-----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, Lc7oDR0uiNmSlUlGxvYUenmcz7l/tZMJehW1zsryk4eR8wXmnWPmzqcyVag4/Cmh r3tFA/ir0cdJZol5WwDYgA== 0000789933-96-000003.txt : 19960517 0000789933-96-000003.hdr.sgml : 19960517 ACCESSION NUMBER: 0000789933-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96565236 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 March 31, 1996 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-9172 NACCO Industries, Inc. (Exact name of registrant as specified in its charter) DELAWARE 34-1505819 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 5875 LANDERBROOK DRIVE, MAYFIELD HEIGHTS, OHIO 44124 (Address of principal executive offices) Zip code Registrant's telephone number, including area code (216) 449-9600 Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the last 90 days. YES X NO Number of shares of Class A Common Stock outstanding at April 30, 1996: 7,275,335 Number of shares of Class B Common Stock outstanding at April 30, 1996: 1,708,427 NACCO INDUSTRIES, INC. TABLE OF CONTENTS Part I. FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheets - March 31, 1996 and December 31, 1995 Unaudited Consolidated Statements of Income for the Three Months Ended March 31, 1996 and 1995 Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1996 and 1995 Notes to Unaudited Consolidated Financial Statements Item 2 - Management's Discussion and Analysis of Results of Operations and Financial Condition Part II. OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K Exhibit Index PART I Item 1 - Financial Statements CONSOLIDATED BALANCE SHEETS NACCO INDUSTRIES, INC. AND SUBSIDIARIES
(Unaudited) (Audited) MARCH 31 DECEMBER 31 1996 1995 ---------- ----------- (In thousands) ASSETS Current Assets Cash and cash equivalents ...................... $ 32,898 $ 30,924 Accounts receivable, net ....................... 279,015 284,235 Inventories .................................... 412,878 388,819 Prepaid expenses and other ..................... 22,288 18,027 ---------- ---------- 747,079 722,005 Other Assets ....................................... 40,434 38,289 Property, Plant and Equipment, Net ................. 534,721 534,477 Deferred Charges Goodwill, net .................................. 461,964 465,051 Deferred costs and other ....................... 56,625 56,725 Deferred income taxes .......................... 16,401 17,290 ---------- ---------- 534,990 539,066 ---------- ---------- Total Assets ... $1,857,224 $1,833,837 ========== ==========
See notes to unaudited consolidated financial statements. CONSOLIDATED BALANCE SHEETS NACCO INDUSTRIES, INC. AND SUBSIDIARIES
(Unaudited) (Audited) MARCH 31 DECEMBER 31 1996 1995 ---------- ---------- (In thousands) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable ................................. $ 257,003 $ 250,662 Revolving credit agreements ...................... 110,125 95,736 Current maturities of long-term obligations ...... 22,490 19,864 Income taxes ..................................... 8,039 4,672 Accrued payroll .................................. 27,730 29,827 Other current liabilities ........................ 118,300 122,961 ---------- ---------- 543,687 523,722 Notes Payable - not guaranteed by the parent company ............................. 320,513 320,200 Obligations of Project Mining Subsidiaries - not guaranteed by the parent company or its North American Coal subsidiary ............ 341,273 346,472 Self-insurance Reserves and Other .................... 230,569 229,302 Minority Interest .................................... 41,936 44,014 Stockholders' Equity Common stock: Class A, par value $1 per share, 7,275,076 shares outstanding (1995 - 7,256,971 shares outstanding) ........................ 7,275 7,257 Class B, par value $1 per share, convertible into Class A on a one-for-one basis, 1,708,686 shares outstanding (1995 - 1,709,453 shares outstanding) ...... 1,709 1,709 Capital in excess of par value ................... 4,556 3,591 Retained income .................................. 361,600 350,301 Foreign currency translation adjustment and other ..................................... 4,106 7,269 ---------- ---------- 379,246 370,127 ---------- ---------- Total Liabilities and Stockholders' Equity .... $1,857,224 $1,833,837 ========== ==========
