10-K 1 NACCO FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT Pursuant to Section 13 of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1994 Commission File No. 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 INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 5875 Landerbrook Drive Mayfield Heights, Ohio 44124-4017 ----------------------------------- --------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: (216) 449-9600 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ----------------------------------- --------------------------------- Class A Common Stock, New York Stock Exchange Par Value $1.00 Per Share SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Class B Common Stock, Par Value $1.00 Per Share Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirement for the past 90 days. YES X NO ----- ----- Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Aggregate market value of Class A Common Stock and Class B Common Stock held by non-affiliates as of February 28, 1995: $306,939,372 Number of shares of Class A Common Stock outstanding at February 28, 1995: 7,244,500 Number of shares of Class B Common Stock outstanding at February 28, 1995: 1,719,694 DOCUMENTS INCORPORATED BY REFERENCE (a) The Company's Proxy Statement for its 1995 annual meeting of stockholders, incorporated herein by reference in Part III. 2 PART I ------ ITEM 1. BUSINESS ----------------- General ------- NACCO Industries, Inc. ("NACCO" or the "Company") is a holding company which owns four principal operating subsidiaries: (a) NACCO MATERIALS HANDLING GROUP. The Company owns approximately 97% of the outstanding capital stock of Hyster-Yale Materials Handling, Inc. ("Hyster-Yale"), which is the parent company of NACCO Materials Handling Group, Inc. (For convenience of reference NACCO Materials Handling Group, Inc. and Hyster-Yale hereinafter referred to as "NMHG"). NMHG markets two full lines of forklift trucks and related service parts under the Hyster(R) and Yale(R) brand names. NMHG accounted for 63% and 49% of NACCO's revenues and operating profits, respectively, in 1994. (b) HAMILTON BEACH/PROCTOR-SILEX. The Company owns 80% of Hamilton Beach/Proctor-Silex, Inc. ("Hamilton Beach/Proctor-Silex"), one of the nation's leading manufacturers and marketers of small electric appliances. Hamilton Beach/Proctor-Silex accounted for 20% and 19% of NACCO's revenues and operating profits, respectively, in 1994. (c) NORTH AMERICAN COAL. The Company's wholly owned subsidiary, The North American Coal Corporation, and its affiliated coal companies (collectively, "North American Coal"), mine and market lignite for use primarily as fuel for power generation by electric utilities. North American Coal accounted for 13% and 36% of NACCO's revenues and operating profits, respectively, in 1994. (d) KITCHEN COLLECTION. The Company's wholly owned subsidiary, The Kitchen Collection, Inc. ("Kitchen Collection"), is a national specialty retailer of kitchenware, small electric appliances and related accessories. Kitchen Collection accounted for 3% and 4% of NACCO's revenues and operating profits, respectively, in 1994. Additional information relating to financial and operating data on a segment basis (including NACCO, which reduced operating profits by 8% in 1994) is set forth in Management's Discussion and Analysis of Results of Operations and Financial Condition on pages 24 through 53 contained in Part II hereof and in Note P to the Consolidated Financial Statements on pages F-24 through F-27 contained in Part IV hereof. NACCO was incorporated as a Delaware corporation in 1986 in connection with the formation of a holding company structure for a predecessor corporation organized in 1913. Significant Events ------------------ In August 1994, NACCO and NMHG's two minority stockholders made pro rata cash capital contributions to NMHG aggregating $25.0 million. This cash contribution, along with internally generated funds and borrowings, enabled NMHG to call approximately $48.0 million face value of subordinated debentures at a price of 105. In December 1994, NMHG called an additional $24.0 million face value of subordinated debentures at a price of 105 using internally generated funds and borrowings. At December 31, 1994, there remained outstanding subordinated debentures having a face value of approximately $78.5 million. 2 3 On February 28, 1995, NMHG entered into a new long-term credit agreement to replace its existing bank agreement and to refinance the majority of its existing long-term debt. The new agreement provided the company with an unsecured $350.0 million revolving credit facility to replace its current senior credit facility. The new credit facility has a five-year maturity with extension options and performance-based pricing comparable to its current senior credit facility which provides the company with reduced interest rates upon achievement of certain financial performance targets. With the new credit facility in place, the company has the ability to call the remaining $78.5 million outstanding subordinated debentures in 1995. In anticipation of the call, an extraordinary charge of $3.4 million will be recorded by NMHG in the first quarter of 1995 to write-off unamortized debt issuance costs and anticipated premiums. Effective February 28, 1995, George C. Nebel resigned as President and Chief Executive Officer of Hamilton Beach/Proctor-Silex. While the search for Mr. Nebel's replacement is underway, Hamilton Beach/Proctor-Silex will be managed by Alfred M. Rankin, Jr., Chairman, President and CEO of the Company, as nonexecutive chairman of the Hamilton Beach/Proctor-Silex Board of Directors, with daily operations being overseen by an executive committee comprised of key Hamilton Beach/Proctor-Silex executives from various disciplines. Business Segment Information ---------------------------- A. NACCO Materials Handling Group ------------------------------ NMHG is one of the leading worldwide designers, manufacturers and marketers of forklift trucks which comprise the largest segment of the materials handling equipment industry. NMHG accounted for 53% and 42% of NACCO's assets and liabilities, respectively, as of December 31, 1994, while its operations accounted for 63% and 49% of NACCO's revenues and operating profits, respectively, in 1994. The Industry ------------ Forklift trucks are used in both manufacturing and warehousing environments. The materials handling industry, especially in industrialized nations, is generally a mature industry, which has historically been cyclical. Fluctuations in the rate of orders for forklift trucks reflect the capital investment decisions of the customers, which in turn depend upon the general level of economic activity in the various industries served by such customers. In the most recent business cycle the North American market for forklift trucks reached its lowest level in 1991 and has increased each year since then to a record level in 1994. The European and Japanese markets generally had been in decline since 1990; they both showed some recovery in 1994. During this business cycle, however, the total worldwide lift-truck market was relatively stable. Company Operations ------------------ NMHG maintains product differentiation between Hyster(R) and Yale(R) brands of forklift trucks and distributes its products through separate worldwide dealer networks. Nevertheless, opportunities have been identified and addressed to improve the company's results by integrating overlapping operations and taking advantage of economies of scale in design, manufacturing and purchasing. NMHG provides all design, manufacturing and administrative functions. Products are marketed and sold through two separate dealer networks which retain the Hyster and Yale identities. In Japan, NMHG has a 50% owned joint venture with Sumitomo Heavy Industries Ltd. named Sumitomo-Yale Company Limited ("S-Y"). S-Y performs certain design activities and produces lift trucks and components which it markets in Japan and which are exported for sale by NMHG and its affiliates in the U.S. and Europe. 3 4 Product Lines ------------- NMHG manufactures a wide range of forklift trucks under both the Hyster(R) and Yale(R) brand names. The principal categories of forklift trucks include electric rider, electric narrow-aisle and electric motorized hand forklift trucks primarily for indoor use, and internal combustion engine ("ICE") forklift trucks for indoor or outdoor use. Forklift truck sales accounted for approximately 82%, 80%, and 79% of NMHG's net sales in 1994, 1993, and 1992, respectively. NMHG also derives significant revenues from the sale of service parts for its products. Profit margins on service parts are greater than those on forklift trucks. The large population of Hyster(R) and Yale(R) forklift trucks now in service provides a market for service parts. In addition to parts for its own forklift trucks, NMHG has a program (termed UNISOURCE(TM) in North America and MULTIQUIP(TM) in Europe) designed to supply Hyster dealers with replacement parts for most competing brands of forklift trucks. NMHG has a similar program (termed PREMIER(TM)) for its Yale dealers in the Americas and Europe. Accordingly, NMHG dealers can offer their mixed fleet customers a "one stop" supply source. Certain of these parts are manufactured by and purchased from third party component makers. NMHG also manufactures some of these parts through reverse-engineering of its competitors' parts. Service parts accounted for approximately 18%, 20%, and 21% of NMHG net sales in 1994, 1993, and 1992, respectively. Competition ----------- The forklift truck industry is highly competitive. The worldwide competitive structure of the industry is fragmented by product line and country. The principal methods of competition among forklift truck manufacturers are product performance, price, service and distribution networks. The forklift truck industry competes with alternative methods of materials handling, including conveyor systems, automated guided vehicle systems and hand labor. Global competition is also affected by a number of other factors, including currency fluctuations, variations in labor costs and effective tax rates, and the costs related to compliance with applicable regulations, including export restraints, antidumping provisions and environmental regulations. Although there is no official source for information on the subject, NACCO believes that NMHG is one of the top three manufacturers of forklift trucks in the world. NMHG's position is strongest in North America, where it believes it is the leader in unit sales of electric rider and ICE forklift trucks and has a significant share of unit sales of electric narrow-aisle and electric motorized hand forklift trucks. Although the European market is fragmented and competitive positions vary from country to country, NMHG believes that it has a significant share of unit sales of electric rider and ICE forklift trucks in Western Europe. Although NMHG's current market share in Asia-Pacific, including Japan, is lower than in other geographic areas it has been targeted for additional market share growth. 4 5 Trade Restrictions ------------------ A. United States ------------- Since June 1988, Japanese-built ICE forklift trucks imported into the U.S., with lifting capacities between 2,000 and 15,000 pounds, including finished and unfinished forklift trucks, chassis, frames, and frames assembled with one or more component parts, have been subject to an antidumping duty order. Antidumping duty rates in effect through 1994 range from 4.48% to 56.81% depending on manufacturer or importer. The antidumping duty rate applicable to imports from S-Y is 51.33%, and is likely to continue unchanged for the foreseeable future, unless S-Y and NMHG decide to participate in proceedings to have it reduced. NMHG does not currently import for sale in the United States any forklift trucks or components subject to the antidumping duty order. This antidumping duty order will remain in effect until the Japanese manufacturers and importers satisfy the U.S. Department of Commerce ("Commerce") that they have not individually sold merchandise subject to the order in the United States below foreign market value for at least three consecutive years, or unless Commerce or the U.S. International Trade Commission finds that changed circumstances exist sufficient to warrant the revocation of the order. The legislation implementing the Uruguay round of GATT negotiations passed in 1994 provides that the anti-dumping order will be reviewed for possible revocation in 2000. All of NMHG's major Japanese competitors have either built or acquired manufacturing or assembly facilities in the United States. The company cannot predict with any certainty if there will be any negative effects to the company resulting from the Japanese sourcing of their forklift products in the United States. B. Europe ------ From 1986 through 1994, Japanese forklift truck manufacturers were subject to informal export restraints on Japanese-manufactured electric rider, electric narrow-aisle and ICE forklift trucks shipped to Europe. These informal restraints are not expected to continue in 1995. Several Japanese manufacturers have announced either that they have established, or intend to establish, manufacturing or assembly facilities within the European Community. The company also cannot predict with any certainty if there will be any negative effects to NMHG resulting from the Japanese sourcing of their forklift products in Europe. Product Design and Development ------------------------------ NMHG spent $23.2 million, $20.7 million, and $21.9 million on product design and development activities in 1994, 1993, and 1992, respectively. The Hyster(R) and Yale(R) products are differentiated for the specific needs of their respective customer bases. NMHG continues to pursue opportunities to improve product costs by engineering new Hyster(R) and Yale(R) brand products with component commonality. Certain product design and development activities with respect to ICE forklift trucks and some components are performed in Japan by S-Y. S-Y spent approximately $4.5 million, $4.0 million, and $3.7 million on product design and development in 1994, 1993, and 1992, respectively. Backlog ------- As of December 31, 1994, NMHG's backlog of unfilled orders for forklift trucks was approximately 24,600 units, or $433 million. This compares to the backlog as of December 31, 1993 of approximately 12,100 units, or $206 million. Management believes NMHG's backlog level is consistent with overall increases in industry backlog levels. Backlog represents unit orders to NMHG's manufacturing plants from independent dealerships, retail customers and contracts with the U.S. Government. Although these 5 6 orders are believed to be firm, such orders may be subject to cancellation or modification. Sources ------- NMHG has adopted a strategy of obtaining its raw materials and principal components on a global basis from competitively priced sources. NMHG is dependent on a limited number of suppliers for certain of its critical components, including diesel and gasoline engines and cast-iron counterweights used on certain forklift trucks. There would be a material adverse effect on NMHG if it were unable to obtain all or a significant part of such components, or if the cost of such components was to increase significantly under circumstances which prevented NMHG from passing on such increases to its customers. Distribution ------------ The Hyster(R) and Yale(R) brand products are distributed through separate highly developed worldwide dealer networks. Each also sells directly to certain major accounts. In Japan, forklift truck products are distributed by S-Y. In 1991, Yale reached a ten-year agreement with Jungheinrich Aktiengesellschaft AG ("Jungheinrich"), a German manufacturer of forklift trucks, to continue distribution of Yale brand products in Germany and Austria and to provide to Jungheinrich certain ICE and electric-powered products for sale in other major European countries under the Jungheinrich brand name. Financing of Sales ------------------ Hyster U.S. dealer and direct sales are supported by leasing and financing services provided by Hyster Credit Company, a division of AT&T Commercial Finance Corporation, pursuant to an operating agreement which expires in 2000. NMHG is a minority stockholder of Yale Financial Services, Inc., a subsidiary of General Electric Capital Corporation, which offers Yale U.S. dealers wholesale and retail financing and leasing services for its forklift trucks. Such retail financing and leasing services are also available to Yale national account customers. Employees --------- As of February 28, 1995, NMHG had approximately 6,000 employees. Employees in the Danville, Illinois manufacturing and parts depot operations are unionized, as are tool room employees located in Portland, Oregon. A new three-year contract for the Danville union employees was signed in 1994, which will expire in June, 1997. A new three-year contract was signed in 1994 with the Portland tool room union which will expire in October 1997. Employees at the facilities in Berea, Kentucky; Sulligent, Alabama; and Greenville and Lenoir, North Carolina are not represented by unions. In Europe, shop employees in the Craigavon, Northern Ireland facility are unionized. Employees in the Irvine, Scotland and Nijmegen, The Netherlands facilities are not represented by unions. The employees in Nijmegen have organized a works council, as required by Dutch law, which performs a consultative role on employment matters. NMHG's management believes its current labor relations with both union and non-union employees are generally satisfactory. 