 $ 37,813 $ 19,757 =========== =========== =========== ========== Per Share: Income Before Extraordinary Charge $ 1.53 $ 1.23 $ 4.60 $ 2.57 Extraordinary charge, net-of-tax ................ (0.24) -- (0.38) (.36) ----------- ----------- ----------- ---------- Net Income ...................................... $ 1.29 $ 1.23 $ 4.22 $ 2.21 =========== =========== =========== ========== Cash dividends per share ........................ $ .180 $ .170 $ .530 $ .505 =========== =========== =========== ==========
See notes to unaudited consolidated financial statements. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS NACCO INDUSTRIES, INC. AND SUBSIDIARIES
NINE MONTHS ENDED SEPTEMBER 30 1995 1994 ---- ---- (In thousands) Operating Activities Net income .................................................................. $ 37,813 $ 19,757 Adjustments to reconcile net income to net cash provided by operating activities: Extraordinary charge, net-of-tax ........................................ 2,161 1,790 Depreciation, depletion and amortization ................................ 59,371 60,273 Deferred income taxes ................................................... 1,013 2,070 Other non-cash items .................................................... 3,255 (5,344) Working Capital Changes: Accounts receivable ..................................................... (24,870) (14,136) Inventories ............................................................. (121,580) (80,810) Other current assets .................................................... 6,598 2,649 Accounts payable ........................................................ 18,225 31,589 Accrued income taxes .................................................... (6,702) (5,806) Other liabilities ....................................................... (5,238) (3,114) --------- --------- Net cash provided (used) by operating activities ........... (29,954) 8,918 Investing Activities Expenditures for property, plant and equipment .............................. (55,379) (34,573) Proceeds from the sale of assets ............................................ 640 2,924 Sale of NMHG bonds .......................................................... 4,394 -- Other investing activities .................................................. (2,375) -- --------- --------- Net cash used by investing activities ........... (52,720) (31,649) Financing Activities Additions to long-term obligations and revolving credit .......................................................... 392,041 143,477 Reductions of long-term obligations and revolving credit .......................................................... (310,928) (109,015) Additions to obligations of project mining subsidiaries...................... 45,033 41,842 Reductions of obligations of project mining subsidiaries..................... (32,203) (53,310) Cash dividends paid ......................................................... (4,751) (4,518) Capital grants .............................................................. 2,389 -- Other - net ................................................................. 1,518 4,297 --------- --------- Net cash provided by financing activities ........... 93,099 22,773 Effect of exchange rate changes on cash ..................................... 904 4,329 --------- --------- Cash and Cash Equivalents Increase for the period ..................................................... 11,329 4,371 Balance at the beginning of the period ...................................... 19,541 29,149 --------- --------- Balance at the end of the period ............................................ $ 30,870 $ 33,520 ========= =========
See notes to unaudited consolidated financial statements. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Dollars in Millions, Except Per Share Data) Note A - Basis of Presentation NACCO Industries, Inc. ("NACCO") is a holding company with four operating subsidiaries: The North American Coal Corporation ("North American Coal"), NACCO Materials Handling Group, Inc. ("NMHG"), Hamilton Beach/Proctor-Silex, Inc. ("HBPS"), and The Kitchen Collection, Inc. ("KCI"). The accompanying unaudited consolidated financial statements include the accounts of NACCO and its majority owned subsidiaries (NACCO Industries, Inc. and Subsidiaries - the "Company"). Intercompany accounts have been eliminated. These financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position of the Company as of September 30, 1995 and the results of its operations for the three and nine month periods and cash flows for the nine month periods ended September 30, 1995 and 1994 have been included. Operating results for the three and nine month periods ended September 30, 1995, are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1994. Certain amounts in the prior periods' unaudited consolidated financial statements have been reclassified to conform to the current period's presentation. Note B - Inventories Inventories are summarized as follows:
September 30 December 31 1995 1994 ---- ---- Manufacturing inventories: Finished goods and service parts NACCO Materials Handling Group ........................................... $118.6 $ 82.3 Hamilton Beach/Proctor-Silex ............................................. 71.2 32.8 ------ ------ 189.8 115.1 ------ ------ Raw materials and work in process NACCO Materials Handling Group ........................................... 185.9 137.9 Hamilton Beach/Proctor-Silex ............................................. 16.3 15.9 202.2 153.8 ------ ------ LIFO reserve NACCO Materials Handling Group ........................................... (14.3) (11.4) Hamilton Beach/Proctor-Silex ............................................. (.6) (.1) (14.9) (11.5) ------ ------ Total manufacturing inventories .............................................. 377.1 257.4 North American Coal: Coal ..................................................................... 9.9 8.4 Mining supplies .......................................................... 18.4 18.8 Retail inventories - Kitchen Collection ........................................ 17.1 14.4 ------ ------ $422.5 $299.0 ====== ======
The cost of manufacturing inventories has been determined by the last-in, first-out (LIFO) method for 70 percent and 69 percent of such inventories as of September 30, 1995 and December 31, 1994, respectively. Note C - Revolving Credit Agreements and Notes Payable On February 28, 1995, NMHG entered into a new long-term credit agreement to replace its previous bank agreement and to refinance the majority of its existing long-term debt. The new agreement provides NMHG with an unsecured $350.0 million revolving credit facility to replace its previous senior credit facility. The new credit facility has a five-year maturity with extension options and performance-based pricing comparable to its previous senior credit facility which provides NMHG with reduced interest rates upon achievement of certain financial performance targets. Note D - Extraordinary Charge As previously announced, NMHG retired the remaining $78.5 million outstanding Hyster-Yale 12 3/8% debentures on August 1, 1995 at a price of 102.5. An extraordinary charge of $2.1 million was recorded in the third quarter of 1995 when these debentures were retired. In the first quarter of 1995 an extraordinary charge of $1.3 million, net of $0.9 million in tax benefits, was recorded relating to the write off of deferred financing fees associated with NMHG's former revolving credit facility and senior term loan which was replaced by the new long-term credit agreement discussed in Note C above. Item 2 - Management's Discussion and Analysis of Results of Operations and Financial Condition (Tabular Dollars in Millions, Except Per Share Data) FINANCIAL SUMMARY NACCO's four operating subsidiaries function in distinct business environments, and the results of operations and financial condition are best discussed at the subsidiary level as presented below. The results for "North American Coal" have been adjusted to exclude the previously combined results of Bellaire Corporation, a non-operating subsidiary of NACCO.