See notes to unaudited consolidated financial statements. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME NACCO INDUSTRIES, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31 ----------------------- 1996 1995 --------- --------- (In thousands, except per share data) Net sales ............................................ $ 557,535 $ 499,966 Other operating income ............................... 1,941 2,405 --------- --------- Total Revenues .............................. 559,476 502,371 Cost of sales ........................................ 452,174 401,618 --------- --------- Gross Profit ................................ 107,302 100,753 Selling, administrative and general expenses ......... 71,915 63,098 Amortization of goodwill ............................. 3,775 3,422 --------- --------- Operating Profit ............................ 31,612 34,233 Other income (expense) Interest income .................................. 302 393 Interest expense ................................. (13,001) (14,023) Other - net ...................................... 811 288 --------- --------- (11,888) (13,342) --------- --------- Income Before Income Taxes, Minority Interest and Extraordinary Charge ............................. 19,724 20,891 Provision for income taxes ........................... 6,657 7,878 --------- --------- Income Before Minority Interest and Extraordinary Charge .................... 13,067 13,013 Minority interest .................................... (148) (208) --------- --------- Income Before Extraordinary Charge .......... 12,919 12,805 Extraordinary charge, net-of-tax ..................... -- (1,280) --------- --------- Net Income .................................. $ 12,919 $ 11,525 ========= ========= Per Share: Income Before Extraordinary Charge ................... $ 1.44 $ 1.43 Extraordinary charge, net-of-tax ..................... -- (.14) --------- --------- Net Income ........................................... $ 1.44 $ 1.29 ========= ========= Dividends per share .................................. $ .18 $ .17 ========= ========= See notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS NACCO INDUSTRIES, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31 ---------------------- 1996 1995 --------- --------- (In thousands) Operating Activities Net income ............................................ $ 12,919 $ 11,525 Adjustments to reconcile net income to net cash provided by operating activities: Extraordinary charge, net-of-tax .................. -- 1,280 Depreciation, depletion and amortization .......... 20,844 20,332 Deferred income taxes ............................. (2,787) (574) Other non-cash items .............................. (411) 691 Working Capital Changes: Accounts receivable ............................... 2,839 20,545 Inventories ....................................... (25,042) (55,762) Other current assets .............................. (446) 2,247 Accounts payable .................................. (3,351) 12,525 Accrued income taxes .............................. 5,880 (5,214) Other liabilities ................................. 1,792 (16,776) --------- --------- Net cash provided (used) by operating activities 12,237 (9,181) Investing Activities Expenditures for property, plant and equipment ........ (18,086) (12,813) Proceeds from the sale of assets ...................... 272 313 Additional investment in subsidiary ................... (1,805) -- --------- --------- Net cash used by investing activities .......... (19,619) (12,500) Financing Activities Additions to long-term obligations and revolving credit .................................... 40,887 162,789 Reductions of long-term obligations and revolving credit .................................... (25,124) (143,496) Additions to obligations of project mining subsidiaries ........................................ 26,409 13,680 Reductions of obligations of project mining subsidiaries ........................................ (30,808) (16,737) Cash dividends paid ................................... (1,617) (1,524) Capital grants ........................................ 377 385 Other - net ........................................... (8) 570 --------- --------- Net cash provided by financing activities ...... 10,116 15,667 Effect of exchange rate changes on cash ............... (760) 1,723 --------- --------- Cash and Cash Equivalents Increase (decrease) for the period .................... 1,974 (4,291) Balance at the beginning of the period ................ 30,924 19,541 --------- --------- Balance at the end of the period ...................... $ 32,898 $ 15,250 ========= ========= 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 ("NACoal"), NACCO Materials Handling Group, Inc. ("NMHG"), Hamilton BeachProctor-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 March 31, 1996 and the results of its operations and cash flows for the three month periods ended March 31, 1996 and 1995 have been included. Operating results for the three month period ended March 31, 1996, are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. 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:
March 31 December 31 1996 1995 ------ ------ Manufacturing inventories: Finished goods and service parts NACCO Materials Handling Group .. $ 131.1 $ 117.4 Hamilton BeachProctor-Silex ..... 59.2 43.3 ------ ------ 190.3 160.7 ------ ------ Raw materials and work in process NACCO Materials Handling Group .. 178.7 182.0 Hamilton BeachProctor-Silex ..... 16.4 15.7 ------ ------ 195.1 197.7 ------ ------ LIFO reserve NACCO Materials Handling Group .. (16.9) (13.3) Hamilton BeachProctor-Silex ..... (.4) (.3) ------ ------ (17.3) (13.6) ------ ------ Total manufacturing inventories ... 368.1 344.8 North American Coal: Coal ............................ 10.3 10.6 Mining supplies ................. 18.8 19.1 Retail inventories - Kitchen Collection 15.7 14.3 ====== ====== $ 412.9 $ 388.8 ====== ======
The cost of manufacturing inventories has been determined by the last-in, first-out (LIFO) method for 66 percent of such inventories as of March 31, 1996 and December 31, 1995. Note C - Extraordinary Charge The 1995 extraordinary charge, of $1.3 million, net of $0.9 million in tax benefits, relates to the write off of deferred financing fees associated with NMHG's former revolving credit facility and senior term loan which was replaced by a new long-term credit agreement. 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 MARCH 31 ------------------- 1996 1995 -------- -------- REVENUES NACCO Materials Handling Group ...................... $ 420.8 $ 363.2 Hamilton BeachProctor-Silex ......................... 67.9 67.0 North American Coal ................................. 59.1 60.5 Kitchen Collection .................................. 12.9 12.2 NACCO and Other ..................................... .1 -- Eliminations ........................................ (1.3) (.5) -------- -------- $ 559.5 $ 502.4 ======== ======== AMORTIZATION OF GOODWILL NACCO Materials Handling Group ...................... $ 2.9 $ 2.7 Hamilton BeachProctor-Silex ......................... .9 .7 -------- -------- $ 3.8 $ 3.4 ======== ======== OPERATING PROFIT (LOSS) NACCO Materials Handling Group ...................... $ 26.5 $ 23.7 Hamilton BeachProctor-Silex ......................... (1.0) 1.4 North American Coal ................................. 9.8 11.7 Kitchen Collection .................................. (1.2) (.5) NACCO and Other ..................................... (2.5) (2.0) -------- -------- $ 31.6 $ 34.3 ======== ======== OPERATING PROFIT (LOSS) EXCLUDING GOODWILL AMORTIZATION NACCO Materials Handling Group ...................... $ 29.4 $ 26.4 Hamilton BeachProctor-Silex ......................... (.1) 2.1 North American Coal ................................. 9.8 11.7 Kitchen Collection .................................. (1.2) (.5) NACCO and Other ..................................... (2.5) (2.0) -------- -------- $ 35.4 $ 37.7 ======== ======== INTEREST EXPENSE NACCO Materials Handling Group ...................... $ (8.1) $ (7.5) Hamilton BeachProctor-Silex ......................... (1.3) (1.6) North American Coal ................................. (.1) (.4) Kitchen Collection .................................. (.1) -- NACCO and Other ..................................... (.2) (.5) Eliminations ........................................ .2 .6 -------- -------- (9.6) (9.4) Project mining subsidiaries ......................... (3.4) (4.6) -------- -------- $ (13.0) $ (14.0) ======== ========
FINANCIAL SUMMARY - continued
THREE MONTHS ENDED MARCH 31 ------------------ 1996 1995 -------- -------- OTHER-NET, INCOME (EXPENSE) NACCO Materials Handling Group ...................... $ .5 $ .2 Hamilton BeachProctor-Silex ......................... (.1) (.1) North American Coal ................................. .3 .2 NACCO and Other ..................................... .1 -- ------- ------- $ .8 $ .3 ======= ======= NET INCOME (LOSS) Before Extraordinary Charge NACCO Materials Handling Group ...................... $ 12.2 $ 9.7 Hamilton BeachProctor-Silex ......................... (.7) (.2) North American Coal ................................. 4.8 5.3 Kitchen Collection .................................. (.7) (.3) NACCO and Other ..................................... (2.5) (1.5) Minority interest ................................... (.2) (.2) ------- ------- 12.9 12.8 Extraordinary charge, net-of-tax .................... -- (1.3) ------- ------- $ 12.9 $ 11.5 ======= ======= DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE NACCO Materials Handling Group ...................... $ 8.2 $ 8.2 Hamilton BeachProctor-Silex ......................... 4.5 4.0 North American Coal ................................. .5 .4 Kitchen Collection .................................. .2 .2 ------- ------- 13.4 12.8 Project mining subsidiaries ......................... 7.4 7.4 ------- ------- $ 20.8 $ 20.2 ======= ======= CAPITAL EXPENDITURES NACCO Materials Handling Group ...................... $ 13.3 $ 8.2 Hamilton BeachProctor-Silex ......................... 1.5 2.0 North American Coal ................................. .2 .1 Kitchen Collection .................................. .9 .4 ------- ------- 15.9 10.7 Project mining subsidiaries ......................... 2.2 2.0 ------- ------- $ 18.1 $ 12.7 ======= =======