6 7 Government Regulation --------------------- NMHG's manufacturing facilities, in common with others in industry, are subject to numerous laws and regulations designed to protect the environment, particularly with respect to disposal of plant waste. NMHG's products are also subject to various industry and governmental standards. NMHG's management believes that such requirements have not had a material adverse effect on its operations. Patents, Trademarks and Licenses -------------------------------- NMHG is not materially dependent upon patents or patent protection. NMHG is the owner of the Hyster(R) trademark, which is currently registered in approximately 51 countries. The Yale(R) trademark, which is used on a perpetual royalty-free basis by NMHG in connection with the manufacture and sale of forklift trucks and related components, is currently registered in approximately 100 countries. NMHG's management believes that its business is not dependent upon any individual trademark registration or license, but that the Hyster(R) and Yale(R) trademarks are material to its business. B. Hamilton Beach/Proctor-Silex ---------------------------- General ------- The Company believes that Hamilton Beach/Proctor-Silex is one of the largest broad line manufacturers and marketers of small electric appliances in North America. Hamilton Beach/Proctor-Silex's products are marketed primarily to retail merchants and wholesale distributors. Hamilton Beach/Proctor-Silex accounted for 17% and 12% of NACCO's assets and liabilities, respectively, as of December 31, 1994, while its operations accounted for 20% and 19% of NACCO's revenues and operating profits, respectively, in 1994. Sales and Marketing ------------------- Hamilton Beach/Proctor-Silex manufactures and markets a wide range of small electric appliances, including motor driven appliances such as blenders, food processors, mixers and electric knives which are primarily marketed under the Hamilton Beach(R) brand name, and heat generating appliances such as toasters, irons, coffeemakers and toaster ovens which are primarily marketed under the Proctor-Silex(R) brand name. The company markets its products primarily in North America, but also sells in, South America, Latin America and Europe. Sales are generated by a network of sales employees and outside sales representatives to mass merchandisers, catalog showrooms, warehouse membership clubs, variety store chains, department stores and other retail outlets. Sales are also made through independent dealers and distributors. Principal customers include Wal-Mart, Target, K-Mart, Service Merchandise, Montgomery Ward, Caldor's, Sears, Canadian Tire and Zellers. The company also manufactures and sells certain private label brand products to third parties for resale. Sales promotional activities are primarily focused on cooperative advertising. Because of the seasonal nature of the markets for small electric appliances, Hamilton Beach/Proctor-Silex's management believes that backlog is not a meaningful indicator of performance nor is it a significant indicator of annual sales. Backlog of orders as of December 31, 1994 was approximately $8.2 million. This compares with the aggregate backlog as of December 31, 1993 of approximately $13.1 million. This backlog represents customer orders; customer orders may be cancelled at any time prior to shipment. Hamilton Beach/Proctor-Silex's warranty program to the consumer consists generally of a limited warranty lasting one or two years, depending on the product, 7 8 for domestic electric appliances, and two years for all Canadian electric appliances. Under these warranty programs, the company may repair or replace, at its option, those products found to contain manufacturing defects. Revenues and operating profit for Hamilton Beach/Proctor-Silex are traditionally greater in the second half of the year as sales of small electric appliances increase significantly with the fall holiday selling season. Because of the seasonality of purchases of its products, Hamilton Beach/Proctor-Silex incurs substantial short-term debt to finance inventories and accounts receivable. Product Design and Development ------------------------------ Hamilton Beach/Proctor-Silex spent $2.7 million in 1994 and 1993 and $2.5 million in 1992 on product design and development activities. Sources ------- The principal raw materials used to manufacture and distribute Hamilton Beach/Proctor-Silex's products are steel, aluminum, plastics and packaging materials. The company's management believes that adequate quantities of raw materials are available from various suppliers. On November 28, 1994, the parent company of one of Hamilton Beach/Proctor Silex's principal suppliers of molded plastic, Southern Tech Plastics Products, Inc., entered into Chapter 11 bankruptcy proceedings. On March 3, 1995, Hamilton Beach/Proctor-Silex entered into a nonbinding letter of intent to purchase the stock of Southern Tech Plastics Products, Inc. Subject to final agreement of the parties and the approval of the United States Bankruptcy Court, it is the company's intention to close this transaction in April and continue molding operations on its own, although there can be no assurance that this transaction will be consummated. Competition ----------- The small electric appliance industry is highly competitive. Based on publicly available information about the industry, Hamilton Beach/Proctor-Silex's management believes it is one of the largest producers of such appliances in North America. As retailers generally purchase a limited selection of small electric appliances, Hamilton Beach/Proctor-Silex competes with other suppliers for retail shelf space and focuses its marketing efforts on retailers rather than consumers. The company's management believes that the principal areas of competition with respect to its products are quality, price, product design, product features, merchandising, promotion and warranty. Hamilton Beach/Proctor-Silex's management believes that it is competitive in all of these areas. Government Regulation --------------------- Hamilton Beach/Proctor-Silex, in common with other manufacturers, is subject to numerous Federal and state health, safety and environmental regulations. The company's management believes that the impact of expenditures to comply with such laws will not have a material adverse effect on Hamilton Beach/Proctor-Silex. The company's products are subject to testing or regulation by Underwriters' Laboratories, the Canadian Standards Association, and various entities in foreign countries which review product design. 8 9 Patents, Trademarks, Copyrights, and Licenses --------------------------------------------- Hamilton Beach/Proctor-Silex holds patents and trademarks registered in the United States and foreign countries for various products. The company's management believes that its business is not dependent upon any individual patent, trademark, copyright or license, but that the Hamilton Beach(R) and Proctor-Silex(R) trademarks are material to its business. Employees --------- As of February 28, 1995, Hamilton Beach/Proctor-Silex's work force consisted of approximately 3,900 employees, none of which are represented by unions except for approximately 30 hourly employees at the Picton, Ontario facility. The Picton, Ontario employees are represented by an employee association which performs a consultative role. C. North American Coal ------------------- General ------- North American Coal is engaged in the mining and marketing of lignite for use primarily as fuel for power generation by electric utilities. Substantially all of the sales by North American Coal are made through wholly owned project mining subsidiaries pursuant to long-term, cost plus a profit per ton contracts. The utility customers have arranged and guaranteed the financing of the development and operation of the project mining subsidiaries. There is no recourse to NACCO or North American Coal for the financing of these subsidiary mines. At December 31, 1994 North American Coal's operating mines consisted of mines where the reserves were acquired and developed by North American Coal, except for the South Hallsville No. 1 Mine whose reserves are owned by the customer. North American Coal also earns royalty income from the lease of various coal and gas properties. For further information as to the financing of the project mining subsidiaries, see Note H to the Consolidated Financial Statements on pages F-15 through F-16 contained in Part IV hereof. Project mining subsidiaries accounted for 24% and 29% of NACCO's assets and liabilities, respectively, as of December 31, 1994, while their operations accounted for 12% and 30% of the Company's revenues and operating profits, respectively, in 1994. Sales and Markets ----------------- The principal customers of North American Coal are electric utilities and a synfuels plant. In 1994, sales to one customer, which supplies coal to four facilities, accounted for 45% of North American Coal's revenues compared with 46% and 44% in 1993 and 1992, respectively. The distribution of sales in the last five years has been as follows:
DISTRIBUTION ----------------------------- Total Tons Sold Electric Synfuels (Millions) Utilities Plant ---------- --------- ------- 1994 27.2 76% 24% 1993 26.5 75% 25% 1992 24.5 74% 26% 1991 21.7 73% 27% 1990 20.8 71% 29%
9 10 The contracts under which the project mining subsidiaries were organized provide that under certain conditions of default the customer(s) involved may elect to acquire the assets (subject to the liabilities) or the capital stock of the subsidiary, for an amount effectively equal to book value. In one case, the customer may elect to acquire the stock of the subsidiary after a specified period of time without reference to default, in exchange for certain payments on coal thereafter mined. 10 11 The location, customer, sales tonnage and contract expiration date for the mines operated by North American Coal in 1994 were as follows:
1994 Sales Mine and Customer Tonnage Contract Mining Operation Location (Plant) (Millions) Expires ---------------- -------- -------- ---------- ------- Project Mining Subsidiaries ------------ The Coteau Freedom (1) Dakota Coal 6.5 2007(2) Properties Mine; Company Company Beulah, (Great Plains North Synfuels Dakota Plant) (surface) Dakota Coal 5.1 2007 Company (Antelope Valley Station) Dakota Coal 3.1 2007 Company (Leland Olds Station) Dakota Coal 1.0 1997 Company (Stanton Station of United Power Association) The Falkirk Falkirk (1) United Power 7.3 2013 Mining Mine; Association/ Company Under- Cooperative wood, Power North Association Dakota (Coal Creek (surface) Station) The Sabine South (1) Southwestern 3.4 2007 Mining Hallsville, Electric Company No. 1 Power Company Mine; (Henry W. Pirkey Halls- Power Plant) ville, Texas (surface) Other ----- Red River Oxbow Mine; Central .8 (3) 2001 Mining Coushatta, Louisiana Company Louisiana Electric (Joint Venture (surface) Company (Dolet with Phillips Hills Power Plant) Coal Company) - see following page for explanation of note references.
11 12 Notes to preceding table: ------------------------- (1) The contracts for these mines require the customer to cover the cost of the ongoing replacement and upkeep of the plant and equipment of the mine. (2) Although the term of the existing coal sales agreement terminates in 2007, the term may be extended for six (6) additional periods of five years, or until 2037, at the option of The Coteau Properties Company. (3) The amount represents the total (100%) of the 1994 joint venture tonnage. Under terms of a lignite mining agreement entered into in 1985 with Utility Fuels, Inc. ("UFI"), a subsidiary of Houston Industries Incorporated, North American Coal has been retained to design, develop, construct and operate the proposed Trinity Mine in the Malakoff-Cayuga reserves near Malakoff, Texas. The Trinity Mine was expected to produce from 4.5 to 6.5 million tons of lignite annually. After several delays, however, the proposed Malakoff Generating Station was cancelled in July, 1994. North American Coal and its wholly-owned subsidiary, North American Coal Royalty Company ("Royalty Company"), have received certain management fees, minimum royalties and other payments in connection with the future development of the Trinity Mine project. In December 1992 the Lignite Lease and Sublease Agreement under which the minimum royalties were received was amended. The parties agreed that, in light of the delayed development of this mining project, effective January 1, 1993 UFI was no longer obligated to pay minimum royalties to Royalty Company. Termination of this obligation reduces North American Coal's annual net income approximately $2.4 million, after tax. Under the original agreement, these minimum royalty payments would have terminated at the end of the year 2005. Government Regulation --------------------- North American Coal, in common with other coal producers, continues to be subject to Federal and state health, safety and environmental regulations. The 1995 expenditures which will be required for compliance with the provisions of governmental regulations, including mined land reclamation and other air and water pollution abatement requirements, are estimated at $1.2 million for certain closed mines and are included in Self-Insurance Reserves and Other in NACCO's Consolidated Financial Statements in this Annual Report on Form 10-K. The active operations are required to make certain additional capital expenditures to comply with such governmental regulations, which expenditures will be recovered under the terms of the coal sales agreements with the utility customers. North American Coal's management believes that the Clean Air Act Amendments, which became effective in 1990, will not have a material adverse effect on its current operations, because substantially all of the power generating facilities operated or supplied by North American Coal's customers meet or exceed the requirements of the Clean Air Act. The Federal Energy Regulatory Commission ("FERC") issued Order 636, effective in May 1992, which requires gas pipeline companies to separate their gas sales and gas transportation functions. As a result of this Order, the nation's natural gas pipeline companies, including the four which purchase gas produced by the Great Plains Synfuels Plant (the 12 13 "Synfuels Plant"), which is supplied by the company's Coteau mining subsidiary, have much less need for gas supply under contract and are actively seeking to restructure or terminate many supply contracts. The four (4) pipeline companies which purchase gas from the Synfuels Plant have reached a tentative settlement agreement with the plant's operator, Dakota Gasification Company ("DGC"), over the dispute regarding their gas purchase contracts. Under the settlement agreement, the pipeline companies will pay DGC market-based prices, plus a fixed monthly demand payment for seven years, for the gas. FERC must approve the settlement with each of the four (4) pipeline companies. In December 1994, FERC approved the settlement with one of the pipeline companies. The affected customers of the four pipelines have been unsuccessful to date in court challenges to the arrangements although several challenges are presently pending on rehearing. Based on regulatory and judicial consideration to date, it does not appear that continued operation of the Synfuels Plant and Coteau's supply of coal to the Plant will be adversely affected in the near future. Coteau sold approximately 6.5 million tons of lignite to the Synfuels Plant in 1994. Competition ----------- The coal industry competes with other sources of energy, particularly oil, gas, hydro-electric power and nuclear power. Among the factors that affect competition are the price and availability of oil and natural gas, environmental considerations, the time and expenditures required to develop new energy sources, the cost of transportation, the cost of compliance with governmental regulation of operations, and the impact of federal energy policies. The ability of North American Coal to market and develop its reserves will depend upon the interaction of these factors. There is no official source of information on the subject, but company management believes that North American Coal is the seventh largest commercial coal producer in the United States. Employees --------- As of February 28, 1995, North American Coal had approximately 880 employees. D. Kitchen Collection ------------------ Kitchen Collection(R) is a national specialty retailer of kitchenware, small electric appliances and related accessories which operated 119 retail stores as of February 28, 1995. Stores are located primarily in factory outlet complexes that feature merchandise of highly recognizable name-brand manufacturers. Kitchen Collection's product mix includes a broad line of appliances from leading manufacturers, including Hamilton Beach/Proctor-Silex appliances. Kitchen Collection introduced a new store format in 1994, named Hearthstone(TM). These stores carry a distinctive mix of merchandise for the entire home, with particular emphasis on gift items and home decor. The product mix and store design at Hearthstone are distinctively different from the traditional Kitchen Collection store. This market differentiation will allow the two store formats to coexist within the same market. 13 14 Kitchen Collection accounted for 1% of NACCO's assets and liabilities as of December 31, 1994, while its operations accounted for 3% and 4% of NACCO's revenues and operating profits, respectively, in 1994. Item 2. Properties ------------------- A. NMHG ---- The following table summarizes certain information with respect to the principal manufacturing, distribution and office facilities owned or leased by NMHG.