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 ---- ---- ---- ---- REVENUES NACCO Materials Handling Group ............................. $349.2 $ 289.7 $1,082.5 $ 825.4 Hamilton Beach/Proctor-Silex ............................... 110.3 106.9 257.0 251.7 North American Coal ........................................ 62.5 68.4 178.3 186.4 Kitchen Collection ......................................... 18.1 17.2 43.7 40.4 Bellaire ................................................... -- .1 .4 .5 Eliminations ............................................... (1.8) (2.0) (3.6) (3.9) ------ -------- -------- -------- $538.3 $ 480.3 $1,558.3 $1,300.5 ====== ======== ======== ======== AMORTIZATION OF GOODWILL NACCO Materials Handling Group ............................. $ 2.7 $ 2.7 $ 8.1 $ 8.1 Hamilton Beach/Proctor-Silex ............................... .7 .7 2.1 2.1 Kitchen Collection ......................................... -- -- .1 .1 ------ -------- -------- -------- $ 3.4 $ 3.4 $ 10.3 $ 10.3 ====== ======== ======== ======== OPERATING PROFIT (LOSS) NACCO Materials Handling Group ............................. $ 15.3 $ 14.5 $ 60.9 $ 45.4 Hamilton Beach/Proctor-Silex ............................... 9.5 9.6 14.4 12.7 North American Coal ........................................ 10.8 11.0 31.8 32.3 Kitchen Collection ......................................... .9 1.6 .1 1.7 Bellaire ................................................... -- (.1) (.1) (.1) NACCO ...................................................... (2.1) (2.4) (6.3) (6.8) ------ -------- -------- -------- $ 34.4 $ 34.2 $ 100.8 $ 85.2 ====== ======== ======== ======== OPERATING PROFIT (LOSS) EXCLUDING GOODWILL AMORTIZATION NACCO Materials Handling Group ............................. $ 18.0 $ 17.2 $ 69.0 $ 53.5 Hamilton Beach/Proctor-Silex ............................... 10.2 10.3 16.5 14.8 North American Coal ........................................ 10.8 11.0 31.8 32.3 Kitchen Collection ......................................... .9 1.6 .2 1.8 Bellaire ................................................... -- (.1) (.1) (.1) NACCO ...................................................... (2.1) (2.4) (6.3) (6.8) ------ -------- -------- -------- $ 37.8 $ 37.6 $ 111.1 $ 95.5 ====== ======== ======== ======== INTEREST INCOME NACCO Materials Handling Group ............................. $ .1 $ .3 $ .7 $ .6 North American Coal ........................................ .6 .8 2.1 2.1 Bellaire ................................................... .2 .3 1.1 .9 NACCO ...................................................... -- .4 1.1 .9 Eliminations ............................................... (.6) (1.3) (2.4) (3.3) ------ -------- -------- -------- $ .3 $ .5 $ 2.6 $ 1.2 ====== ======== ======== ========
FINANCIAL SUMMARY - continued
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 ---- ---- ---- ---- INTEREST EXPENSE NACCO Materials Handling Group ................................... $ (7.5) $ (8.2) $(22.9) $(26.2) Hamilton Beach/Proctor-Silex ..................................... (1.9) (2.2) (5.2) (5.2) North American Coal .............................................. (.4) (.5) (1.1) (1.5) Kitchen Collection ............................................... (.2) (.1) (.4) (.2) NACCO ............................................................ (.6) (.9) (2.3) (2.4) Eliminations ..................................................... .6 1.3 2.4 3.3 ------ ------ ------ ------ (10.0) (10.6) (29.5) (32.2) Project mining subsidiaries ...................................... (3.5) (3.4) (10.4) (10.3) ------ ------ ------ ------ $(13.5) $(14.0) $(39.9) $(42.5) ====== ====== ====== ====== OTHER-NET, INCOME (EXPENSE) NACCO Materials Handling Group ................................... .9 $ .8 $ 2.0 $ .3 Hamilton Beach/Proctor-Silex ..................................... (.2) -- (.4) (.4) North American Coal .............................................. .2 .1 .4 (.8) Bellaire ......................................................... -- -- -- .2 NACCO ............................................................ .1 .1 .3 .3 ------ ------ ------ ------ $ 1.0 $ 1.0 $ 2.3 $ (.4) ====== ====== ====== ====== NET INCOME (LOSS) Before Extraordinary Charge NACCO Materials Handling Group ................................... $ 6.0 $ 3.5 $ 24.6 $ 9.7 Hamilton Beach/Proctor-Silex ..................................... 4.9 4.0 5.8 3.7 North American Coal .............................................. 5.4 5.2 16.0 14.6 Kitchen Collection ............................................... .5 .9 (.1) .9 Bellaire ......................................................... .1 .2 .7 .6 NACCO ............................................................ (2.1) (1.9) (4.0) (5.6) Minority interest ................................................ (1.1) (.9) (1.8) (.9) ------ ------ ------ ------ 13.7 11.0 41.2 23.0 Extraordinary charge, net-of-tax ................................................... (2.1) -- (3.4) (3.2) ------ ------ ------ ------ $ 11.6 $ 11.0 $ 37.8 $ 19.8 ====== ====== ====== ====== DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE NACCO Materials Handling Group ................................... $ 24.4 $ 24.6 Hamilton Beach/Proctor-Silex ..................................... 11.9 11.5 North American Coal .............................................. 1.2 1.2 Kitchen Collection ............................................... .7 .7 NACCO ............................................................ .2 .2 ------ ------ 38.4 38.2 Project mining subsidiaries ...................................... 21.0 22.1 ------ ------ $ 59.4 $ 60.3 ====== ====== CAPITAL EXPENDITURES NACCO Materials Handling Group ................................... $ 28.2 $ 18.7 Hamilton Beach/Proctor-Silex ..................................... 7.4 8.4 North American Coal .............................................. 2.5 .3 Kitchen Collection ............................................... 1.3 .8 ------ ------ 39.4 28.2 Project mining subsidiaries ...................................... 16.0 6.4 ------ ------ $ 55.4 $ 34.6 ====== ======
FINANCIAL SUMMARY - continued