MARCH 31 DECEMBER 31 1996 1995 -------- ----------- TOTAL ASSETS NACCO Materials Handling Group..................... $1,089.2 $1,052.2 Hamilton BeachProctor-Silex........................ 280.2 288.0 North American Coal................................ 39.8 40.7 Kitchen Collection................................. 25.0 25.1 NACCO and Other.................................... 68.8 62.7 -------- -------- 1,503.0 1,468.7 Project mining subsidiaries........................ 428.9 433.3 -------- -------- 1,931.9 1,902.0 Consolidating eliminations......................... (74.7) (68.2) -------- -------- $1,857.2 $1,833.8 ======== ========
NORTH AMERICAN COAL NACoal mines and markets lignite for use primarily as fuel for power generation by electric utilities. The lignite is surface mined in North Dakota, Texas and Louisiana. Total coal reserves approximate 2.1 billion tons with 1.3 billion tons committed to electric utility customers pursuant to long-term contracts. In November 1995, NACoal began providing dragline mining services ("Florida dragline operations") for a limerock quarry near Miami, Florida. The operating results for the Florida dragline operations are included in other mining operations. FINANCIAL REVIEW NACoal's three project mining subsidiaries (Coteau, Falkirk and Sabine) mine lignite for utility customers pursuant to long-term contracts at a price based on actual cost plus an agreed pretax profit per ton. Due to the cost-plus nature of these contracts, revenues and operating profits are impacted by increases and decreases in operating costs, as well as by sales tons. Net income of these project mines, however, is not significantly affected by changes in such operating costs, which include costs of operations, interest expense and certain other items. Because of the nature of the contracts at these mines, operating results are best analyzed in terms of income before taxes and net income. Tons sold by NACoal's four operating lignite mines were as follows for the three months ended March 31:
1996 1995 ---- ---- Coteau Properties ............................ 4.2 4.1 Falkirk Mining ............................... 1.9 1.9 Sabine Mining ................................ .9 .9 Red River Mining ............................. .1 .1 --- --- 7.1 7.0 === ===
Revenues, income before taxes, provision for taxes and net income were as follows for the three months ended March 31:
1996 1995 ----- ----- Revenues Project mines .............................. $54.6 $54.9 Other mining operations .................... 3.6 3.3 ----- ----- 58.2 58.2 Royalties and other ........................ .9 2.3 ----- ----- $59.1 $60.5 ===== ===== Income before taxes Project mines .............................. $6.4 $6.4 Other mining operations .................... .5 .2 ----- ----- Total from operating mines ..................... 6.9 6.6 Royalty and other income, net .................. 1.5 2.7 Headquarters expense ........................... (1.4) (1.7) ----- ----- 7.0 7.6 Provision for taxes ............................ 2.2 2.3 ----- ----- Net income ................................. $4.8 $5.3 ===== =====
NORTH AMERICAN COAL - continued FINANCIAL REVIEW - continued First Quarter of 1996 Compared with First Quarter of 1995 The following schedule details the components of the changes in revenues, income before taxes and net income for the three months ended March 31:
Income Before Net Revenues Taxes Income -------- --------- -------- 1995 $60.5 $7.6 $5.3 Increase (decrease) in 1996 from: Project mines Tonnage volume ........................ 1.0 .1 -- Pass-through costs .................... (1.3) -- -- Other mining operations Tonnage volume ........................ .1 .7 .5 Mix of tons sold ...................... .2 .2 .1 Operating costs ....................... -- (.8) (.5) Other income (expense) ................ -- .1 .1 ----- ---- ---- Changes from operating mines ............. -- .3 .2 Royalties and other income, net .......... (1.4) (1.2) (.8) Headquarters expense ..................... -- .3 .2 Differences between effective and statutory tax rates ................... -- -- (.1) ----- ---- ---- 1996 $59.1 $7.0 $4.8 ===== ==== ====
The volume variance at the other mining operations was due to the Florida dragline operations which began production in November of 1995, somewhat offset by reduced volume at Red River. The Florida dragline operations generated the increase in operating costs at the other mining operations. The reduction in royalties and other income was due to the receipt of the final management fee relating to the Trinity project in 1995 along with the lower level of royalties received relating to former coal properties. NORTH AMERICAN COAL - continued FINANCIAL REVIEW - continued Other Income and Expense and Income Taxes Items of other income (expense) for the three months ended March 31:
1996 1995 ------ ------ Interest income Project mining subsidiaries .................... $ .2 $ .3 Other mining operations ........................ .2 .3 ------ ------ $ .4 $ .6 ====== ====== Interest expense Project mining subsidiaries .................... $ (3.4) $ (4.6) Other mining operations ........................ (.1) (.4) ------ ------ $ (3.5) $ (5.0) ====== ====== Other-net Project mining subsidiaries .................... $ -- $ .1 Other mining operations ........................ .3 .1 ------ ------ $ .3 $ .2 ====== ====== Effective tax rate ............................. 31.9% 30.6%
LIQUIDITY AND CAPITAL RESOURCES NACoal has in place a $50.0 million revolving credit facility. The expiration date of this facility (which currently is September 2000) can be extended one additional year, on an annual basis, upon the mutual consent of NACoal and the bank group. NACoal had $46.2 million of its revolving credit facility available at March 31, 1996. 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 NACoal. These arrangements allow the project mining subsidiaries to pay dividends in amounts equal to their retained earnings. NACoal's capital structure, excluding the project mining subsidiaries, is presented below:
March 31 December 31 1996 1995 -------- ----------- Investment in Project Mining Subsidiaries .......... $ 2.5 $ 3.3 Other Net Tangible Assets .......................... (.4) (2.8) ------- ------- Total Tangible Assets .......................... 2.1 .5 Advances to Parent Company ......................... 17.0 14.9 Debt Related to Parent Advances .................... (3.8) -- Other Debt ......................................... (.2) (.3) ------- ------- Total Debt ..................................... (4.0) (.3) ------- ------- Stockholder's Equity ............................... $ 15.1 $ 15.1 ======= ======= Debt to Total Capitalization ....................... 21% 2%
NACCO MATERIALS HANDLING GROUP NMHG, 98 percent-owned by NACCO, designs, manufactures and markets forklift trucks and related service parts under the Hyster(R) and Yale(R) brand names. FINANCIAL REVIEW The results of operations for NMHG were as follows for the three months ended March 31:
1996 1995 -------- --------- Revenues Americas ...................................... $ 272.2 $ 249.5 Europe, Africa and Middle East ................ 121.3 95.8 Asia-Pacific .................................. 27.3 17.9 -------- --------- $ 420.8 $ 363.2 ======== ========= Operating profit Americas ...................................... $ 16.1 $ 16.9 Europe, Africa and Middle East ................ 10.9 5.8 Asia-Pacific .................................. (.5) 1.0 -------- --------- $ 26.5 $ 23.7 ======== ========= Operating profit excluding goodwill amortization Americas ...................................... $ 18.2 $ 18.8 Europe, Africa and Middle East ................ 11.7 6.5 Asia-Pacific .................................. (.5) 1.1 -------- --------- $ 29.4 $ 26.4 ======== ========= Net income before extraordinary charge ............ $ 12.2 $ 9.7 Extraordinary charge .............................. -- (1.3) -------- --------- Net income .................................... $ 12.2 $ 8.4 ======== =========
NACCO MATERIALS HANDLING GROUP - continued FINANCIAL REVIEW - continued First Quarter of 1996 Compared With First Quarter of 1995 The following schedule details the components of the changes in revenues, operating profit and net income for the first quarter of 1996 compared with 1995:
Operating Net Revenues Profit Income -------- ------- -------- 1995 $ 363.2 $ 23.7 $ 8.4 Increase (decrease) in 1996 from: Unit volume ................................. 41.2 7.4 4.8 Sales mix ................................... 6.6 (4.2) (2.7) Average sales price ......................... 4.7 4.7 3.1 Service parts ............................... 4.7 1.7 1.1 Foreign currency ............................ .4 2.8 1.8 Manufacturing cost .......................... -- (2.9) (1.9) Other operating expense ..................... -- (6.7) (4.4) Other income and expense .................... -- -- (.4) Differences between effective and statutory tax rates ................... -- -- 1.1 Extraordinary charge recorded in 1995 ....... -- -- 1.3 -------- ------- -------- 1996 $ 420.8 $ 26.5 $ 12.2 ======== ======= ========