Location Owned Leased Function/Principal Products -------- ----- ----- --------------------------- Basingstoke, England X Hyster forklift truck marketing and sales operations for Europe, the Middle East and Africa Berea, Kentucky X Manufacture of forklift trucks Craigavon, Northern X Manufacture of forklift trucks Ireland Danville, Illinois X Manufacture of forklift trucks, components and service parts Danville, Illinois X Distribution of service parts for both Hyster and Yale forklift trucks Danville, Illinois X Hyster forklift truck marketing and sales operations for the Americas Flemington, X Yale forklift truck marketing New Jersey and sales operations for the Americas and certain NMHG engineering operations Greenville, North X Manufacture of forklift trucks; Carolina NMHG manufacturing and other staff operations for the Americas Irvine, Scotland X Manufacture of forklift trucks and other staff operations for the Europe Lenoir, North X Manufacture of component Carolina parts for forklift trucks
14 15 Nijmegen, The X Manufacture of forklift Netherlands trucks and component parts; distribution of service parts for forklift trucks Portland, Oregon X Technical center for testing of prototype equipment and component parts Portland, Oregon X NMHG corporate headquarters Portland, Oregon X Manufacture of production tooling and prototype units Sao Paulo, Brazil X Manufacture of forklift trucks; distribution of service parts for forklift trucks Sulligent, Alabama X Manufacture of component parts for forklift trucks Sydney, Australia X Assembly of forklift trucks; distribution of service parts for forklift trucks and staff operations for Asia- Pacific Wolverhampton, X Yale forklift truck England marketing and sales operations for Europe
In 1994, NMHG sold one of its facilities located in Danville, Illinois and is currently leasing back a portion of the facility for its Hyster marketing and sales operations. 15 16 B. Hamilton Beach/Proctor-Silex ---------------------------- The following table summarizes certain information with respect to the principal manufacturing, distribution and office facilities owned or leased by Hamilton Beach/Proctor-Silex.
Location Owned Leased Function/Principal Products -------- ----- ------ --------------------------- Collierville, X Distribution center Tennessee El Paso, Texas X Distribution center Glen Allen, Virginia X Corporate headquarters Juarez, Chihuahua, X Two assembly plants Mexico for coffeemakers,irons and popcorn pumpers Miami, Florida X Distribution center Mt. Airy, North X Manufacture of toasters and Carolina toaster ovens Mt. Airy, North X Distribution center Carolina Picton, Ontario, X Distribution center Canada Southern Pines, X Manufacture of iron North Carolina components; service center for customer returns; catalog sales center; parts distribution center Toronto, Ontario, X Proctor-Silex, Canada sales Canada and administration headquarters Washington, North X Distribution and Carolina warranty center; manufacture of products; plastics molding facility
Sales offices are also leased in several cities in the United States and Canada. C. North American Coal ------------------- North American Coal's proven and probable coal reserves and deposits (owned in fee or held under leases which generally remain in effect until exhaustion of the reserves if mining is in progress) are estimated at approximately 2.2 billion tons, approximately 81% of which are lignite deposits in North Dakota. Reserves are estimates of quantities of coal, made by the company's geological and engineering staff, that are considered mineable in the future using existing operating methods. Developed reserves are those which have been allocated to mines which are in operation; all other reserves are classified as 16 17 undeveloped. The table which follows gives detailed information as to North American Coal's in-place reserves as of December 31, 1994 for the mines listed under Item 1 "North American Coal" on page 11. The reserves of the South Hallsville No. 1 Mine, which are listed on page 11, are owned and controlled by the customer and, therefore, have not been listed in the following table. Additional information concerning North American Coal is set forth in Item 1 "North American Coal".
Reserves (Millions of Tons) --------------------------- Average Sulfur Committed Average Content Under BTUs Per Unit Contract Uncommitted per lb. of Weight -------- ----------- ------- --------- Developed --------- Freedom Mine, North Dakota 507.5 6,767 0.8% Falkirk Mine, North Dakota 674.2 6,200 0.6% Oxbow Mine, Louisiana (1) 2.8 6.4 6,722 0.7% ------- ------ Total Developed 1,184.5 6.4 Undeveloped ----------- North Dakota 571.2 6,428 0.7% Texas 125.8 125.2 6,208 0.9% Eastern 64.5 79.7 12,070 3.3% ------- ----- Total Undeveloped 190.3 776.1 ------- ----- 1,374.8 782.5 ======= ===== (1) These amounts represent the total (100%) of the joint venture reserves.
D. Kitchen Collection ------------------ Kitchen Collection owns the building housing its corporate headquarters, a warehouse/distribution facility and a retail store in Chillicothe, Ohio. It leases warehouse/distribution facilities in Chillicothe, Ohio and the remainder of its retail stores. A typical store is approximately 3,300 square feet. 17 18 Item 3. Legal Proceedings -------------------------- Neither the Company nor any of its subsidiaries is a party to any material pending legal proceeding other than ordinary routine litigation incidental to its respective business. Item 4. Submission of Matters to a Vote of Security Holders ------------------------------------------------------------ No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders of the Company. Item 4A. Executive Officers of the Registrant ---------------------------------------------- The information under this Item is furnished pursuant to Instruction 3 to Items 401(b) and 401(c) of Regulation S-K. The table on the following pages sets forth the name, age, current position and principal occupation and employment during the past five years of the Company's executive officers. 18 19 Officers of the Company
Name Age Current Position Other Positions ---- --- ---------------- --------------- Alfred M. Rankin, Jr. 53 Chairman, President, and Chief Executive Officer From May 1991 to May 1994, of NACCO (since May 1994) President and Chief Executive Officer of NACCO. From prior to 1990 to May 1991, President and Chief Operating Officer of NACCO. Frank B. O'Brien 48 Senior Vice President - Corporate From January 1993 to Development and Chief Financial Officer of December 1993, NACCO (since January 1994) Senior Vice President - Corporate Development of NACCO. From prior to 1990 to December 1992, see Vice President - Corporate Development of NACCO. Steven M. Billick 38 Vice President and Controller From prior to 1990 to July 1991, of NACCO (since July 1991) Partner, Deloitte & Touche (accounting firm). Charles A. Bittenbender 45 Vice President, General Counsel and From prior to 1990 to June 1990, Secretary of NACCO (since July 1990) Deputy General Counsel, G.D. Searle & Co. (research-based manufacturer and marketer of pharmaceutical products).
19 20 Principal Officers of the Company's Subsidiaries A. NMHG ----
Name Age Current Position Other Positions ---- --- ---------------- --------------- Reginald R. Eklund 54 President and Chief Executive From August 1993 to September Officer of NMHG (since 1993, Vice President of Hyster and September 1992) Yale. From September 1992 to August 1993, President and Chief Executive Officer of Hyster. From prior to 1990 to September 1992, President and Chief Operating Officer of NMHG. From prior to 1990 to August 1993, President and Chief Executive Officer of Yale. Bergen I. Bull 55 Vice President, General Counsel From November 1990 to December and Secretary of NMHG 1993, Vice President and Assistant (since December 1993) Secretary of Yale. From prior to 1990 to December 1993, Vice President, Corporate Administration, General Counsel and Secretary of Hyster. G. Michael Decker 53 Vice President, Finance and Chief From February 1993 to December Financial Officer of NMHG 1993, Vice President, Finance (since February 1993) and Chief Financial Officer of Hyster and Yale. From 1991 to February 1993, Vice President, Finance, Secretary and Chief Financial Officer for Doehler Jarvis Ltd. Partnership (casting manufacturer). From prior to 1990 to 1991, Senior Vice President Finance Treasurer and Chief Financial Officer for The Manitowoc Company, Inc. (manufacturer serving heavy construction, food service and shipbuilding industries). Julie C. Hui 38 Controller of NMHG (since From 1992 to January 1995, January 1995) Controller, Bun Brown Corporation (manufacturer of micro electronics and systems products). In 1991, Director of Accounting and Tax of Bun Brown. From prior to 1990 to December 1990, Tax Manager of Bun Brown. Jeffrey C. Mattern 42 Treasurer of NMHG (since From August 1992, Treasurer of August 1992) Hyster and Yale. From prior to 1990 to July 1992, Assistant Treasurer for Harnischfeger Industries, Inc. (manufacturer of papermaking machinery, mining and materials handling equipment). Frank G. Muller 53 Vice President, President Americas From February 1993 to December for NMHG (since May 1993) 1993, Vice President of Hyster and Yale. From May 1992 to May 1993, Vice President, Manufacturing, Americas for NMHG. From prior to 1990 to May 1992, Vice President, Manufacturing, Yale. Victoria L. Rickey 42 Vice President, Managing Director, From 1993 to January 1995, NMHG Europe (since January 1995) Senior Vice President International Business Group, J.I. Case (manufacturer of agricultural and construction equipment). From prior to 1990 to 1993, Vice President, Agricultural Equipment of J.I. Case. Graham D. Tribe 52 Vice President, Managing Director, From prior to 1990 to May 1994, NMHG Asia-Pacific Managing Director, Hyster (since May 1994) Australia Pty. Ltd.
20 21 Principal Officers of the Company's Subsidiaries ------------------------------------------------ B. HAMILTON BEACH/PROCTOR-SILEX --------------------------------
Name Age Current Position Other Positions ---- --- ---------------- --------------- Judith B. McBee 47 Executive Vice President - From October 1990 to September Marketing of Hamilton Beach/ 1994, Executive Vice President - Proctor-Silex (since October 1994) Marketing/Sales of Hamilton Beach/Proctor Silex. From January 1990 to October 1990, Executive Vice President - Marketing/Sales of Proctor-Silex. From prior to 1990 to January 1990, Executive Vice President - Marketing of Proctor-Silex. Paul C. Smith 48 Senior Vice President - Sales of From prior to 1990 to September Hamilton Beach/Proctor-Silex 1994, Vice President and General (since October 1994) Manager, Consumer Markets Division, Fuji Photo Film U.S.A. (manufacturer of photographic film). Charles B. Hoyt 47 Vice President - Finance and From August 1990 to October 1990, Chief Financial Officer of Vice President and Chief Financial Hamilton Beach/Proctor-Silex Officer of Proctor-Silex. From (since October 1990) prior to 1990 to August 1990, Vice President - Finance and Treasurer of Yale. Ronald C. Eksten 51 Vice President, General Counsel From prior to 1990 to December and Secretary of Hamilton Beach/ 1991, Associate General Counsel, Proctor-Silex (since December 1991) Continental Can Company, Inc. (an international manufacturer of packaging products). Michael J. Morecroft 52 Vice President, Engineering/Product From prior to 1990 to October Development of Hamilton Beach/ 1990, Vice President, Engineering Proctor-Silex (since October 1990) of Hamilton Beach Inc. Jack J. Pountney 66 Vice President of Hamilton Beach/ From prior to 1990, President, Proctor-Silex - President, Proctor-Silex Proctor-Silex Canada. Canada (since June 1993) James H. Taylor 37 Vice President and Treasurer of From prior to 1990 to October Hamilton Beach/Proctor-Silex 1990, Vice President and Treasurer (since October 1990) of Proctor-Silex.