SEPTEMBER 30 DECEMBER 31 1995 1994 ---- ---- TOTAL ASSETS NACCO Materials Handling Group ........................................... $1,021.5 $ 906.2 Hamilton Beach/Proctor-Silex ............................................. 330.7 289.6 North American Coal ...................................................... 47.8 49.0 Kitchen Collection ....................................................... 25.9 26.0 Bellaire ................................................................. 83.9 87.1 NACCO .................................................................... 8.5 26.6 -------- -------- 1,518.3 1,384.5 Project mining subsidiaries .............................................. 419.7 412.3 -------- -------- 1,938.0 1,796.8 Consolidating eliminations ............................................... (77.3) (102.5) -------- -------- $1,860.7 $1,694.3 ======== ========
NORTH AMERICAN COAL North American Coal mines and markets lignite for use primarily as fuel for power generation by electric utilities. The lignite is surface mined in North Dakota, Texas and Louisiana. Total coal reserves approximate 2.2 billion tons with 1.4 billion tons committed to electric utility customers pursuant to long-term contracts. FINANCIAL REVIEW North American Coal's three project mining subsidiaries (Coteau, Falkirk and Sabine) mine lignite for utility customers pursuant to long-term contracts at a price based on actual cost plus an agreed pretax profit per ton. Due to the cost-plus nature of these contracts, revenues and operating profits are impacted by increases and decreases in operating costs, as well as by sales tons. Net income of these project mines, however, is not significantly affected by changes in such operating costs, which include costs of operations, interest expense and certain other income and expense items. Because of the nature of the contracts at these mines, operating results are best analyzed in terms of income before taxes and net income. North American Coal's results for 1995 have been adjusted to include certain royalty and other payments previously classified with Bellaire, a non-operating subsidiary of NACCO, that are more appropriately classified with North American Coal. NORTH AMERICAN COAL - continued FINANCIAL REVIEW - continued Tons sold by North American Coal's four operating mines were as follows for the three and nine month periods ended September 30:
Three Months Nine Months 1995 1994 1995 1994 ---- ---- ---- ---- Coteau Properties ............................... 3.8 3.9 11.2 11.6 Falkirk Mining .................................. 1.8 1.8 5.3 5.3 Sabine Mining ................................... 1.1 .9 2.7 2.4 Red River Mining ................................ .3 .2 .7 .6 --- ---- ---- ---- 7.0 6.8 19.9 19.9 === ==== ==== ====
Revenues, income before taxes, provision for taxes and net income were as follows for the three and nine months ended September 30:
Three Months Nine Months 1995 1994 1995 1994 ---- ---- ---- ---- Revenues from operating mines ........................... $60.7 $ 65.5 $171.9 $179.1 Royalties and other ..................................... 1.8 2.9 6.4 7.3 ----- ------ ------ ------ $62.5 $ 68.4 $178.3 $186.4 ===== ====== ====== ====== Income before tax from operating mines ..................................... $ 6.8 $ 6.4 $ 19.5 $ 18.7 Royalty and other income, net ........................... 2.1 3.6 7.5 7.8 Headquarters expense .................................... (1.2) (2.0) (4.2) (4.4) ----- ------ ------ ------ 7.7 8.0 22.8 22.1 Provision for taxes ..................................... 2.3 2.8 6.8 7.5 ----- ------ ------ ------ Net income .......................................... $ 5.4 $ 5.2 $ 16.0 $ 14.6 ===== ====== ====== ======
NORTH AMERICAN COAL - continued FINANCIAL REVIEW - continued Third Quarter of 1995 Compared with Third Quarter of 1994 The following schedule details the components of the changes in revenues, income before taxes and net income for the three months ended September 30:
Income Before Net Revenues Taxes Income -------- ------ ------ 1994.................................................................. $68.4 $ 8.0 $5.2 Increase (decrease) in 1995 from: Project mining subsidiaries Tonnage volume ................................................ 3.3 .1 .1 Agreed profit per ton ......................................... .2 .2 .1 Pass-through costs ............................................ (8.7) -- -- Other Mining Operations Tonnage volume ................................................ .5 .2 .1 Mix of tons sold .............................................. .8 .8 .6 Average selling price ......................................... (.9) (.9) (.6) ----- ----- ---- Variances from operating mines ................................... (4.8) .4 .3 Royalties and other income, net .................................. (1.1) (1.5) (.9) Headquarters expense ............................................. .8 .5 Differences between effective and statutory tax rates ........................................... .3 ----- ----- ---- 1995.................................................................. $62.5 $ 7.7 $5.4 ===== ===== ====
The favorable volume variance at the project mines relates primarily to increased customer requirements at Sabine. The favorable volume at Sabine was somewhat offset by reduced shipments to Coteau's customer because of shut-downs at its customer's generating plants due to upgrades and maintenance. The decrease in revenues due to pass through costs at the project mines relates to the implementation of cost reduction programs at Sabine. Increased customer requirements at Red River caused the favorable volume variance for other mining operations. Increased sales of base tons at Red River which yield a higher price as specified in the supply contract resulted in a favorable mix variance at other mining operations. In addition, Red River has a new agreement with its customer that extends the contract term nine years to 2010 in exchange for a lower sales prices per ton, resulting in the unfavorable price variance at other mining operations. The reduction in royalty income in 1995 results from decreased activity at the eastern underground properties formerly owned by North American Coal to which royalties pertain. The favorable headquarters expense variance results from the non-recurrence of a third quarter 1994 charge relating to the consolidation of administrative support activities. NORTH AMERICAN COAL - continued FINANCIAL REVIEW - continued First Nine Months of 1995 Compared with First Nine Months of 1994 The following schedule details the components of the changes in revenues, income before taxes and net income for the nine months ended September 30:
Income Before Net Revenues Taxes Income -------- ------ ------ 1994................................................................ $186.4 $22.1 $14.6 Increase (decrease) in 1995 from: Project mining subsidiaries Tonnage volume ............................................... 1.7 .1 .1 Mix of tons sold ............................................. .3 .3 .2 Agreed profit per ton ........................................ .4 .4 .3 Pass-through costs ........................................... (9.9) -- -- Other Mining Operations Tonnage volume ............................................... .9 .3 .2 Mix of tons sold ............................................. 3.5 3.5 2.3 Average selling price ........................................ (4.1) (4.1) (2.7) Operating costs .............................................. .1 -- Other income (expense) ....................................... .2 .1 ----- ----- ----- Variances from operating mines ................................... (7.2) .8 .5 Royalties and other income, net .................................. (.9) (.3) (.1) Headquarters expense ............................................. .2 .1 Differences between effective and statutory tax rates .......................................... .9 ----- ----- ----- 1995................................................................ $178.3 $22.8 $16.0 ====== ===== =====