Unit volumes in the first quarter of 1996 increased 7.2 percent in the Americas, 29.8 percent in Europe and 47.9 percent in Asia-Pacific compared with the same period in 1995. While industry demand is down in the Americas, increased market share and reduced backlog resulted in increased unit shipments. In Europe, the growth in shipments resulted from increased market share and market size. NMHG's backlog of orders at March 31, 1996 was approximately 17,300 forklift truck units compared to the 21,200 forklift truck units at December 31, 1995. Sales mix favorably impacted revenues due to increased sales of higher value product classes, primarily in the Americas. These higher value products however, carry lower margins which along with a shift in sales to lower margin countries in Europe, resulted in a negative impact on operating profit due to sales mix. The two price increases which became effective late in the first quarter of 1995 and in the fourth quarter of 1995 favorably impacted operating results, more than offsetting increases in manufacturing costs. The improvement in service parts sales was primarily from sales in the Americas of service parts for competitors' lift trucks. Operating profit was positively affected by the strength of the dollar and pound sterling relative to the yen. Manufacturing costs increased in the first quarter of 1996 compared with 1995 due to higher product costs and inflation partially offset by higher factory throughput in the Americas. Other operating expenses increased in 1996 due primarily to expenditures related to new product launches and marketing programs. NACCO MATERIALS HANDLING GROUP- continued FINANCIAL REVIEW - continued Other Income and Expense and Income Taxes Below is a detail of other income (expense) for the three months ended March 31:
1996 1995 ------- ------- Interest income .......................... $ .1 $ .2 Interest expense ......................... (8.1) (7.5) Other-net ................................ .5 .2 ------- ------- $ (7.5) $ (7.1) ======= ======= Effective tax rate ....................... 35.7% 41.4%
The higher interest expense in 1996 is due to increased levels of debt to support working capital needs. The improvement in other-net in 1996 results from the Sumitomo-NACCO joint venture which experienced higher earnings in 1996 compared with 1995. During the first quarter of 1996 NMHG recorded a favorable income tax adjustment resulting from the resolution of tax issues from prior years resulting in a reduction of the effective tax rate. Extraordinary Charge The 1995 extraordinary charge of $1.3 million, net of $0.9 million in tax benefits, relates to the write off of deferred financing fees associated with NMHG's former revolving credit facility and senior term loan which was replaced by a new long-term credit agreement. LIQUIDITY AND CAPITAL RESOURCES Expenditures for property, plant and equipment were $13.3 million during the first three months of 1996. It is estimated that NMHG's capital expenditures for the remainder of 1996 will be approximately $43.5 million. The principal sources of financing for these capital expenditures are internally generated funds, bank borrowings and government assistance grants. The company believes it can meet all of its current and long-term commitments and operating needs from operating cash flows and funds available under revolving credit agreements. At March 31, 1996 NMHG had available $60.0 million of its $350.0 million revolving credit facility. In addition, NMHG has separate facilities totalling $30.9 million, of which $13.4 million was available at March 31, 1996. NMHG's capital structure is presented below:
MARCH 31 DECEMBER 31 1996 1995 -------- ----------- Total Tangible Assets ................................ $ 335.5 $ 305.2 Goodwill at Cost ..................................... 439.6 438.9 -------- -------- Total Assets Before Goodwill Amortization ....... 775.1 744.1 Accumulated Goodwill Amortization .................... (74.1) (71.2) Total Debt ........................................... (351.1) (331.9) -------- -------- Stockholders' Equity ................................. $ 349.9 $ 341.0 ======== ======== Debt to Total Capitalization ......................... 50% 49%
HAMILTON BEACHPROCTOR-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 months ended March 31:
1996 1995 ------- ------- Revenues ......................................... $ 67.9 $ 67.0 Operating profit (loss) .......................... $ (1.0) $ 1.4 Operating profit (loss) excluding goodwill amortization ......................... $ (.1) $ 2.1 Net loss ......................................... $ (.7) $ (.2)
First Quarter of 1996 Compared With First Quarter of 1995 The following schedule details the components of the changes in revenues, operating profit (loss) and net loss for the first quarter of 1996 compared with 1995:
Operating Profit Net Revenues (Loss) Loss -------- ------ ----- 1995 $ 67.0 $ 1.4 $ (.2) Increase (decrease) in 1996 from: Unit volume and sales mix ................ 1.9 -- -- Average sales price ...................... (1.0) (1.0) (.6) Manufacturing cost ....................... -- (.1) (.1) Other operating expense .................. -- (1.3) (.8) Other income and expense ................. -- -- .2 Differences between effective and statutory tax rates -- -- .8 ------- ------ ----- 1996 $ 67.9 $ (1.0) $ (.7) ======= ====== =====