21 22 Principal Officers of the Company's Subsidiaries ------------------------------------------------ C. North American Coal -----------------------
Name Age Current Position Other Positions ---- --- ---------------- --------------- Clifford R. Miercort 55 President of North American Coal (since prior to 1990) and Chief Executive Officer of North American Coal (since April 1990) H. Dean Jacot 52 Executive Vice President and Chief Operating Officer of North American Coal (since prior to 1990) Herschell A. Cashion 52 Senior Vice President - Business From prior to 1990 to August 1994, Development of North American Coal Vice President - Business (since August 1994) Development of North American Coal Charles B. Friley 53 Vice President and Chief Financial From April 1992 to October 1994, Officer (since February 1995) Senior Vice President of Phillips Alaska Natural Gas Company. From prior to 1990 to April 1992, Vice President of Phillips 66 Natural Gas Company. Thomas A. Koza 48 Vice President - Law and From prior to 1990 to July 1990, Administration of North Vice President, General Counsel American Coal; Secretary of and Secretary of NACCO. North American Coal (since prior to 1990) K. Donald Grischow 47 Controller of North American Coal and Treasurer of North American Coal (since prior to 1990)
22 23 Principal Officers of the Company's Subsidiaries ------------------------------------------------ D. Kitchen Collection ------------------
Name Age Current Position Other Positions ---- --- ---------------- --------------- Randall D. Lynch 48 President and Chief Executive Officer of Kitchen From prior to 1990 to June 1991, Collection (since June 1991) President of Kitchen Collection. Randolph J. Gawelek 47 Executive Vice President and Secretary of Kitchen Collection (since prior to 1990)
23 24 PART II ------- Item 5. Market for Registrant's Common Equity and Related ------------------------------------------------------------- Stockholder Matters ------------------- NACCO Industries, Inc. Class A common stock is traded on the New York Stock Exchange. The ticker symbol is NC. Because of transfer restrictions, no trading market has developed, or is expected to develop, for the Company's Class B common stock. The Class B common stock is convertible into Class A common stock on a one-for-one basis. The high and low market prices for the Class A common stock and dividends per share for both classes of stock for the past two years are presented in the table below:
1994 ----------------------------- Sales Price Cash ----------------------------- High Low Dividend ------ -------- -------- First quarter $58.13 - $48.38 16.5 cents Second quarter $60.75 - $45.75 17.0 cents Third quarter $63.00 - $52.88 17.0 cents Fourth quarter $64.00 - $46.63 17.0 cents
1993 ----------------------------- Sales Price Cash ----------------------------- High Low Dividend ------ -------- -------- First quarter $55.00 - $44.00 16.0 cents Second quarter $58.25 - $50.00 16.5 cents Third quarter $52.13 - $43.63 16.5 cents Fourth quarter $52.00 - $42.00 16.5 cents
At December 31, 1994, there were approximately 900 Class A common stockholders of record and 600 Class B common stockholders of record. 24 25 Item 6. Selected Financial Data -------------------------------- NACCO Industries, Inc. and Subsidiaries
Year Ended December 31 -------------------------------------------------------------------------- 1994 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- ---------- (In thousands, except per share and employee data) Total revenues $1,864,887 $1,549,371 $1,483,779 $1,369,195 $1,384,993 $1,187,570 Operating profit $ 135,096 $ 93,384 $ 101,280 $ 94,532 $ 106,484 $ 125,363 Income before extraordinary $ 45,272 $ 11,593 $ 22,868 $ 20,038 $ 28,189 $ 55,820 charge Extraordinary charge, net- of-tax (3,218) (3,292) (110,000) ---------- ---------- ---------- ---------- ---------- ---------- Net income $ 42,054 $ 8,301 $ (87,132) $ 20,038 $ 28,189 $ 55,820 (loss) Total assets $1,694,322 $1,642,493 $1,684,889 $1,629,663 $1,767,098 $1,724,767 Notes payable $ 286,717 $ 357,788 $ 459,906 $ 442,279 $ 533,692 $ 605,874 Stockholders $ 279,391 $ 235,626 $ 238,316 $ 350,188 $ 353,293 $ 303,986 equity Total employees 11,086 10,879 10,497 9,858 11,111 10,725 Per share of stock: Income before extraordinary $ 5.06 $ 1.30 $ 2.57 $ 2.26 $ 3.18 $ 6.29 charge Extraordinary charge, net- of-tax (0.36) (0.37) (12.37) ---------- ---------- ---------- ---------- ---------- ---------- Net income $ 4.70 $ 0.93 $ (9.80) $ 2.26 $ 3.18 $ 6.29 (loss) Cash dividends $ .675 $ .655 $ .635 $ .615 $ .595 $ .575 Market value $ 48.38 $ 51.50 $ 51.75 $ 47.50 $ 30.25 $ 55.50 Stockholders equity $ 31.21 $ 26.35 $ 26.67 $ 39.43 $ 39.79 $ 34.25 Average shares outstanding 8,948 8,938 8,891 8,878 8,877 8,874
25 26 Item 7. Management's Discussion and Analysis of Financial ------------------------------------------------------------ Condition and Results of Operations ----------------------------------- (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) FINANCIAL SUMMARY Income before extraordinary charge for 1994 was $45.3 million, or $5.06 per share, compared with income before extraordinary charge of $11.6 million, or $1.30 per share, in 1993. Extraordinary charges of $3.2 million and $3.3 million, net-of-tax, or $0.36 per share and $0.37 per share, were recognized in 1994 and 1993, respectively, resulting in net income of $42.1 million, or $4.70 per share in 1994 and $8.3 million or $0.93 per share in 1993. These extraordinary charges relate to the retirement of portions of NACCO Materials Handling Group's Hyster-Yale 12 3/8% subordinated debentures and are discussed in more detail in Note B to the consolidated financial statements on page F-10 and in this discussion and analysis on page 38. Income before extraordinary charge for 1992 was $22.9 million, or $2.57 per share. In 1992, an extraordinary charge of $110.0 million, or $12.37 per share, was recognized as a result of the Coal Industry Retiree Health Benefit Act of 1992. The 1992 extraordinary charge is discussed in more detail in Note B to the consolidated financial statements on page F-10 and in this discussion and analysis on page 53. SEGMENT INFORMATION NACCO Industries, Inc. ("NACCO," the parent company) has four operating subsidiaries, The North American Coal Corporation ("North American Coal"), NACCO Materials Handling Group, Inc. ("NMHG"), Hamilton Beach/Proctor-Silex, Inc. ("Hamilton Beach/ Proctor-Silex"), and The Kitchen Collection, Inc. ("Kitchen Collection"). These four subsidiaries function in distinct business environments, and the results of operations and financial condition are best discussed at the subsidiary level. Results by segment as reported in the financial statements are summarized in Note P to the consolidated financial statements on page F-24 of this annual report. 26 27 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) 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 sales tons. Net income of these project mines, however, is not significantly affected by changes in such operating costs. These operating costs include costs of operations, interest expense and certain other income and expense items. Because of the nature of the contracts at these mines, their results are best analyzed in terms of income before taxes and net income. North American Coal s results 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. Tons sold by North American Coal's four operating mines were as follows for the year ended December 31:
1994 1993 1992 ---- ---- ---- Coteau Properties 15.7 14.9 13.7 Falkirk Mining 7.3 7.6 7.4 Sabine Mining 3.4 3.5 2.8 Red River Mining .8 .5 .6 -- -- -- 27.2 26.5 24.5 ==== ==== ====
Revenues, income before taxes, provision for taxes and net income were as follows for the year ended December 31:
1994 1993 1992 ---- ---- ---- Revenues Coteau $113.5 $106.5 $93.1 Falkirk 61.3 59.5 54.8 Sabine 51.8 50.4 43.4 Red River 13.9 10.0 10.6 ---- ---- ---- 240.5 226.4 201.9 Royalties and other 9.7 6.9 10.0 --- --- ---- $250.2 $233.3 $211.9 ====== ====== ======
27 28 Income before taxes Coteau $10.5 $11.1 $10.2 Falkirk 9.8 9.8 9.1 Sabine 3.3 3.3 2.6 Red River 2.3 1.1 1.4 --- --- --- Total from operating mines 25.9 25.3 23.3 Royalty and other income, net 10.5 7.7 9.6 Headquarters expense (6.0) (5.2) (4.9) ---- ---- ---- 30.4 27.8 28.0 Provision for taxes 9.4 10.4 7.9 --- ---- --- Net income $21.0 $17.4 $ 20.1 ===== ===== =====
28 29 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) FINANCIAL REVIEW - Continued NORTH AMERICAN COAL 1994 Compared with 1993 The following schedule details the components of the changes in revenues, income before taxes and net income for 1994 compared with 1993:
Income Net Revenues Before Taxes Income -------- ------------ ------ 1993 $233.3 $27.8 $17.4 Coteau Tonnage volume 4.9 .6 .4 Mix of tons sold (.5) (.5) (.3) Agreed profit per ton (.9) (.9) (.6) Pass-through costs 3.4 Falkirk Tonnage volume (2.4) (.4) (.3) Agreed profit per ton .3 .3 .2 Pass-through costs 3.7 Sabine Tonnage volume (1.4) (.1) (.1) Agreed profit per ton .1 .1 Pass-through costs 2.8 Red River Tonnage volume 6.6 1.6 1.0 Mix of tons sold (1.6) (1.6) (1.0) Average selling price (1.1) (1.1) (.7) Operating costs 3.4 2.2 Other income (expense) (1.2) (.8) ------ ------ ------ Variances from operating mines 13.9 .2 -- Royalties and other income, net 3.0 3.2 2.1 Headquarters expense (.8) (.5) Differences between effective and statutory tax rates 2.0 ------ ------ ------ 1994 $250.2 $30.4 $21.0 ====== ===== =====
29 30 Increases in customer demand due to higher customer fuel requirements resulted in increased tonnage volume at Coteau and Red River. In 1993, Falkirk's customer purchased additional tonnage for purposes of increasing the stockpile at the generating station which resulted in unfavorable tonnage volume in 1994 compared with 1993. At Red River, tons sold in excess of amounts specified in the contract yield a lower price, resulting in an unfavorable sales mix in 1994. The increased tonnage at Red River resulted in volume efficiencies that favorably impacted operating costs. The increase in royalties and other income in 1994 is from royalties received relating to former coal properties, which royalties were not received in 1993. 30 31 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NORTH AMERICAN COAL - Continued FINANCIAL REVIEW - Continued 1993 Compared with 1992 The following schedule details the components of the changes in revenues, income before taxes and net income for 1993 compared with 1992:
Income Net Revenues Before Taxes Income -------- ------------ ------ 1992 $ 211.9 $28.0 $20.1 Coteau Tonnage volume 8.2 .9 .6 Mix of tons sold (.3) (.3) (.2) Agreed profit per ton .2 .2 .1 Pass-through costs 5.4 Falkirk Tonnage volume 1.3 .2 .1 Agreed profit per ton .4 .4 .3 Pass-through costs 3.0 Sabine Tonnage volume 9.3 .6 .4 Agreed profit per ton .1 .1 .1 Pass-through costs (2.5) Red River Tonnage volume (1.8) (.5) (.3) Mix of tons sold .1 .1 .1 Average selling price 1.1 1.1 .7 Operating costs (1.2) (.8) Other income (expense) .3 .1 ------- ---- ----- Variances from operating mines 24.5 1.9 1.2 Royalties and other income, net (3.1) (1.8) (1.1) Headquarters expense (.3) (.2) Differences between effective and statutory tax rates (2.6) -------- ----- ----- 1993 $ 233.3 $27.8 $17.4 ======== ===== =====
31 32 The increase in revenues due to pass-through costs at Coteau primarily related to increased interest expense of $5.8 million. The loss of the minimum royalty payments (see "Other" which follows) related to Royalty Company reduced revenues and operating profit by approximately $3.6 million. OTHER INCOME AND EXPENSE Below is a detail of other income (expense) for the year ended December 31:
1994 1993 1992 ------ ------ ------ Interest income Project mining subsidiaries $ .8 $ .5 $ .5 Other mining operations 2.2 1.6 1.6 --- --- --- $ 3.0 $ 2.1 $ 2.1 ====== ===== ===== Interest expense Project mining subsidiaries $(18.6) (18.5) (13.2) Other mining operations (1.3) (.8) (1.0) ---- --- ---- $(19.9) $(19.3) $(14.2) ====== ====== ====== Other-net Project mining subsidiaries $ .4 $ .2 $ 1.1 Other mining operations (1.5) (.2) (2.5) ---- --- ---- $ (1.1) $ --- $ (1.4) ====== ====== =======
PROVISION FOR INCOME TAXES North American Coal's effective tax rate for 1994, 1993 and 1992 was 31.1 percent, 37.9 percent and 28.7 percent, respectively. In the third quarter of 1993, North American Coal recognized additional tax expense to reflect the impact on their deferred tax balances of the one percent increase in the statutory tax rate. This adjustment increased North American Coal's effective tax rate in 1993 relative to 1994 and 1992. OTHER In December 1992, North American Coal Royalty Company ("Royalty Company"), a wholly owned subsidiary of North American Coal, and a public utility company agreed to amend an existing Lignite Lease and Sublease Agreement. The parties agreed, in light of the delayed development of the mining project to which such leases were assigned, the utility was no longer obligated to pay Royalty Company minimum royalties beginning January 1, 1993. These royalties amounted to approximately $3.6 million per year and termination of these payments reduced North American Coal's annual net income approximately $2.4 million, after tax, beginning in 1993. 32 33 RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NORTH AMERICAN COAL - Continued FINANCIAL REVIEW - Continued 1995 OUTLOOK North American Coal's existing mines are expected to produce about the same number of total tons in 1995 as in 1994, as customer requirements appear level with the previous year. Several events have, however, occurred during 1994 which will provide for future growth at North American Coal. In the company's first venture outside of coal, a mining services contract was signed in December 1994 with White Rock Quarries near Miami, Florida, which produces limestone. North American Coal has contracted to provide mining services on the limestone reserves owned by White Rock. The project will begin generating revenues in 1996. In June 1994, Coteau amended the coal sales agreement with its customer, which gives Coteau the option to extend its contract for up to an additional 30 years, through 2037. This contract amendment was signed in exchange for reduced profits of approximately $1.0 million per year for ten years beginning in 1994. North American Coal is continuing its contract negotiations relating to a contract mining agreement for the Salt River Project in western New Mexico, and is continuing to look for other growth opportunities. 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 1997) 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 $35.0 million of its revolving credit facility available at December 31, 1994. 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. Expenditures for property, plant and equipment by the project mining subsidiaries were $11.7 million in 1994 and $23.0 million in 1993, and are anticipated to be approximately $15.0 million in 1995. These expenditures relate to the development and improvement of the project mining subsidiaries' mines and are financed by the utility customers. 33 34 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NACCO MATERIALS HANDLING GROUP NACCO Materials Handling Group, 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 year ended December 31:
1994 1993 1992 ---- ---- ---- Revenues Americas $ 828.1 $645.4 $ 579.0 Europe, Africa and Middle East 289.7 220.5 251.5 Asia - Pacific 61.1 42.3 35.4 ---- ---- ---- $1,178.9 $ 908.2 $ 865.9 ======== ======= ======== Operating profit Americas $ 45.5 $ 40.3 $14.9 Europe, Africa and Middle East 15.1 (2.4) 28.7 Asia - Pacific 5.2 1.7 .7 --- --- -- $ 65.8 $ 39.6 $44.3 ======== ====== ===== Operating profit excluding goodwill amortization Americas $ 53.4 $ 48.2 $22.8 Europe, Africa and Middle East 17.9 .4 31.5 Asia - Pacific 5.3 1.8 .8 --- --- -- $ 76.6 $ 50.4 $55.1 ======== ====== ===== Net income (loss) before extraordinary charge $ 18.7 $ (5.1) $ 1.3 Extraordinary charge (3.2) (3.3) ---- ---- ---- Net income (loss) $ 15.5 $ (8.4) $ 1.3 ======== ====== =====
34 35 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NACCO MATERIALS HANDLING GROUP--Continued FINANCIAL REVIEW--Continued 1994 Compared With 1993 The following schedule details the components of the changes in revenues, operating profit and net income (loss) for 1994 compared with 1993:
Net Operating Income Revenues Profit (Loss) -------- ------------- ------- 1993 $ 908.2 $39.6 $(8.4) Increase (decrease) in 1994 from: Unit volume 211.7 40.8 26.5 Sales mix 8.1 (.8) (.5) Average sales price 14.7 14.7 9.6 Service parts 27.2 11.1 7.2 Foreign currency 9.0 (4.2) (2.7) Manufacturing cost 3.5 2.3 Other operating expense (38.9) (25.2) Other income and expense 7.1 Differences between effective and statutory tax rates (.5) Extraordinary item .1 -------- ----- ----- 1994 $1,178.9 $65.8 $15.5 ======== ===== =====
Record market size in North America and higher market shares in both the Americas and Europe resulted in record lift truck unit volume of 55,751 units at NMHG in 1994. Unit shipments were up approximately 25 percent and 30 percent in the Americas and in Europe, respectively. NMHG initiated modest price increases during the middle of 1994 which were accepted in the marketplace, favorably affecting operating results. The strong economy in North America and new marketing programs and new dealers in Europe improved the worldwide service parts business. During 1994, a weaker U.S. dollar caused translated revenues to be higher compared with 1993, while operating profit was adversely affected by the strong Japanese yen which increased the cost of products sourced from Japan. The improvement in manufacturing cost is due to the favorable effect of increased manufacturing throughput partially offset by plant ramp-ups and vendor parts shortages which caused labor inefficiencies. Other operating expense increased in 1994 compared with 1993 due to higher costs associated with strategic marketing and product development programs, increased incentive-based payroll costs and additional warranty expenditures related to new products and increased volumes. The investments in strategic programs are expected to plateau in the next two years. 35 36 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NACCO MATERIALS HANDLING GROUP--Continued FINANCIAL REVIEW--Continued 1993 COMPARED WITH 1992 The following schedule details the components of the changes in revenues, operating profit and net income (loss) for 1993 compared with 1992:
Net Operating Income Revenues Profit (Loss) -------- ------------- ------- 1992 $865.9 $44.3 $1.3 Increase (decrease) in 1993 from: Unit volume 49.8 7.1 4.7 Sales mix 15.1 1.2 .8 Average sales price 8.2 8.2 5.4 Service parts 6.4 6.6 4.4 Foreign currency (37.2) (16.3) (10.8) Manufacturing cost (10.8) (7.1) Other operating expense (.7) (.5) Other income and expense (1.0) Differences between effective and statutory tax rates (1.8) Change in statutory tax rate (.5) Extraordinary item (3.3) ------ ----- ----- 1993 $908.2 $39.6 $(8.4) ====== ===== =====
Improved economic conditions in North America, partially offset by continued weakness in most of Europe and Japan, resulted in increased unit volume in 1993. While continued discounting prevented significant price improvements in 1993 in the forklift industry, pricing in North America and Europe was favorable when compared with 1992. Although sales mix changes to higher-priced products in both North America and Europe during 1993 had a favorable impact on revenues, the impact on operating profit was not proportionate because mix shifted to lower-margin products. NMHG also realized improved global market share in 1993. Service parts business continued to recover in North America with higher volumes and sales of higher-margin service parts resulting in a favorable impact on revenues and operating profit during 1993. Higher revenues from the North American service parts business were partially offset by weak European markets. Favorable mix, however, reduced the impact of lower European volume on operating profit from the service parts business in 1993. 36 37 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NACCO MATERIALS HANDLING GROUP--Continued FINANCIAL REVIEW--Continued 1993 Compared With 1992--Continued Manufacturing costs were higher in 1993 compared with 1992 primarily as a result of start-up costs associated with new product introductions and unfavorable fixed manufacturing cost variances due to the lower level of production volume in Europe. A weaker British pound sterling in 1993 compared with 1992 resulted in lower translated sales and profits in Europe. In addition, a stronger Japanese yen in 1993 adversely affected operating profit because it increased the cost of products and parts sourced from Japan. OTHER INCOME AND EXPENSE Below is a detail of other income (expense) for the year ended December 31:
1994 1993 1992 ------ ----- ------- Interest income $ .8 $ .8 $ 1.5 Interest expense (33.7) (40.4) (44.2) Other-net 2.9 (1.7) 2.9 --- ---- --- $(30.0) $(41.3) $ (39.8) ======= ====== =====
The decrease in interest income in 1993 compared with 1992 is due primarily to lower levels of excess cash available for investment. The debt restructurings and equity infusions in 1994 and 1993 reduced outstanding debt and lowered overall effective interest rates resulting in reduced interest expense in 1994 compared with 1993, and in 1993 compared with 1992 (see the "Extraordinary Charge" discussion which follows). Other-net consists primarily of equity in the earnings of the Sumitomo-Yale 50 percent-owned joint venture ("S-Y"), gains and losses on the sale of assets and grant income. In 1994, other-net included income of $0.5 million from S-Y compared with a loss of $3.9 million in 1993. The improved results at S-Y in 1994 are due to elevated sales volumes to NMHG and manufacturing cost reductions. The significant loss at S-Y in 1993 was caused by the increase in the value of the Japanese yen compared with other global currencies and the depressed European and Japanese markets. During, 1994 NMHG received $3.2 million of employment grant income related to additional hiring at the Craigavon, Northern Ireland, facility. During the second quarter of 1993, NMHG sold its former manufacturing site in Wednesfield, England, for $3.3 million, resulting in a net pretax gain of $2.1 million. During 1992, NMHG experienced sizable foreign currency exchange gains due to the decrease in the value of the British pound sterling compared with other currencies which have not been repeated. 37 38 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NACCO MATERIALS HANDLING GROUP--Continued FINANCIAL REVIEW--Continued PROVISION FOR INCOME TAXES NMHG's effective tax rate for 1994 was 47.7 percent. For 1993, the effective tax rate was not meaningful because expenses not deductible for tax purposes, primarily amortization of goodwill, resulted in a tax provision in 1993 despite a loss before income taxes. The higher level of pretax income in 1994 reduced the effect of these non-deductible expenses and resulted in an effective tax rate that is closer to the statutory tax rate. Also in 1993, NMHG began providing for U.S. taxes on foreign earnings taxed at overall lower rates in anticipation of future repatriations. In 1992 the effective tax rate was 70.7 percent. The high effective tax rate in 1992 was due to the low level of pretax income in that year relative to the expenses not deductible for tax purposes. EXTRAORDINARY CHARGE The extraordinary charges of $3.2 million and $3.3 million, net of $2.0 million in tax benefits, were recognized in the second quarters of 1994 and 1993, respectively. These charges represent the write-off of premiums and unamortized debt issuance costs associated with the retirement of approximately $70.0 million and $50.0 million face value of NACCO Materials Handling Group s Hyster-Yale 12 3/8% subordinated debentures. These retirements were achieved using internally generated funds of NMHG and equity infusions from existing stockholders. Refer to Note G, Revolving Credit Agreements and Notes Payable, for additional information. BACKLOG NMHG's backlog of orders at December 31, 1994, was approximately 24,600 forklift truck units, compared with 12,100 units at December 31, 1993 and 1992. The increased order demand in 1994 and, to a lesser degree, vendor part shortages have extended delivery lead times and resulted in expanded backlog in 1994. Management believes that the NMHG backlog level is consistent with overall increases in industry backlog levels. 38 39 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NACCO MATERIALS HANDLING GROUP--Continued 1995 OUTLOOK The forklift truck industry has historically been cyclical. The economic conditions in the various markets in which the industry customers operate affect demand. Based on external economic forecasts and recent factory order levels, management expects economic activity in North America to continue to be strong in 1995. Europe has begun to recover from its recent recession and an expanded European market is anticipated in 1995. Many markets in the Asia-Pacific will continue to grow. The Japanese market is expected to show signs of improvement in 1995. Overall, NMHG anticipates increased shipments in 1995 compared with 1994. NMHG will introduce several new products in 1995 and will continue its efforts to increase worldwide market shares. Management is focused on alleviating manufacturing bottlenecks to improve the output of its plants and reduce delivery lead times. While NMHG does source certain product from Japan, management does not expect the recent earthquake, which did not damage S-Y's manufacturing facility, to have a material adverse affect on the company's supply of manufacturing materials. In addition, the recent floods in The Netherlands did not damage NMHG's facility in Nijmegen or seriously interrupt the plant s supply lines. LIQUIDITY AND CAPITAL RESOURCES In connection with the 1994 retirement of subordinated debentures, NMHG further amended its existing senior bank credit agreement during the second quarter of 1994 to permit the accelerated use of $25.0 million to retire additional debentures. These funds were used to call additional debentures in December 1994. NMHG had available $67.0 million of its $100.0 million revolving credit facility at December 31, 1994. On February 28,1995, the company entered into a new long-term credit agreement to replace its existing 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 current senior credit facility. The new credit facility has a five-year maturity with extension options and performance-based pricing comparable to its current senior credit facility which provides the company with reduced interest rates upon achievement of certain financial performance targets. With the new credit agreement in place, the company has the ability to call the remaining $78.5 million outstanding Hyster-Yale 12 3/8% subordinated debentures in 1995. In anticipation of the call, an extraordinary charge of $3.4 million will be recorded in the first quarter of 1995 to write-off unamortized debt issuance costs and anticipated premiums. The company believes it can adequately meet all of its current and long-term commitments and operating needs from operating cash flow and funds available under credit agreements. 39 40 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NACCO MATERIALS HANDLING GROUP--Continued LIQUIDITY AND CAPITAL RESOURCES--Continued Expenditures for property, plant and equipment were $25.9 million in 1994 and $20.2 million in 1993, and are anticipated to be approximately $40.0 million in 1995. These expenditures relate to investments in productive capacity because of the increased unit volumes, and new product development. NMHG is investing to improve production volumes at all of its plants and has undertaken expansion of its Craigavon, Northern Ireland, and Irvine, Scotland, production facilities. Capital for these expenditures has been and is expected to be provided primarily by internally generated funds and government assistance grants. During 1993, NMHG repatriated $18.3 million of earnings from certain foreign subsidiaries, which were used in operations. Taxes associated with these earnings were previously provided for financial reporting purposes. Future repatriations of foreign earnings may be affected by changes in currency exchange rates and foreign and U.S. tax rates. NMHG s capital expenditures in 1994, 1993 and 1992 of $25.9 million, $20.2 million and $24.3 million, respectively, are outpacing depreciation expense of $19.8 million in 1994, $18.9 million in 1993 and $19.1 million in 1992. NMHG s capital structure has improved with substantially less debt and is as follows for the year ended December 31:
1994 1993 1992 ------- ------- ------- Debt $ 260.1 $ 326.6 $ 406.6 Stockholders equity 305.9 257.1 215.4 ------- ------- ------- Total capitalization $ 566.0 $ 583.7 $ 622.0 ======= ======= ======== Debt to total capitalization 46% 56% 65% ======= ======= ========
40 41 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) HAMILTON BEACH PROCTOR-SILEX Hamilton Beach/Proctor-Silex, 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 Hamilton Beach/Proctor-Silex were as follows for the year ended December 31:
1994 1993 1992 ------- ------- ------ Revenues $377.5 $356.3 $358.6 Operating profit $ 25.3 $ 11.8 $ 19.3 Operating profit excluding goodwill amortization $ 28.1 $ 14.7 $ 22.3 Net income (loss) $ 10.2 $ (1.0) $ 5.4
1994 COMPARED WITH 1993 The following schedule details the components of the changes in revenues, operating profit and net income (loss) for 1994 compared with 1993:
Net Operating Income Revenues Profit (Loss) -------- ---------- -------- 1993 $356.3 $ 11.8 $ (1.0) Increase (decrease) in 1994 from: Unit volume 17.1 4.2 2.8 Sales mix 1.9 .5 .3 Average sales price 4.2 4.2 2.8 Foreign currency translation (2.0) (2.0) (1.3) Manufacturing cost 8.5 5.6 Other operating expense (1.9) (1.3) Other income and expense 2.7 Differences between effective and statutory tax rates (.4) ------ ------ ------ 1994 $377.5 $ 25.3 $ 10.2 ====== ====== ======