Higher shipments at Sabine and at Falkirk were due to increased customer requirements. These increases were partially offset by a reduction in customer demand at Coteau. The favorable mix variance at other mining operations during the first nine months of 1995 results from increased sales of base tons at Red River, which yield a higher price as specified in the supply contract. The unfavorable price variance at other mining operations relates to the new agreement Red River signed with its customer. In addition, increased customer requirements at Red River resulted in a favorable volume variance at other mining operations. Decreased activity at the eastern underground properties formerly owned by North American Coal resulted in reduced royalty income in 1995. NORTH AMERICAN COAL - continued FINANCIAL REVIEW - continued Other Income and Expense Items of other income (expense) for the three and nine months ended September 30:
Three Months Nine Months 1995 1994 1995 1994 ---- ---- ---- ---- Interest income Project mining subsidiaries ........................... $ .2 $ .2 $ .8 $ .5 Other mining operations ............................... .4 .6 1.3 1.6 ---- ----- ----- ----- $ .6 $ .8 $ 2.1 $ 2.1 ==== ===== ===== ===== Interest expense Project mining subsidiaries ........................... $(3.5) $ (3.4) $(10.4) $(10.3) Other mining operations ............................... (.4) (.5) (1.1) (1.5) ---- ----- ----- ----- $(3.9) $ (3.9) $(11.5) $(11.8) ==== ===== ===== ===== Other-net Project mining subsidiaries ........................... $ .1 -- $ .2 $ .5 Other mining operations ............................... .1 .1 .2 (1.3) ---- ----- ----- ----- $ .2 $ .1 $ .4 $ (.8) ==== ===== ===== =====
Provision for Income Taxes North American Coal's effective tax rate for the quarter ended September 30, 1995 and 1994 was 31.0 percent and 35.0 percent, respectively. The lower effective tax rate in the third quarter of 1995 compared with 1994 results from certain state tax impacts. North American Coal's effective tax rate for the nine months ended September 30, 1995 and 1994 was 30.0 percent and 33.7 percent, respectively. The reduction in the effective tax rate in the first nine months of 1995 compared with 1994 is due to the recognition of an income tax refund of approximately $0.1 million (net of approximately $0.1 million in taxes on related interest) from prior tax years in the second quarter of 1995 and certain state tax impacts. LIQUIDITY AND CAPITAL RESOURCES North American Coal has in place a $50.0 million revolving credit facility. The expiration date of this facility (which currently is September 2000) can be extended one additional year, on an annual basis, upon the mutual consent of North American Coal and the bank group. North American Coal had $40.0 million of its revolving credit facility available at September 30, 1995. The financing of the project mining subsidiaries, which is guaranteed by the utility customers, comprises long-term equipment leases, notes payable and non-interest-bearing advances from customers. The obligations of the project mining subsidiaries do not impact the short- or long-term liquidity of the company and are without recourse to NACCO or North American Coal. These arrangements allow the project mining subsidiaries to pay dividends in amounts equal to their retained earnings. NORTH AMERICAN COAL - continued LIQUIDITY AND CAPITAL RESOURCES - continued North American Coal's capital structure, excluding the project mining subsidiaries, is presented below:
September 30 December 31 1995 1994 ---- ---- Investment in Project Mining Subsidiaries .................................... $ 2.5 $ 5.3 Other Net Tangible Assets .................................................... 8.8 4.2 ------ ------ Total Net Tangible Assets ................................................. 11.3 9.5 Parent Company Advances ...................................................... 15.1 22.7 Debt Related to Parent Advances .............................................. (10.0) (16.7) Other Debt ................................................................... (.3) (.4) ------ ------ Total Debt ............................................................... (10.3) (17.1) ------ ------ Stockholder's Equity ......................................................... $ 16.1 $ 15.1 ====== ====== Debt to Total Capitalization ................................................. 39% 53%
NACCO MATERIALS HANDLING GROUP NMHG, 97 percent-owned by NACCO, designs, manufactures and markets forklift trucks and related service parts under the Hyster(R) and Yale(R) brand names. FINANCIAL REVIEW The results of operations for NMHG were as follows for the three and nine months ended September 30:
Three Months Nine Months 1995 1994 1995 1994 ---- ---- ---- ---- Revenues Americas ............................................ $240.5 $ 204.8 $ 730.5 $582.0 Europe, Africa and Middle East ...................... 89.4 65.3 292.4 194.7 Asia-Pacific ........................................ 19.3 19.6 59.6 48.7 ------ -------- -------- ------ $349.2 $ 289.7 $1,082.5 $825.4 ====== ======== ======== ====== Operating profit Americas ............................................ $ 10.4 $ 11.5 $ 40.5 $ 35.7 Europe, Africa and Middle East ...................... 6.3 1.0 20.3 5.0 Asia-Pacific ........................................ (1.4) 2.0 .1 4.7 ------ -------- -------- ------ $ 15.3 $ 14.5 $ 60.9 $ 45.4 ====== ======== ======== ====== Operating profit excluding goodwill amortization Americas ............................................ $ 12.3 $ 13.4 $ 46.2 $ 41.6 Europe, Africa and Middle East ...................... 7.0 1.7 22.4 7.1 Asia-Pacific ........................................ (1.3) 2.1 .4 4.8 ------ -------- -------- ------ $ 18.0 $ 17.2 $ 69.0 $ 53.5 ====== ======== ======== ====== Net income before extraordinary charge .................. $ 6.0 $ 3.5 $ 24.6 $ 9.7 Extraordinary charge, net-of-tax ........................ (2.1) -- (3.4) (3.2) ------ -------- -------- ------ Net income .......................................... $ 3.9 $ 3.5 $ 21.2 $ 6.5 ====== ======== ======== ======
NACCO MATERIALS HANDLING GROUP - continued FINANCIAL REVIEW - continued Third Quarter of 1995 Compared With Third Quarter of 1994 The following schedule details the components of the changes in revenues, operating profit and net income for the third quarter of 1995 compared with 1994:
Operating Net Revenues Profit Income -------- --------- ------ 1994................................................................ $289.7 $14.5 $ 3.5 Increase (Decrease) in 1995 from: Unit volume .................................................... 40.9 6.8 4.4 Sales mix ...................................................... (4.0) (4.6) (3.0) Average sales price ............................................ 16.2 16.2 10.5 Service parts .................................................. 1.7 .2 .1 Foreign currency ............................................... 4.7 (3.7) (2.4) Manufacturing cost ............................................. (14.5) (9.4) Other operating expense ........................................ .4 .3 Differences between effective and statutory tax rates ...................................... 2.0 Extraordinary charge ........................................... (2.1) ------ ----- ----- 1995................................................................ $349.2 $15.3 $ 3.9 ====== ===== =====
Unit volumes in the third quarter increased 13 percent in the Americas, 27 percent in Europe and 32 percent in Asia-Pacific. The lift truck market size in North America remains steady at historically high levels, while market size in Europe and Asia-Pacific continue to improve. In addition, increased factory production rates improved unit volumes. The price increases announced in mid-1994 favorably impacted results of operations, primarily in the Americas and Europe. NMHG announced additional price increases in the spring of 1995 which had a slight impact on third quarter results, but will reach full impact during the fourth quarter of 1995. These price increases were enacted in order to offset the adverse affects of higher raw material costs and the strength of the yen relative to the dollar which increased the cost of purchases sourced from Japan. Manufacturing inefficiencies, due to vendor parts shortages, and higher raw material costs, resulted in an unfavorable manufacturing cost variance. NACCO MATERIALS HANDLING GROUP - continued FINANCIAL REVIEW - continued First Nine Months of 1995 Compared With First Nine Months of 1994 The following schedule details the components of the changes in revenues, operating profit and net income for the first nine months of 1995 compared with 1994:
Operating Net Revenues Profit Income -------- --------- ------ 1994............................................................. $ 825.4 $ 45.4 $ 6.5 Increase (Decrease) in 1995 from: Unit volume ................................................. 182.4 32.6 21.2 Sales mix ................................................... (9.2) (11.8) (7.7) Average sales price ......................................... 45.5 45.5 29.6 Service parts ............................................... 14.2 6.3 4.1 Foreign currency ............................................ 24.2 (7.5) (4.9) Manufacturing cost .......................................... (34.1) (22.2) Other operating expense ..................................... (15.5) (10.1) Other income and expense .................................... 2.0 Differences between effective ............................... 2.9 and statutory tax rates Extraordinary charge ........................................ (.2) -------- ------ ------ 1995............................................................. $1,082.5 $ 60.9 $21.2 ======== ====== =====
Unit volumes during the first nine months of 1995 increased 23 percent in the Americas, 39 percent in Europe and 46 percent in Asia-Pacific when compared with 1994. The price increases announced in mid-1994 and, to a lesser degree, the increases announced in the spring of 1995 favorably impacted operating results during the first nine months of 1995. These price increases were enacted to offset the raw material cost increases and currency impacts noted below. The negative impact on operating profit from currency results primarily from the strength of the yen relative to the dollar, which increased the cost of purchases sourced from Japan. This unfavorable effect is partially offset by the favorable impact, primarily on revenues, resulting from the strength of certain European currencies relative to the dollar. The unfavorable impact from manufacturing costs is due to increased material prices and manufacturing inefficiencies caused by vendor parts shortages. Increases in volume related customer service costs, new product introduction and marketing programs and general inflation resulted in higher other operating expenses. NMHG's backlog of orders at September 30, 1995 was approximately 24,800 forklift truck units compared to the 24,600 forklift truck units at December 31, 1994. The continued high order rate, coupled with the vendor parts shortages, have caused backlog to increase from December 31, 1994. The company is working to resolve its vendor parts supply problems by the end of 1995. As these supply problems are resolved the company will begin to work down its backlog. NACCO MATERIALS HANDLING GROUP - continued FINANCIAL REVIEW - continued Other Income and Expense Below is the detail of other income (expense) for the three and nine months ended September 30:
Three Months Nine Months 1995 1994 1995 1994 ---- ---- ---- ---- Interest income .............................. $ .1 $ .3 $ .7 $ .6 Interest expense ............................. $(7.5) $(8.2) $(22.9) $(26.2) Other-net .................................... $ .9 $ .8 $ 2.0 $ .3
The lower interest expense in 1995 is primarily due to the retirements in 1995 and 1994 of the Hyster-Yale 12 3/8% subordinated debentures. The improvement in other-net in 1995 results primarily from dividend income received from NMHG's unconsolidated Brazilian subsidiary and improved earnings in 1995 at the company's Sumitomo-NACCO joint venture. Provision for Income Taxes NMHG's effective tax rate for the quarter ended September 30, 1995 and 1994 was 32.2 percent and 52.0 percent, respectively. NMHG's effective tax rate for the first nine months of 1995 and 1994 was 39.5 percent and 52.0 percent, respectively. The higher level of pretax earnings in 1995 reduced the effect of nondeductible goodwill amortization resulting in a lower effective tax rate in 1995. In addition, the recognition in 1995 of income tax refunds of approximately $1.6 million (net of approximately $0.5 million in taxes on related interest) from prior tax years also lowered the effective tax rate during the first nine months of 1995. Extraordinary Charge As previously announced, NMHG retired the remaining $78.5 million outstanding Hyster-Yale 12 3/8% debentures on August 1, 1995 at a price of 102.5. An extraordinary charge of $2.1 million was recorded in the third quarter of 1995 when these debentures were retired. In the first quarter of 1995 an extraordinary charge of $1.3 million, net of $0.9 million in tax benefits, was recognized relating to the write off of deferred financing fees associated with NMHG's former revolving credit facility and senior term loan which was replaced by the new long-term credit agreement discussed in the following section. The 1994 extraordinary charge, recognized in the second quarter, of $3.2 million, net of $2.0 million in tax benefits, reflects the write-off of premiums and unamortized debt issuance costs associated with the retirement of the Hyster-Yale 12 3/8% subordinated debentures. NACCO Materials Handling Group - continued LIQUIDITY AND CAPITAL RESOURCES Expenditures for property, plant and equipment were $28.2 million during the first nine months of 1995. The increased demand for lift trucks has required NMHG to invest in