HAMILTON BEACHPROCTOR-SILEX - continued FINANCIAL REVIEW - continued The increase in revenues from unit volume is due mainly to higher sales of blenders, coffeemakers and blender accessories somewhat offset by reduced sales of toasters, irons, and toaster ovens. The volume increases were driven by higher sales of products in the "better" product category offset by reduced sales in the "good" and "best" product categories resulting in a minimal improvement in operating profit related to volume. A weak retail environment caused competitive pricing resulting in the unfavorable effect on operating results due to price. The unfavorable variance from other operating expenses was primarily caused by higher selling and engineering expenses and increased amortization related to the 1995 acquisition of SOTEC, S.A. de C.V.. Other Income and Expense and Income Taxes Below is a detail of other income (expense) for the three months ended March 31:
1996 1995 ------- ------- Interest expense ......................... $ (1.3) $ (1.6) Other-net ................................ (.1) (.1) ------- ------- $ (1.4) $ (1.7) ======= ======= Effective tax rate ....................... 69.6% 43.1%
In 1996, HBPS's effective tax rate benefit increased due to the favorable impact of federal income tax adjustments relating to the resolution of tax issues from prior years. LIQUIDITY AND CAPITAL RESOURCES Expenditures for property, plant and equipment were $1.5 million during the first three months of 1996 and are estimated to be $19.4 million for the remainder of 1996. The primary purpose of these expenditures is to increase manufacturing capacity and efficiency and to acquire tooling for new and existing products. In April 1996, HBPS announced plans to build a new facility in Mexico to increase manufacturing capacity for new and existing products. Construction of the new plant is scheduled to begin in the second quarter of 1996 with production scheduled to begin in the first quarter of 1997. An exact location for the new facility has not yet been determined. 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 March 31, 1996, HBPS had $66.5 million available under this Facility. The expiration date of this Facility (which currently is May 1999) may be extended annually for one additional year upon the mutual consent of HBPS and the bank group. At March 31, 1996, HBPS also had $18.5 million available under separate facilities. HAMILTON BEACHPROCTOR-SILEX - continued LIQUIDITY AND CAPITAL RESOURCES - continued HBPS's capital structure is presented below:
MARCH 31 DECEMBER 31 1996 1995 -------- ----------- Total Net Tangible Assets ............................ $ 112.6 $ 131.7 Goodwill at Cost ..................................... 112.3 112.0 -------- -------- Total Assets Before Goodwill Amortization ........ 224.9 243.7 Accumulated Goodwill Amortization .................... (19.5) (18.6) Total Debt ........................................... (73.7) (82.8) -------- -------- Stockholders' Equity ................................. $ 131.7 $ 142.3 ======== ======== Debt to Total Capitalization ......................... 36% 37%
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 First Quarter of 1996 Compared With First Quarter of 1995 The following schedule details the components of the changes in revenues, operating loss and net loss for the first quarter of 1996 compared with 1995:
Operating Net Revenues Loss Loss ------- ------ ----- 1995 $ 12.2 $ (.5) $ (.3) Increase (decrease) in 1996 from: Stores opened in 1995 .................... 1.3 -- -- Comparable stores ........................ (.6) (.3) (.2) Other .................................... -- (.4) (.2) ------- ------ ----- 1996 $ 12.9 $ (1.2) $ (.7) ======= ====== =====
KCI operated 134 stores at March 31, 1996 compared with 120 stores at the end of the first quarter of 1995. KCI did not open any new stores during the first quarter of 1996. A full quarter's results from stores opened in 1995 contributed favorably to revenues in 1996. The results at comparable stores were adversely affected by the continuing difficult retail environment evidenced by lower levels of customer traffic in factory outlet malls. The unfavorable other variance is primarily due to higher payroll and store rent costs. Provision for Income Taxes Kitchen Collection's effective tax rate for the three months ended March 31, 1996 and 1995 was 41.5 percent and 40.8 percent, respectively. LIQUIDITY AND CAPITAL RESOURCES Expenditures for property, plant and equipment were $0.9 million during the first three months of 1996. The expenditures during the first quarter included $0.4 million related to an expansion of KCI's headquarters building. These expenditures will be recovered in the second quarter as part of a sale-leaseback of that building. Estimated capital expenditures for the remainder of 1996 are $0.9 million. The principal source of funds for these capital expenditures is short term borrowings. At March 31, 1996, KCI had available $3.0 million of its $5.0 million line of credit. KITCHEN COLLECTION - continued LIQUIDITY AND CAPITAL RESOURCES - continued KCI's capital structure is presented below:
MARCH 31 DECEMBER 31 1996 1995 ------- ---------- Total Net Tangible Assets ............................ $ 14.3 $ 13.1 Goodwill at Cost ..................................... 4.6 4.6 ------- ------- Total Assets Before Goodwill Amortization ........ 18.9 17.7 Accumulated Goodwill Amortization .................... (.9) (.9) Total Debt ........................................... (7.0) (5.0) ------- ------- Stockholder's Equity ................................. $ 11.0 $ 11.8 ======= ======= Debt to Total Capitalization ..................... 39% 30%
NACCO AND OTHER FINANCIAL REVIEW NACCO and Other includes the parent company operations and Bellaire Corporation ("Bellaire"), a non-operating subsidiary of NACCO. While Bellaire's operations are minor, it has significant long-term liabilities related to closed mine activities, primarily from former eastern U.S. underground coal-mining activities. Cash payments related to Bellaire's obligations, net of internally generated cash, are funded by NACCO and are anticipated to be $3.8 million for the remainder of 1996. The results of operations at NACCO and Other were as follows for the three months ended March 31:
1996 1995 ------- ------- Revenues ....................................... $ .1 $ -- Operating loss ................................. $ (2.5) $ (2.0) Other income (expense), net .................... $ (.1) $ (.4) Net loss ....................................... $ (2.5) $ (1.5)
LIQUIDITY AND CAPITAL RESOURCES Although the subsidiaries have entered into substantial debt agreements, NACCO has not guaranteed the long-term debt or any borrowings of its subsidiaries. The debt agreements at HBPS and KCI allow for the payment of dividends under certain circumstances. The credit agreement at NMHG allows the transfer of up to $25.0 million to NACCO; there have not yet been any such transfers. There are no restrictions for NACoal, 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 stems from amounts available under revolving credit facilities and the utility customers' funding of the project mining subsidiaries. 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 25 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 May 13, 1996 Frank B. O'Brien Frank B. O'Brien Senior Vice President - Corporate Development and Chief Financial Officer Date May 13, 1996 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 Ended March 31 --------------------------- 1996 1995 ------------- ----------- (Amounts in thousands except per share data) Income (loss): Income before extraordinary charge .............. $ 12,919 $ 12,805 Extraordinary charge, net-of-tax ................ -- (1,280) ------------- ---------- Net income ...................................... $ 12,919 $ 11,525 ============= ========== Per share amounts reported to stockholders - Note 1: Income before extraordinary charge .............. $ 1.44 $ 1.43 Extraordinary charge, net-of-tax ................ -- (.14) ------------- ---------- Net income ...................................... $ 1.44 $ 1.29 ============= ========== Primary: Weighted average shares outstanding ............. 8,975 8,958 Dilutive stock options - Note 2 ................. 11 9 ------------- ---------- Totals .................................... 8,986 8,967 ============= ========== Per share amounts Income before extraordinary charge ........ $ 1.44 $ 1.43 Extraordinary charge, net-of-tax .......... -- (.14) ------------- ---------- Net income ................................ $ 1.44 $ 1.29 ============= ========== Fully diluted: Weighted average shares outstanding ............. 8,975 8,958 Dilutive stock options - Note 2 ................. 12 11 ------------- ---------- Totals .................................... 8,987 8,969 ============= ========== Per share amounts Income before extraordinary charge ........ $ 1.44 $ 1.43 Extraordinary charge, net-of-tax .......... -- (.14) ------------- ---------- Net income ................................ $ 1.44 $ 1.29 ============= ==========
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. EX-27 2 ART.5 FDS FOR 1ST QUARTER 10-Q
5 0000789933 NACCO Industries 1000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 32,898 0 279,015 9,045 412,878 747,079 534,721 398,928 1,875,224 543,687 0 0 0 8,984 370,262 1,857,224 557,535 559,476 452,174 527,864 0 0 13,001 19,724 6,657 12,919 0 0 0 12,919 1.44 1.44
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