41 42 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) HAMILTON BEACH/PROCTOR-SILEX--Continued FINANCIAL REVIEW--Continued 1994 COMPARED WITH 1993--CONTINUED During 1994, Hamilton Beach/Proctor-Silex experienced increased volumes in blenders, mixers, coffeemakers and food processors sold domestically and in most products sold in Canada. The increased volumes in these product lines were tempered somewhat by decreased steam grill and toaster sales domestically and lower toaster oven sales both domestically and in Canada. Contributing to the positive sales mix were increased sales of high-end toasters, irons and toaster ovens offset by a shift to lower-priced blender models. Hamilton Beach/Proctor-Silex's improvements in pricing occurred in both the domestic and Canadian markets across most core heat and motor-driven product lines. The successful completion of its manufacturing consolidation programs, level loading of its factories and reduced transportation costs favorably affected operating results at Hamilton Beach/ Proctor-Silex by reducing manufacturing costs. Level loading maintains consistent production and staffing levels throughout the year, contributing favorably to manufacturing efficiencies by maintaining a more highly trained and experienced work force. Other operating expenses were unfavorable in 1994 compared with 1993 primarily due to higher selling and incentive compensation costs. 1993 COMPARED WITH 1992 The following schedule details the components of the changes in revenues, operating profit and net income (loss) for 1993 compared with 1992:
Net Operating Income Revenues Profit (Loss) -------- --------- -------- 1992 358.6 19.3 $ 5.4 Increase (decrease) in 1993 from: Unit volume 14.3 3.8 2.4 Sales mix (10.2) (2.6) (1.7) Average sales price (3.5) (3.5) (2.3) Foreign currency translation (2.9) (2.9) (1.9) Manufacturing cost (1.1) (.7) Other operating expense (1.2) (.8) Other income and expense (2.1) Differences between effective and statutory tax rates .5 Change in statutory tax rate .2 -------- ------- ------- 1993 $ 356.3 $ 11.8 $ (1.0) ======== ======= =======
42 43 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) HAMILTON BEACH/PROCTOR-SILEX--Continued FINANCIAL REVIEW--Continued 1993 COMPARED WITH 1992--Continued The higher volume in 1993 was primarily the result of increased unit sales of coffeemakers, blenders, steam grills, food processors, toaster ovens and commercial roasters. A significant decrease in unit sales of juice extractors offset the increases in other product lines. The adverse sales mix in 1993 was the result of reduced juice extractor sales, which yielded improved margins in 1992, and a shift away from sales of full-size irons. In addition, the increased volume in blenders, food processors, toaster ovens and coffeemakers was primarily in opening price-point models. Foreign currency translation negatively influenced operating results in 1993 due to the drop in the value of the Canadian dollar in relation to the U.S. dollar. The increase in other operating expense in 1993 was primarily the result of higher marketing and selling costs. 43 44 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) HAMILTON BEACH/PROCTOR-SILEX--Continued FINANCIAL REVIEW--Continued Other Income and Expense Below is a detail of other income (expense) for the year ended December 31:
1994 1993 1992 ------ ------ ------- Interest expense $(7.5) $ (7.7) $ (8.6) Other-net (.3) (4.1) ------ ------ ------- $(7.8) $(11.8) $ (8.6) ======= ====== =======
The reduced interest expense in 1994 compared with 1993 is due to lower average interest rates partially offset by higher average borrowings. The reduction in interest expense in 1993 compared with 1992 was due to lower levels of borrowings. The decrease in other-net in 1994 compared with 1993 resulted primarily from the settlement of certain litigation during 1993. PROVISION FOR INCOME TAXES Hamilton Beach/Proctor-Silex's effective tax rate for 1994 was 41.7 percent. The effective tax rate was not meaningful in 1993 and was 50.0 percent in 1992. Expenses not deductible for tax purposes, which include amortization of goodwill and other purchase price adjustments associated with the Hamilton Beach and Proctor-Silex acquisitions, were approximately level in 1994, 1993 and 1992. These non-deductible expenses resulted in a tax provision in 1993 despite break-even pretax earnings. Due to higher levels of pretax income in 1994 and 1992, relative to 1993, these non-deductible expenses had a smaller impact on the effective tax rate in 1994 and 1992. 44 45 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) HAMILTON BEACH/PROCTOR-SILEX--Continued FINANCIAL REVIEW--Continued 1995 OUTLOOK Hamilton Beach/Proctor-Silex expects total industry unit shipments to be slightly higher in 1995 compared with 1994 in most core product lines. Management of Hamilton Beach<>Proctor-Silex expects increases in market share in its core products during 1995 as a result of new and redesigned products introduced during 1994 that should better meet consumer demand and increase product placements. LIQUIDITY AND CAPITAL RESOURCES Hamilton Beach/Proctor-Silex's credit agreement, as modified in May 1994, provides for a revolving credit facility ("Facility") that permits advances up to $135.0 million. At December 31, 1994, Hamilton Beach/Proctor-Silex had $57.0 million available under this Facility. The expiration date of this Facility (which currently is May 1997) may be extended, on an annual basis, beginning in 1995 for one additional year upon the mutual consent of Hamilton Beach/Proctor-Silex and the bank group. In conjunction with this modification, Hamilton Beach/Proctor-Silex repaid the outstanding balance of its term note of $28.1 million in May 1994. At December 31, 1994, Hamilton Beach/Proctor-Silex also had $0.4 million available under a separate facility. The Facility, which is secured by substantially all assets of Hamilton Beach/Proctor-Silex, allows borrowings to be made at either LIBOR or lender's prime rate plus a margin. At the date of modification the stated interest rate became LIBOR plus 1.00 percent compared with a stated interest rate at March 31 of LIBOR plus 1.75 percent. In addition, this modification allows Hamilton Beach/Proctor-Silex to pay dividends, under certain conditions, to its stockholders. The borrowing rates can be reduced to as low as LIBOR plus 0.50 percent based upon achievement of predetermined interest coverage ratios. On July 15, 1994, Hamilton Beach/ Proctor-Silex paid a $15.0 million dividend to its stockholders. Expenditures for property, plant and equipment were $13.4 million in 1994 and $12.2 million in 1993, and are anticipated to be approximately $12.8 million in 1995. The primary focus of these expenditures is to increase manufacturing efficiency and to acquire tooling for new and existing products. Capital for these expenditures has been and is expected to be provided primarily by internally generated funds and short-term borrowings. Hamilton Beach/Proctor-Silex's capital expenditures in 1994, 1993 and 1992 of $13.4 million, $12.2 million and $10.8 million, respectively, are outpacing depreciation expense of $11.5 million in 1994, $10.9 million in 1993 and $9.8 million in 1992. Hamilton Beach/Proctor-Silex's capital structure continues to be near its 35 percent target and is as follows for the year ended December 31:
1994 1993 1992 ------- ------- -------- Debt $ 82.6 $ 86.5 $ 83.0 Stockholders equity 130.4 138.6 141.8 ------- ------- -------- Total capitalization $ 213.0 $ 225.1 $ 224.8 ======= ======= ======== Debt to total capitalization 39% 38% 37% ======= ======= ========
45 46 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) KITCHEN COLLECTION Kitchen Collection 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 The results of operations for Kitchen Collection were as follows for the year ended December 31:
1994 1993 1992 -------- -------- --------- Number of stores 119 104 86 Revenues $63.9 $53.7 $45.5 Operating profit $ 5.4 $ 4.8 $ 4.4 Net income $ 3.1 $ 2.7 $ 2.4
1994 COMPARED WITH 1993 The following schedule details the components of the changes in revenues, operating profit and net income for 1994 compared with 1993:
Operating Net Revenues Profit Income -------- --------- ------ 1993 $53.7 $4.8 $2.7 Increase (decrease) in 1994 from: Stores opened in 1994 5.5 .6 .4 Stores opened in 1993 4.4 .4 .3 Comparable stores .3 (.2) (.1) Other (.2) (.2) -------- --------- ------ 1994 $63.9 $5.4 $3.1 ===== ==== ====
The opening of 37 new stores in 1994 and 1993 contributed favorably to current year results. While gross profit showed a slight improvement in 1994 compared with 1993, operating profit as a percent of sales declined somewhat due primarily to store rent escalations and increased costs for renovations at comparable stores. 46 47 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) THE KITCHEN COLLECTION--Continued FINANCIAL REVIEW--Continued 1993 Compared With 1992 The following schedule details the components of the changes in revenues, operating profit and net income for 1993 compared with 1992:
Operating Net Revenues Profit Income -------- --------- ------ 1992 $ 45.5 $ 4.4 $ 2.4 Increase (decrease) in 1993 from: Stores opened in 1993 4.8 .5 .3 Stores opened in 1992 4.4 .6 .4 Comparable stores (1.0) (.4) (.3) Other (.3) (.1) -------- ------- ------ 1993 $ 53.7 $ 4.8 $ 2.7 ======= ======= ======
Kitchen Collection experienced mixed results during 1993. The net addition of 18 new stores during 1993 and a full year's operations of stores opened during 1992 resulted in increases to revenues and operating profits. Results at comparable stores were lower in 1993 compared with 1992 as the economic recovery did not impact specialty retailers. The use of markdowns on selected products to increase customer traffic and competitive pricing pressures on specific product lines negatively affected operating profit in 1993. OTHER INCOME AND EXPENSE Interest expense was $0.3 million, $0.1 million and $0.2 million in 1994, 1993 and 1992, respectively. 47 48 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) THE KITCHEN COLLECTION--Continued FINANCIAL REVIEW--Continued PROVISION FOR INCOME TAXES Kitchen Collection's effective tax rate was 40.0 percent, 40.6 percent and 41.6 percent in 1994, 1993 and 1992, respectively. LIQUIDITY AND CAPITAL RESOURCES In May, 1994, Kitchen Collection modified its credit arrangement to allow for an increase in the outstanding balance on its term loan to $5.0 million. At December 31, 1994, the outstanding balance was $5.0 million. In addition, the scheduled repayments, which previously were in annual installments through 1997, are now payable in two equal installments due January 15, 1999, and January 15, 2000. This modification also reduced Kitchen Collection's stated interest rate to LIBOR plus 0.75 percent from LIBOR plus 1.50 percent and allows for increased levels of dividends. During 1994, Kitchen Collection paid dividends of $5.6 million to NACCO. Expenditures for property, plant and equipment were $1.0 million in 1994 and $1.1 million in 1993, and are anticipated to be approximately $1.9 million in 1995. These expenditures are primarily for new store openings and improvements to existing facilities and are funded internally. At December 31, 1994, Kitchen Collection had available all of its $2.5 million line of credit. This credit line is renewable annually in May and has currently been extended through May 1995. Kitchen Collection's capital structure approaches its 35 percent target and is as follows for the year ended December 31:
1994 1993 1992 Debt $ 5.0 $ 2.4 $ 2.9 Stockholder's equity 10.1 12.6 11.6 ---- ---- ---- Total capitalization $ 15.1 $ 15.0 $ 14.5 ==== ==== ==== Debt to total capitalization 33% 16% 20% ==== ==== ====
48 49 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NACCO AND OTHER FINANCIAL REVIEW 1994 COMPARED WITH 1993 The following schedule details the components of the changes in operating loss and net loss for 1994 compared with 1993:
Operating Net Loss Loss ---- ---- 1993 $(7.9) $(5.4) Administrative and general expenses Payroll-related (2.3) (1.6) Outside service and other .3 .2 Interest income (.5) Interest expense (.8) Other-net (.4) Consolidating tax adjustments 2.4 ----- ---- 1994 $(9.9) $(6.1) ===== =====
While the level of parent company personnel remained steady in 1994 compared with 1993, payroll-related expenses increased in 1994 due to higher incentive-based compensation, profit sharing and medical expenses. 49 50 1993 COMPARED WITH 1992 The following schedule details the components of the changes in operating loss and net loss for 1993 compared with 1992:
Operating Net Loss Loss ------- ------ 1992 $ (8.2) $ (6.1) Administrative and general expenses Payroll-related .2 .2 Outside service and other .1 .1 Interest income .4 Interest expense (.3) Other-net .5 Differences between effective and statutory tax rates (.2) ------- ------ 1993 $ (7.9) $ (5.4) ======= ======
INTEREST RATE PROTECTION NMHG, Hamilton Beach/Proctor-Silex, North American Coal and Kitchen Collection have entered into interest rate swap agreements and/or purchased interest rate caps for portions of their floating rate debt. These interest rate swaps and caps provide protection against significant increases in interest rates. The Company evaluates its exposure to floating rate debt on an ongoing basis. 50 51 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NACCO AND OTHER--Continued ENVIRONMENTAL MATTERS The Company's manufacturing operations, like those of other companies engaged in similar businesses, involve the use, disposal and cleanup of substances regulated under environmental protection laws. The Company's North American Coal subsidiary is affected by the regulations of agencies under which it operates, particularly the federal Office of Surface Mining, the United States Environmental Protection Agency and associated state regulatory authorities. In addition, North American Coal is attentive to any changes which may arise due to proposed legislation concerning the Clean Air Act Amendments of 1990, reauthorization of the Resource Conservation and Recovery Act, the Clean Water Act, the Endangered Species Act and other regulatory actions. Compliance with these increasingly stringent standards results in higher expenditures for both capital improvements and operating costs. The Company's policies stress environmental responsibility and compliance with these regulations. Based on current information, management does not expect compliance with these regulations to have a material adverse effect on its financial condition or results of operations. 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 NMHG debt agreement includes loan covenants which prohibit the payment of dividends to NACCO. The debt agreements at Hamilton Beach/Proctor-Silex and Kitchen Collection 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 stems from amounts available under revolving credit facilities, the substantial prepayment of scheduled debt payments and the utility customers' funding of the project mining subsidiaries. 51 52 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued (Tabular Amounts in Millions, Except Per Share, Store and Percentage Data) NACCO AND OTHER--Continued 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 when its sales contract expired due to the exhaustion of its economically recoverable coal reserves. Bellaire's results have been adjusted to remove certain royalty and other payments that are now more appropriately classified with North American Coal's results. The results of operations were as follows for the year ended December 31:
1994 1993 1992 ---- ---- ---- Revenues $ .6 $ 3.0 $ 6.0 Operating loss $ (.1) $ (.1) $ (.1) Other income, net $ 1.5 $ 1.1 $ 1.6 Income before extraordinary charge $ .8 $ 2.6 $ .9 Extraordinary charge, net-of-tax (110.0) ------ ------ ------- Net income (loss) $ .8 $ 2.6 $(109.1) ====== ====== =======