its productive capacity. NMHG is investing to break bottlenecks at all of its plants and has undertaken expansion of its Craigavon, Northern Ireland and Irvine, Scotland production facilities. It is estimated that NMHG's capital expenditures for the remainder of 1995 will be approximately $17.3 million. The principal sources of financing for these capital expenditures are internally generated funds, bank borrowings and government assistance grants. On February 28, 1995, the company entered into a new long-term credit agreement to replace its previous bank agreement and to refinance the majority of its existing long-term debt. The new agreement provides the company with an unsecured $350.0 million revolving credit facility to replace its previous senior credit facility. The new credit facility has a five-year maturity with extension options and performance-based pricing comparable to its previous senior credit facility which provides the company with reduced interest rates upon achievement of certain financial performance targets. The company believes it can meet all of its current and long-term commitments and operating needs from operating cash flows and funds available under revolving credit agreements. At September 30, 1995 NMHG had available $39.0 million of its $350.0 million revolving credit facility. NMHG's capital structure is presented below:
SEPTEMBER 30 DECEMBER 31 1995 1994 ---- ---- Total Net Tangible Assets .................................................. $ 285.0 $ 192.9 Goodwill at Cost ........................................................... 438.3 433.5 ------- ------- Total Assets Before Goodwill Amortization .............................. 723.3 626.4 Accumulated Goodwill Amortization .......................................... (68.5) (60.4) Total Debt ................................................................. (321.4) (260.1) ------- ------- Stockholders' Equity ....................................................... $ 333.4 $ 305.9 ======= ======= Debt to Total Capitalization ............................................... 49% 46%
HAMILTON BEACH/PROCTOR-SILEX HBPS, 80 percent-owned by NACCO, is a leading manufacturer of small electric appliances. The housewares business is seasonal. A majority of revenues and operating profit occurs in the second half of the year when sales of small electric appliances increase significantly for the fall holiday selling season. FINANCIAL REVIEW The results of operations for HBPS were as follows for the three and nine months ended September 30:
Three Months Nine Months 1995 1994 1995 1994 ---- ---- ---- ---- Revenues ........................................... $110.3 $106.9 $257.0 $251.7 Operating profit ................................... $ 9.5 $ 9.6 $ 14.4 $ 12.7 Operating profit excluding goodwill amortization .......... ............... $ 10.2 $ 10.3 $ 16.5 $ 14.8 Net income ......................................... $ 4.9 $ 4.0 $ 5.8 $ 3.7
Third Quarter of 1995 Compared With Third Quarter of 1994 The following schedule details the components of the changes in revenues, operating profit and net income for the third quarter of 1995 compared with 1994:
Operating Net Revenues Profit Income -------- --------- ------ 1994............................................................... $106.9 $9.6 $4.0 Increase (Decrease) in 1995 from: Unit volume .................................................. 4.1 2.6 1.6 Average sales price .......................................... (.7) (.7) (.4) Manufacturing cost ........................................... (.6) (.4) Other operating expense ...................................... (1.4) (.9) Other income and expense ..................................... .1 Differences between effective and statutory tax rates .................................... .9 ------ ---- ---- 1995............................................................... $110.3 $9.5 $4.9 ====== ==== ====
HAMILTON BEACH/PROCTOR-SILEX - continued FINANCIAL REVIEW - continued Increased sales of irons, indoor steam grills, roasters, blenders and canopeners, slightly offset by reductions in toaster and toaster oven sales, resulted in a favorable impact from volume on results in the third quarter of 1995. In addition, a shift in sales within certain product lines from the good to the best category and favorable mix shifts to higher margin product lines favorably impacted operating profit and net income. Increased raw materials costs were the primary factor causing the unfavorable manufacturing cost variance. An increase in the bad debt reserve resulting from the bankruptcy of Caldors, a large regional retailer, and higher marketing and selling expenditures caused the unfavorable variance in other operating expenses. First Nine Months of 1995 Compared with First Nine Months of 1994 The following schedule details the components of the changes in the revenues, operating profit and net income for the first nine months of 1995 compared with 1994:
Operating Net Revenues Profit Income -------- --------- ------ 1994.............................................................. $251.7 $12.7 $3.7 Increase (Decrease) in 1995 from: Unit volume ................................................. 5.7 5.6 3.6 Average sales price ......................................... (.3) (.3) (.2) Foreign currency translation ................................ (.1) (.1) (.1) Manufacturing cost .......................................... (.9) (.6) Other operating expense ..................................... (2.6) (1.7) Other income and expense .................................... .2 Differences between effective and statutory tax rates .................................. .9 ------ ----- ---- 1995.............................................................. $257.0 $14.4 $5.8 ====== ===== ====
The favorable volume variance relates to increased sales of irons, canopeners, coffeemakers, slowcookers, indoor steam grills and roasters partially offset by reduced toaster, toaster oven and blender sales. Sales mix shifts to higher margin product lines and an overall shift in sales to the better and best product category resulted in improved profitability during the first nine months of 1995. Increased raw materials costs partially offset by the favorable impact on costs of the devalued peso resulted in an unfavorable variance from manufacturing costs. An increase in the bad debt reserve resulting from the bankruptcy of Caldors, a large regional retailer, and higher marketing and selling expenditures caused the unfavorable variance in other operating expenses. HAMILTON BEACH/PROCTOR-SILEX - continued FINANCIAL REVIEW - continued Other Income and Expense Below is the detail of other income (expense) for the three and nine months ended September 30:
Three Months Nine Months 1995 1994 1995 1994 Interest expense ................................... $(1.9) $(2.2) $(5.2) $(5.2) Other-net .......................................... $(.2) -- $(.4) $(.4)