During the third quarter of 1993, Bellaire recognized a non-recurring tax benefit of $2.3 million to reflect the impact of the one percent increase in the statutory tax rate on its deferred tax asset. This tax benefit increased Bellaire s income in 1993 relative to 1994 and 1992. 52 53 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NACCO INDUSTRIES, INC. AND SUBSIDIARIES--Continued NACCO AND OTHER--Continued BELLAIRE CORPORATION--Continued The Coal Industry Retiree Health Benefit Act of 1992 requires Bellaire to incur additional costs for retiree medical expenses of certain United Mine Worker retirees. A charge of $110.0 million (net of $56.7 million of tax benefits) was recognized in 1992 to reflect the estimated future payments related to this legislation. Annual cash payments required by this legislation are expected to be in the range of $2.0 million to $4.0 million per year after tax. These payments could continue as long as 40 to 50 years, or as long as there are eligible participants. Payments in 1994 amounted to $4.6 million before-tax and included payments for 1994 and 1993. Management expects taxable earnings to continue to be sufficient to realize the full amount of the related deferred tax asset. The condensed balance sheets for Bellaire were as follows at December 31:
1994 1993 ----- ----- Net current assets $ 13.1 $ 10.9 Property, plant and equipment, net .5 .5 Deferred taxes and other assets 64.1 67.0 Obligation to United Mine Workers of America Combined Benefit Fund (155.0) (159.3) Other liabilities (24.0) (21.2) ------- ------- Deficit $(101.3) $(102.1) ======= =======
The assets and liabilities of Bellaire represent the net assets of former mining operations, including Indian Head. The Obligation to United Mine Workers of America Combined Benefit Fund relates to the previously discussed extraordinary charge. The deferred taxes relate to the Obligation to United Mine Workers of America Combined Benefit Fund. The other liabilities are obligations related to other former mining operations. The annual cash payments related to Bellaire's obligations, net of internally generated funds, are funded by NACCO and amounted to $4.7 million before-tax during 1994 and are anticipated to be approximately $3.9 million before-tax in 1995. EFFECTS OF INFLATION The Company believes that inflation has not materially affected its results of operations in 1994 and does not expect inflation to be a significant item in 1995. 53 54 Item 8. Financial Statements and Supplementary Data -------------------------------------------------------- The information required by this Item 8 is set forth at pages F-2 through F-42 of the Financial Statements and Supplementary Data contained in Part IV hereof. Item 9. Changes in and Disagreements with Accountants on -------------------------------------------------------- Accounting and Financial Disclosure ----------------------------------- Not Applicable. 54 55 PART III -------- Item 10. Directors and Executive Officers of the Registrant ------------------------------------------------------------ Information with respect to Directors of the Company is set forth in the 1995 Proxy Statement under the heading "Business to be Transacted -- 1. Election of Directors," which information is incorporated herein by reference. Information regarding the executive officers of the Company is included as Item 4A of Part I as permitted by Instruction 3 to Item 401(b) of Regulation S-K. Item 11. Executive Compensation -------------------------------- Information with respect to executive compensation is set forth in the 1995 Proxy Statement under the headings "Business to be Transacted -- 1. Election of Directors -- Compensation of Directors," and "Compensation of Executive Officers," which information is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and ------------------------------------------------------------- Management ---------- Information with respect to security ownership of certain beneficial owners and management is set forth in the 1995 Proxy Statement under the heading "Business to be Transacted -- 1. Election of Directors -- Beneficial Ownership of Class A Common and Class B Common," which information is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions -------------------------------------------------------- Information with respect to certain relationships and related transactions is set forth in the 1995 Proxy Statement under the heading "Business to be Transacted -- 1. Election of Directors -- Compensation Committee Interlocks and Insider Participation," which information is incorporated herein by reference. 55 56 PART IV ------- Item 14. Exhibits, Financial Statement Schedules, and Reports -------------------------------------------------------------- on Form 8-K ----------- (a) (1) and (2) The response to Item 14(a)(1) and (2) is set forth beginning at page F-1 of this Annual Report on Form 10-K. (a) (3) Listing of Exhibits -- See the exhibit index beginning at page X-1 of this Annual Report on Form 10-K. (b) The Company has not filed any current reports on Form 8-K during the fourth quarter of 1994. (c) The response to Item 14(c) is set forth beginning at page X-1 of this Annual Report on Form 10-K. (d) Financial Statement Schedules -- The response to Item 14(d) is set forth beginning at page F-32 of this Annual Report on Form 10-K. 56 57 SIGNATURES ---------- Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. NACCO Industries, Inc. By: Frank B. O'Brien ----------------------------------- Frank B. O'Brien Senior Vice President - Corporate Development and Chief Financial Officer (Principal Financial Officer) Date: March 31, 1995 57 58 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. * Alfred M. Rankin, Jr. Chairman, President and March 31, 1995 ----------------------- Chief Executive Officer Alfred M. Rankin, Jr. (Principal Executive Officer), Director Frank B. O'Brien Senior Vice President - March 31, 1995 ----------------------- Corporate Development Frank B. O'Brien and Chief Financial Officer (Principal Financial Officer) Steven M. Billick Vice President and March 31, 1995 ----------------------- Controller (Principal Steven M. Billick Accounting Officer) * Owsley Brown II Director March 31, 1995 ---------------------- Owsley Brown II * John J. Dwyer Director March 31, 1995 ---------------------- John J. Dwyer * Robert M. Gates Director March 31, 1995 ---------------------- Robert M. Gates * E. Bradley Jones Director March 31, 1995 ---------------------- E. Bradley Jones * Dennis W. LaBarre Director March 31, 1995 ---------------------- Dennis W. LaBarre * John C. Sawhill Director March 31, 1995 ---------------------- John C. Sawhill * Britton T. Taplin Director March 31, 1995 ---------------------- Britton T. Taplin * Frank E. Taplin, Jr. Director March 31, 1995 ---------------------- Frank E. Taplin, Jr.
58 59 *Frank B. O'Brien, by signing his name hereto, does hereby sign this Annual Report on Form 10-K on behalf of each of the above named and designated officers and directors of the Company pursuant to a Power of Attorney executed by such persons and filed with the Securities and Exchange Commission. Frank B. O'Brien March 31, 1995 ------------------------------------- Frank B. O'Brien, Attorney-in-Fact 59 60 ANNUAL REPORT ON FORM 10-K ITEM 8, ITEM 14(a)(1) AND (2), AND ITEM 14(d) FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES FINANCIAL STATEMENTS FINANCIAL STATEMENT SCHEDULES YEAR ENDED DECEMBER 31, 1994 NACCO INDUSTRIES, INC. MAYFIELD HEIGHTS, OHIO F-1 61 Form 10-K ITEM 14(a)(1) AND (2) NACCO INDUSTRIES, INC. AND SUBSIDIARIES LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES The following consolidated financial statements of NACCO Industries, Inc. and Subsidiaries are included in Item 8: Report of Independent Public Accountants-Year ended December 31, 1994, 1993 and 1992 Consolidated statements of income-Year ended December 31, 1994, 1993 and 1992. Consolidated balance sheets-December 31, 1994 and December 31, 1993. Consolidated statements of cash flows-Year ended December 31, 1994, 1993 and 1992. Consolidated statements of stockholders' equity-Year ended December 31, 1994, 1993 and 1992. Notes to consolidated financial statements. NACCO Industries, Inc. Report of Management. The following consolidated financial statement schedules of NACCO Industries, Inc. and Subsidiaries are included in Item 14(d): Schedule I Condensed Financial Information of the Parent Schedule II Valuation and qualifying accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. F-2 62 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders of NACCO Industries, Inc.: We have audited the accompanying consolidated balance sheets of NACCO Industries, Inc. and Subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1994. These financial statements and the schedules referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of NACCO Industries, Inc. and Subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in Item 14(a)(1) and (2) and Item 14(d) of Form 10-K are the responsibility of the Company's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. Arthur Andersen LLP Cleveland, Ohio February 28, 1995 F-3 63
CONSOLIDATED STATEMENTS OF INCOME NACCO INDUSTRIES, INC. AND SUBSIDIARIES Year Ended December 31 ------------------------------------- 1994 1993 1992 ------------------------------------- (In thousands, except per share data) Net sales $1,853,479 $1,538,805 $1,470,005 Other operating income 11,408 10,566 13,774 ---------- ---------- ---------- TOTAL REVENUES 1,864,887 1,549,371 1,483,779 Cost of sales 1,487,447 1,244,051 1,171,231 ---------- ---------- ---------- GROSS PROFIT 377,440 305,320 312,548 Selling, administrative and general expenses 228,619 198,149 197,393 Amortization of goodwill 13,725 13,787 13,875 ---------- ---------- ---------- OPERATING PROFIT 135,096 93,384 101,280 Other income (expense) Interest income 1,615 1,880 3,294 Interest expense (60,400) (65,930) (66,032) Other - net 2,185 (4,670) 1,787 ---------- ---------- ---------- (56,600) (68,720) (60,951) ---------- ---------- ---------- Income Before Income Taxes, Minority Interest and Extraordinary Charge 78,496 24,664 40,329 Provision for income taxes 30,730 13,511 16,346 ---------- ---------- ---------- Income Before Minority Interest and Extraordinary Charge 47,766 11,153 23,983 Minority interest (2,494) 440 (1,115) ---------- ---------- ---------- Income Before Extraordinary Charge 45,272 11,593 22,868 Extraordinary charge, net-of-tax (3,218) (3,292) (110,000) ---------- ---------- ---------- Net Income (Loss) $ 42,054 $ 8,301 $ (87,132) ========== ========== ========== Per Share: Income Before Extraordinary Charge $ 5.06 $ 1.30 $ 2.57 Extraordinary charge, net-of-tax (.36) (.37) (12.37) ---------- ---------- ---------- Net Income (Loss) $ 4.70 $ .93 $ (9.80) ========= ========= ========== See notes to consolidated financial statements.
F-4 64 CONSOLIDATED BALANCE SHEETS NACCO INDUSTRIES, INC. AND SUBSIDIARIES
December 31 ----------------------------- 1994 1993 ----------------------------- (In thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 19,541 $ 29,149 Accounts receivable, net 236,215 200,112 Inventories 298,987 238,168 Prepaid expenses and other 31,893 37,373 -------- --------- 586,636 504,802 OTHER ASSETS 41,341 45,438 PROPERTY, PLANT AND EQUIPMENT, NET 485,314 496,213 DEFERRED CHARGES Goodwill, net 471,574 487,963 Deferred costs and other 69,257 64,663 Deferred income taxes 40,200 43,414 -------- --------- 581,031 596,040 -------- --------- TOTAL ASSETS $ 1,694,322 $ 1,642,493 ========= =========
F-5 65 CONSOLIDATED BALANCE SHEETS NACCO INDUSTRIES, INC. AND SUBSIDIARIES
December 31 ----------------------------- 1994 1993 ----------------------------- (In thousands) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 226,892 $ 148,397 Revolving credit agreements 30,760 35,178 Current maturities of long-term obligations 63,509 55,016 Income taxes 18,662 27,198 Accrued payroll 28,018 19,750 Other current liabilities 113,597 111,916 ----------- ----------- 481,438 397,455 NOTES PAYABLE - not guaranteed by the parent company 286,717 357,788 OBLIGATIONS OF PROJECT MINING SUBSIDIARIES not guaranteed by the parent company or its North American Coal subsidiary 331,876 338,504 OBLIGATION TO UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT FUND 154,959 159,276 SELF-INSURANCE RESERVES AND OTHER 119,399 112,589 MINORITY INTEREST 40,542 41,255 STOCKHOLDERS' EQUITY Common stock: Class A, par value $1 per share, 7,228,739 shares outstanding (1993 - 7,177,075 shares outstanding) 7,229 7,177 Class B, par value $1 per share, convertible into Class A on a one-for-one basis, 1,722,981 shares outstanding (1993 - 1,763,503 shares outstanding) 1,723 1,764 Capital in excess of par value 2,788 2,548 Retained income 262,226 226,212 Foreign currency translation adjustment and other 5,425 (2,075) ----------- ----------- 279,391 235,626 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $ 1,694,322 $ 1,642,493 =========== =========== See notes to consolidated financial statements.
F-6 66 CONSOLIDATED STATEMENTS OF CASH FLOWS NACCO INDUSTRIES, INC. AND SUBSIDIARIES
Year Ended December 31 ------------------------------------ 1994 1993 1992 ------------------------------------ (In thousands) OPERATING ACTIVITIES Net income (loss) $ 42,054 $ 8,301 $ (87,132) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Extraordinary charge, net-of-tax 1,022 2,007 110,000 Depreciation, depletion and amortization 80,154 78,063 72,509 Deferred income taxes 3,985 5,176 6,159 Currency exchange (gain) loss 103 (5,691) Other non-cash items (6,165) (8,047) (15,185) Working capital changes: Accounts receivable (31,180) (22,926) 943 Inventories (54,791) 8,505 (19,214) Other current assets (5,353) (2,213) 2,902 Accounts payable and other liabilities 68,054 3,341 (18,323) -------- -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 97,780 72,310 46,968 INVESTING ACTIVITIES Expenditures for property, plant and equipment (52,564) (57,661) (74,354) Proceeds from the sale of businesses 21,229 Proceeds from the sale of other assets 11,144 27,600 1,707 Notes receivable 1,412 4,664 1,431 -------- -------- -------- NET CASH USED BY INVESTING ACTIVITIES (40,008) (25,397) (49,987) FINANCING ACTIVITIES Additions to long-term obligations and revolving credit 122,055 31,373 93,106 Reductions of long-term obligations and revolving credit (192,679) (84,533) (114,294) Additions to obligations of project mining 53,768 51,517 45,535 subsidiaries Reductions of obligations of project mining (67,658) (60,083) (54,809) subsidiaries Additions to (reductions of) advances from customers 2,626 (7,208) 26,107 Financing of other short-term obligations 11,884 16,172 Cash dividends paid (6,040) (5,854) (5,645) Capital grants 1,622 3,741 2,020 Other - net 3,596 4,746 (3,825) -------- -------- -------- NET CASH USED BY FINANCING ACTIVITIES (70,826) (50,129) (11,805) Effect of exchange rate changes on cash 3,446 (1,482) (3,615) -------- -------- -------- CASH AND CASH EQUIVALENTS Decrease for the year (9,608) (4,698) (18,439) Balance at the beginning of the year 29,149 33,847 52,286 -------- -------- -------- BALANCE AT THE END OF THE YEAR $ 19,541 $ 29,149 $ 33,847 ======== ======== ======== See notes to consolidated financial statements.