Provision for Income Taxes HBPS's effective tax rate for the quarter ended September 30, 1995 and 1994 was 33.5 percent and 45.9 percent, respectively. HBPS's effective tax rate for the first nine months of 1995 and 1994 was 33.5 percent and 46.0 percent, respectively. The reduction in HBPS's effective tax rate in 1995 is due to the utilization of foreign tax credits received as a result of the repatriation of foreign earnings previously taxed at a rate in excess of the U.S. statutory tax rate. LIQUIDITY AND CAPITAL RESOURCES Expenditures for property, plant and equipment were $7.4 during the first nine months of 1995 and are estimated to be $5.8 million for the remainder of 1995. The primary purpose of these expenditures is to increase manufacturing efficiency and to acquire tooling for new and existing products. These expenditures are funded primarily from internally generated funds and short term borrowings. HBPS's credit agreement provides for a revolving credit facility ("Facility") that permits advances up to $135.0 million. At September 30, 1995, HBPS had $14.6 million available under this Facility. The expiration date of this Facility (which currently is May 1998) may be extended annually for one additional year upon the mutual consent of HBPS and the bank group. In April, 1995 this Facility was amended to provide a lower interest rate if HBPS achieves a certain interest coverage ratio and to allow for interest rates quoted under a competitive bid option. At September 30, 1995, HBPS also had $25.0 million available under separate facilities. HAMILTON BEACH/PROCTOR-SILEX - continued FINANCIAL REVIEW - continued LIQUIDITY AND CAPITAL RESOURCES - continued HBPS's capital structure is presented below:
September 30 DECEMBER 31 1995 1994 ---- ---- Total Net Tangible Assets .............................................. $ 164.4 $118.3 Goodwill at Cost ....................................................... 110.5 110.5 ------- ------ Total Assets Before Goodwill Amortization ........................... 274.9 228.8 Accumulated Goodwill Amortization ...................................... (17.9) (15.8) Total Debt ............................................................. (120.7) (82.6) ------- ------ Stockholders' Equity ................................................... $ 136.3 $130.4 ======= ====== Debt to Total Capitalization ........................................... 47% 39%
KITCHEN COLLECTION KCI is a national specialty retailer of kitchenware, tableware, small electric appliances and related accessories. The specialty retail business is seasonal with the majority of its revenues and operating profit generated in the fourth quarter during the fall holiday selling season. FINANCIAL REVIEW Third Quarter of 1995 Compared With Third Quarter of 1994 The following schedule details the components of the changes in revenues, operating profit and net income for the third quarter of 1995 compared with 1994:
Operating Net Revenues Profit Income -------- --------- ------ 1994................................................................ $17.2 $1.6 $ .9 Increase (decrease) in 1995 from: Stores opened in 1995 ......................................... 1.3 -- -- Stores opened in 1994 ......................................... .4 (.1) -- Comparable stores ............................................. (.8) (.4) (.2) Other ......................................................... (.2) (.2) ----- ---- ---- 1995................................................................ $18.1 $ .9 $ .5 ===== ==== ====
First Nine Months of 1995 Compared With First Nine Months of 1994 The following schedule details the components of the changes in revenues, operating profit and net income (loss) for the first nine months of 1995 compared with 1994:
Net Operating Income Revenues Profit (Loss) -------- ------ ------ 1994................................................................ $40.4 $1.7 $ .9 Increase (decrease) in 1995 from: Stores opened in 1995 ......................................... 1.6 (.1) (.1) Stores opened in 1994 ......................................... 3.5 (.1) -- Comparable stores ............................................. (1.8) (.9) (.5) Other ......................................................... -- (.5) (.4) ----- ---- ---- 1995................................................................ $43.7 $ .1 $(.1) ===== ==== ====
KITCHEN COLLECTION - continued FINANCIAL REVIEW - continued Provision for Income Taxes KCI'S effective tax rate for the quarter ended September 30, 1995 and 1994 was 40.4 percent and 40.7 percent, respectively. KCI's effective tax rate for the first nine months of 1995 and 1994 was 42.3 percent and 40.8 percent, respectively. LIQUIDITY AND CAPITAL RESOURCES Expenditures for property, plant and equipment were $1.3 million during the first nine months of 1995. Estimated capital expenditures for the remainder of 1995 are $0.6 million. These expenditures are primarily for new store openings and improvements to existing facilities. The principal source of funds for these capital expenditures is internally generated funds. In May, Kitchen Collection entered into a new $5.0 million revolving credit facility which replaced the previous $2.5 million line of credit. This new facility has performance based pricing which provides for reduced interest rates based on achievement of certain financial performance measures. At September 30, 1995, KCI had $2.7 million available under this facility. KCI's capital structure is presented below:
SEPTEMBER 30 DECEMBER 31 1995 1994 ---- ---- Total Net Tangible Assets .................................................. $13.5 $11.3 Goodwill at Cost ........................................................... 4.6 4.6 ----- ----- Total Assets Before Goodwill Amortization .............................. 18.1 15.9 Accumulated Goodwill Amortization .......................................... (.8) (.8) Total Debt ................................................................. (7.3) (5.0) ----- ----- Stockholder's Equity ....................................................... $10.0 $10.1 ===== ===== Debt to Total Capitalization ............................................... 42% 33%
NACCO AND OTHER FINANCIAL REVIEW Third Quarter of 1995 Compared with Third Quarter of 1994 The following schedule details the components of the changes in parent company operating loss and net loss for the third quarter of 1995 compared with 1994:
Operating Net Loss Loss --------- ------ 1994.............................................................................. $(2.4) $(1.9) Administrative and general expenses ........................................ .3 -- Interest income ............................................................ -- (.2) Interest expense ........................................................... -- .2 Consolidating and other tax adjustments .................................... -- (.2) ----- ----- 1995.................................................................................. $(2.1) $(2.1) ===== =====
First Nine Months of 1995 Compared With First Nine Months of 1994 The following schedule details the components of the changes in parent company operating loss and net loss for the first nine months of 1995 compared with 1994:
Operating Net Loss Loss --------- ----- 1994 ............................................................................. $(6.8) $(5.6) Administrative and general expenses ........................................ .5 .3 Interest income ............................................................ - .1 Interest expense ........................................................... - .1 Consolidating and other tax adjustments .................................... - 1.1 --- ---- 1995.............................................................................. $(6.3) $(4.0) ===== =====
The favorable impact from interest income and tax adjustments is primarily due to the recognition in the second quarter of 1995 of an income tax refund and related interest income resulting from prior tax years. NACCO AND OTHER - continued LIQUIDITY AND CAPITAL RESOURCES Although the subsidiaries have entered into substantial debt agreements, NACCO has not guaranteed the long-term debt or any borrowings of its subsidiaries. The debt agreements at HBPS and KCI allow for the payment of dividends under certain circumstances. The revised credit agreement entered into on February 28, 1995 at NMHG will allow the transfer of up to $25.0 million to NACCO. There are no restrictions for North American Coal, and its dividends and advances are the primary source of cash for NACCO. The Company believes it can adequately meet all of its current and long-term commitments and operating needs. This outlook is supported by the amounts available under revolving credit facilities and the utility customers' funding of the project mining subsidiaries. BELLAIRE CORPORATION Bellaire Corporation ("Bellaire") is a non-operating subsidiary of NACCO. Bellaire's results primarily include mine closing activities related to the Indian Head Mine, which ceased mining operations in April 1992. Bellaire's results for 1995 have been adjusted to remove certain royalty and other payments that are more appropriately classified with North American Coal's results. Cash payments related to Bellaire's obligations, net of internally generated cash, are funded by NACCO and amounted to $1.1 million and $2.5 million during the first nine months of 1995 and 1994, respectively. The results of operations were as follows for the three and nine months ended September 30:
THREE MONTHS NINE MONTHS 1995 1994 1995 1994 ---- ---- ---- ---- Revenues ........................................... - $ .1 $ .4 $ .5 Operating loss ..................................... - $(.1) $(.1) $(.1) Net income ......................................... $.1 $ .2 $ .7 $ .6
NACCO AND OTHER - continued BELLAIRE CORPORATION - continued The condensed balance sheets for Bellaire were as follows:
SEPTEMBER 30 DECEMBER 31 1995 1994 ---- ---- Net current assets ...................................................... $ 13.2 $ 13.1 Property, plant and equipment, net ...................................... .5 .5 Deferred taxes and other assets ......................................... 62.9 64.1 Obligation to United Mine Workers of America Combined Benefit Fund ........................................ (152.2) (155.0) Other liabilities ....................................................... (25.0) (24.0) ------- ------- Deficit ................................................................. $(100.6) $(101.3) ======= =======
Part II Item 1 Legal Proceedings None Item 2 Change in Securities None Item 3 Defaults Upon Senior Securities None Item 4 Submission of Matters to a Vote of Security Holders None Item 5 Other Information None Item 6 Exhibits and Reports on Form 8-K (a) Exhibits. See Exhibit Index on page 33 of this quarterly report on Form 10-Q. Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NACCO Industries, Inc. (Registrant) Date November 13, 1995 Frank B. O'Brien Frank B. O'Brien Senior Vice President - Corporate Development and Chief Financial Officer Date November 13, 1995 Steven M. Billick Steven M. Billick Vice President and Controller (Principal Accounting Officer) Exhibit Index Exhibit Number* Description of Exhibit (11) Computation of Earnings Per Common Share (27) Financial Data Schedule * Numbered in accordance with Item 601 of Regulation S-K. Exhibit 11 NACCO Industries, Inc. And Subsidiaries Form 10-Q Computation of Earnings per Share
Three Months Nine Months Ended September 30 Ended September 30 1995 1994 1995 1994 ---- ---- ---- ---- (Amounts in thousands except per share data) Income: Income before extraordinary charge ............................. $ 13,658 $ 11,014 $ 41,195 $22,975 Extraordinary charge, net-of-tax ............................... (2,102) -- (3,382) (3,218) -------- -------- -------- ------- Net income .................................................... $ 11,556 $ 11,014 $ 37,813 $19,757 ======== ======== ======== ======= Per share amounts reported to stockholders - Note 1: Income before extraordinary charge ............................. $ 1.53 $ 1.23 $ 4.60 $ 2.57 Extraordinary charge, net-of-tax ............................... (.24) -- (.38) (.36) -------- -------- -------- ----- Net income ..................................................... $ 1.29 $ 1.23 $ 4.22 $ 2.21 ======== ======== ======== ===== Primary: Weighted average shares outstanding ............................ 8,966 8,951 8,962 8,947 Dilutive stock options - Note 2 ................................ 13 12 12 13 -------- -------- -------- ----- Totals ................................................... 8,979 8,963 8,974 8,960 ======== ======== ======== ===== Per share amounts Income before extraordinary charge ....................... $ 1.52 $ 1.23 $ 4.59 $ 2.56 Extraordinary charge, net-of-tax ......................... (.23) -- (.38) (.35) -------- -------- -------- ----- Net income ............................................... $ 1.29 $ 1.23 $ 4.21 $ 2.21 ======== ======== ======== ===== Fully diluted - Note 3: Weighted average shares outstanding ............................ 8,951 8,962 8,947 Dilutive stock options - Note 2 ................................ 13 13 14 -------- -------- ----- Totals ................................................... 8,964 8,975 8,961 ======== ======== ===== Per share amounts Income before extraordinary charge ....................... $ 1.23 $ 4.59 $ 2.56 Extraordinary charge, net-of-tax ......................... -- (.38) (.35) -------- -------- ----- Net income ............................................... $ 1.23 $ 4.21 $ 2.21 ======== ======== =====
EXHIBIT 11 - continued Note 1 - Per share earnings have been computed and reported to the stockholders pursuant to APB Opinion No. 15, which provides that "any reduction of less than 3% in the aggregate need not be considered as dilution in the computation and presentation of earnings per share data." Note 2 - Dilutive stock options are calculated based on the treasury stock method. For primary per share earnings the average market price is used. For fully diluted per share earnings the period-end market price, if higher than the average market price, is used. Note 3 -- Fully diluted per share earnings for the three months ended September 30, 1995 are not disclosed because the quarter-end market price did not exceed the average market price for the three month period in 1995. EX-27 2 ART.5 FDS FOR 3RD QUARTER 10-Q
5 0000789933 NACCO Industries 1,000 9-MOS DEC-31-1994 JAN-01-1995 SEP-30-1995 30,870 0 267,512 0 422,479 742,781 518,392 0 1,860,737 480,565 0 8,966 0 0 311,571 1,860,737 1,550,668 1,558,300 1,256,501 1,457,457 0 0 39,866 65,835 22,852 41,195 0 3,382 0 37,813 $4.21 $4.21
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