F-7 67 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY NACCO INDUSTRIES, INC. AND SUBSIDIARIES
Year Ended December 31 ------------------------------------ 1994 1993 1992 ---------- --------- ---------- (In thousands) CLASS A COMMON STOCK Beginning balance $ 7,177 $ 7,113 $ 7,040 Conversion of Class B shares to Class A shares 43 60 26 Sale of treasury shares under stock option and compensation plans 11 4 56 Purchase of treasury shares (2) (9) --------- -------- -------- 7,229 7,177 7,113 CLASS B COMMON STOCK Beginning balance 1,764 1,823 1,842 Conversion of Class B shares to Class A shares (43) (60) (26) Sale of shares under stock option plans 2 1 7 --------- -------- -------- 1,723 1,764 1,823 CAPITAL IN EXCESS OF PAR VALUE Beginning balance 2,548 2,342 774 Sale of shares under stock option and compensation plans 348 206 1,912 Purchase of treasury shares (108) (344) --------- -------- -------- 2,788 2,548 2,342 RETAINED INCOME Beginning balance 226,212 223,765 316,542 Net income (loss) 42,054 8,301 (87,132) Cash dividends on Class A and Class B common stock: 1994 $.675 per share (6,040) 1993 $.655 per share (5,854) 1992 $.635 per share (5,645) --------- -------- -------- 262,226 226,212 223,765 FOREIGN CURRENCY TRANSLATION ADJUSTMENT AND OTHER Beginning balance (2,075) 3,273 23,990 Foreign currency translation adjustment and other 7,500 (5,348) (20,717) --------- -------- -------- 5,425 (2,075) 3,273 --------- -------- -------- TOTAL STOCKHOLDERS' EQUITY $ 279,391 $ 235,626 $ 238,316 ========= ========= ========= See notes to consolidated financial statements.
F-8 68 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Dollars in Millions, Except Per Share and Percentage Data) NOTE A--ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of NACCO Industries, Inc. ("NACCO," the parent company) and its majority owned subsidiaries (NACCO Industries, Inc. and Subsidiaries - the "Company"). Intercompany accounts and transactions are eliminated. CASH AND CASH EQUIVALENTS: Cash and cash equivalents include cash in banks and highly liquid investments with original maturities of three months or less. INVENTORIES: Inventories are stated at the lower of cost or market. Cost is determined under the last-in, first-out (LIFO) method for manufacturing inventories in the United States and under the first-in, first-out (FIFO) method with respect to all other inventories. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are recorded at cost. Depreciation, depletion and amortization are provided in amounts sufficient to amortize the cost of the assets (including assets recorded under capital leases) over their estimated useful lives using the straight- line method. The units-of-production method is used to amortize certain coal-related assets based on estimated recoverable tonnages. GOODWILL: Goodwill represents the excess purchase price paid over the fair value of the net assets acquired. The amortization of goodwill is determined on a straight-line basis over a 40-year period. Management regularly evaluates its accounting for goodwill considering such factors as historical and future profitability and believes that the asset is realizable and the amortization period remains appropriate. DEFERRED FINANCING COSTS: Amortization of the costs related to manufacturing assets is calculated utilizing the interest method over the term of the related indebtedness. The costs incurred related to the coal assets are amortized utilizing the units-of-production method. Amortization of these costs is included in interest expense on the Company's consolidated statements of income. PRODUCT DEVELOPMENT COSTS: Expenses associated with the development of new products and changes to existing products are charged to expense as incurred. These costs amounted to $25.9 million, $23.4 million and $24.4 million in 1994, 1993 and 1992, respectively. COMMON STOCK: The Class A common stock has one vote per share and the Class B common stock has 10 votes per share. The total number of authorized shares of Class A common stock and Class B common stock at December 31, 1994, was 25,000,000 shares and 6,756,176 shares, respectively. Treasury shares of Class A stock totalling 832,122 and 840,564 at December 31, 1994 and 1993, respectively, have been deducted from shares outstanding. FOREIGN CURRENCY: The financial statements of the Company's foreign operations are translated into U.S. dollars at year-end exchange rates for assets and liabilities, and at weighted average exchange rates during the year for revenues and expenses. The effect of changes in foreign exchange rates applied to these foreign financial statements is included as a separate component of stockholders' equity. F-9 69 NOTE A--ACCOUNTING POLICIES--Continued FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS: The fair values of financial instruments have been determined through information obtained from quoted market sources and management estimates. The Company does not hold or issue financial instruments or derivative financial instruments for trading purposes. The Company enters into forward foreign exchange contracts with terms of one-to-twelve months. These contracts hedge certain foreign currency denominated receivables and payables and foreign currency commitments. Gains and losses on these contracts are deferred and recognized as part of the cost of the underlying transaction being hedged. The Company also enters into interest rate swap agreements with terms ranging from six months to five years. The differential between the floating interest rate and fixed interest rate which is to be paid or received is recognized in interest expense as the floating interest rate changes over the life of the agreement. EARNINGS PER SHARE: The calculation of net income per share is based on the weighted average number of shares outstanding during each period. RECLASSIFICATIONS: Certain amounts in the prior periods' consolidated financial statements have been reclassified to conform to the current period's presentation. NOTE B--EXTRAORDINARY CHARGE 1994 AND 1993 The extraordinary charges of $3.2 million and $3.3 million, net of $2.0 million in tax benefits, were recognized in the second quarters of 1994 and 1993, respectively. These charges represent the write-off of premiums and unamortized debt issuance costs associated with the retirement of approximately $70.0 million and $50.0 million face value of NACCO Materials Handling Group s Hyster-Yale 12 3/8% subordinated debentures. These retirements were achieved using internally generated funds of NMHG and equity infusions from existing stockholders. 1992 The Coal Industry Retiree Health Benefit Act of 1992 requires Bellaire, a wholly-owned non-operating subsidiary of NACCO, to incur additional costs for retiree medical expenses of certain United Mine Worker retirees. A charge of $110.0 million (net of $56.7 million of tax benefits) was recognized in 1992 to reflect the estimated future payments related to this legislation. Annual cash payments required by this legislation are expected to be in the range of $2.0 million to $4.0 million per year after tax. These payments could continue as long as 40 to 50 years, or as long as there are eligible participants. Payments in 1994 amounted to $4.6 million and included payments for 1994 and 1993. Management expects taxable earnings to continue to be sufficient to realize the full amount of the related deferred tax asset. NOTE C--ACCOUNTS RECEIVABLE Allowances for doubtful accounts, returns, discounts and adjustments of $10.6 million and $11.1 million at December 31, 1994 and 1993, respectively, were deducted from accounts receivable. F-10 70 NOTE D--INVENTORIES Inventories are summarized as follows:
December 31 ---------------------- 1994 1993 ---------------------- Manufacturing inventories: Finished goods and service parts NACCO Materials Handling Group $ 82.3 $ 81.6 Hamilton Beach<>Proctor-Silex 32.8 36.0 ------- ------- 115.1 117.6 ------- ------- Raw materials and work in process NACCO Materials Handling Group 137.9 80.3 Hamilton Beach<>Proctor-Silex 15.9 15.3 ------- ------- 153.8 95.6 ------- ------- LIFO reserve NACCO Materials Handling Group (11.4) (10.6) Hamilton Beach<>Proctor-Silex (.1) .4 ------- ------- (11.5) (10.2) ------- ------- Total manufacturing inventories 257.4 203.0 North American Coal: Coal 8.4 7.6 Mining supplies 18.8 16.2 Retail inventories-Kitchen Collection 14.4 11.4 ------ ------ $299.0 $238.2 ====== ======
The cost of manufacturing inventories has been determined by the LIFO method for 69% of such inventories at December 31, 1994 and 1993. F-11 71 NOTE E--PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment includes the following:
December 31 --------------------- 1994 1993 --------------------- Coal lands and real estate NACCO Materials Handling Group $ 6.0 $ 5.4 Hamilton Beach<>Proctor-Silex .8 .7 North American Coal 14.8 15.2 Project mining subsidiaries (Note H) 54.0 52.7 Kitchen Collection .1 .1 NACCO and Bellaire .9 .9 ------ ------- 76.6 75.0 Plant and equipment NACCO Materials Handling Group 208.4 185.5 Hamilton Beach<>Proctor-Silex 105.5 94.2 North American Coal 15.2 15.2 Project mining subsidiaries (Note H) 409.3 403.0 Kitchen Collection 6.0 5.1 NACCO and Bellaire 4.1 4.2 ------ ------- 748.5 707.2 ------ ------- 825.1 782.2 Less allowances for depreciation, depletion and amortization 339.8 286.0 ------ ------- $ 485.3 $ 496.2 ======== ========
Total depreciation, depletion and amortization expense on property, plant and equipment was $63.2 million, $60.1 million and $53.6 million during 1994, 1993 and 1992, respectively. Proven and probable coal reserves approximated 2.2 billion tons at December 31, 1994 and 1993. NOTE F--DEFERRED CHARGES Accumulated amortization of goodwill, patents and trademarks was $80.5 million and $66.4 million at December 31, 1994 and 1993, respectively. Total amortization expense of these items was $14.1 million, $14.3 million and $14.4 million during 1994, 1993 and 1992, respectively. Total amortization expense of deferred financing costs was $3.0 million, $3.7 million and $4.0 million during 1994, 1993 and 1992, respectively. F-12 72 NOTE G--REVOLVING CREDIT AGREEMENTS AND NOTES PAYABLE NACCO has not guaranteed the long-term debt or any borrowings of its subsidiaries. REVOLVING CREDIT AGREEMENTS NACCO Materials Handling Group NMHG's credit agreement, as amended, provides for a term note and a revolving credit facility. The revolving credit facility permits advances and secured letters of credit to NMHG from time to time, up to an aggregate principal amount of $100.0 million. The following summarizes the revolving credit facility: Amount of revolver $100.0 Amount available at December 31, 1994 $ 67.0 Interest rate at December 31, 1994 8.5% Average interest rate during 1994 7.5% Commitment fee at December 31, 1994 0.3% Expiration date 1997
In connection with the 1994 retirement of subordinated debentures, NMHG further amended its existing senior bank credit agreement during the second quarter of 1994 to permit the accelerated use of $25.0 million to retire additional debentures. These funds were used to call additional debentures in December 1994. On February 28, 1995, the company entered into a new long-term credit agreement to replace its existing 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 current senior credit facility. The new credit facility has a five year maturity with extension options and performance based pricing comparable to its current senior credit facility, which provides the company with reduced interest rates upon achievement of certain financial performance targets. With the new credit agreement in place, the company has the ability to call the remaining $78.5 million outstanding Hyster-Yale 12 3/8% subordinated debentures in 1995. In anticipation of the call, an extraordinary charge of $3.4 million will be recorded in the first quarter of 1995 to write-off unamortized debt issuance costs and anticipated premiums. HAMILTON BEACH PROCTOR-SILEX Hamilton Beach Proctor-Silex's credit agreement, as modified in May 1994, provides for a revolving credit facility (Facility) that permits advances up to $135.0 million. The following summarizes this Facility: Amount of revolver $135.0 Amount available at December 31, 1994 $ 57.0 Interest rate at December 31, 1994 6.9% Average interest rate during 1994 6.4% Facility fee 0.4% Current expiration date 1997
At December 31, 1994, Hamilton Beach Proctor-Silex had $78.0 million outstanding under this Facility, $70.0 million of which is classified as long- term because it is not expected to be repaid during 1995. The expiration date of this Facility (which currently is May 1997) may be extended, on an annual basis, beginning in 1995 for one additional year upon the mutual consent of Hamilton Beach Proctor-Silex and the bank group. In conjunction with this modification, Hamilton Beach Proctor-Silex repaid the outstanding balance of its term note of $28.1 million in May 1994. At December 31, 1994, Hamilton Beach Proctor-Silex also had $0.4 million available under a separate facility. F-13 73 NOTE G--REVOLVING CREDIT AGREEMENTS AND NOTES PAYABLE--Continued REVOLVING CREDIT AGREEMENTS--Continued The Facility, which is secured by substantially all assets of Hamilton Beach Proctor-Silex, allows borrowings to be made at either LIBOR, or lender's prime rate plus a margin. At the date of modification, the stated interest rate became LIBOR plus 1.00%, compared with a stated interest rate at March 31 of LIBOR plus 1.75%. In addition, this modification allows Hamilton Beach Proctor-Silex to pay dividends, under certain conditions, to its stockholders. The borrowing rates can be reduced to as low as LIBOR plus 0.50% based upon achievement of predetermined interest coverage ratios. On July 15, 1994, Hamilton Beach Proctor-Silex paid a $15.0 million dividend to its stockholders. NORTH AMERICAN COAL North American Coal has in place a revolving credit facility summarized as follows: Amount of revolver $50.0 Amount available at December 31, 1994 $35.0 Interest rate at December 31, 1994 6.6% Average interest rate during 1994 5.7% Total commitment and facility fee 0.3% Current expiration date 1997
The expiration date of this facility may be extended one additional year, on an annual basis, upon the mutual consent of North American Coal and the bank group. NOTES PAYABLE Subsidiary notes payable, less current maturities, consist of the following:
December 31 ----------------------- 1994 1993 ----------------------- NACCO MATERIALS HANDLING GROUP Term note with an interest rate of 6.0% at year-end (average interest rate of 6.3% during 1994) payable 1995 to 1997 and secured by all assets $ 95.3 $ 139.3 12.375% senior subordinated debentures payable in 1999 with a mandatory sinking fund payment on August 1, 1998 of $78.5 million 78.5 149.8 Long-term portion of revolving credit facility 33.0 Other 4.6 1.3 ------- ------- Total NMHG 211.4 290.4 HAMILTON BEACH PROCTOR-SILEX Long-term portion of revolving credit facility 70.0 37.0 Term note 28.1 ------- ------- Total Hamilton Beach<>Proctor-Silex 70.0 65.1 KITCHEN COLLECTION Term note with an interest rate of 7.6% at year-end (average interest rate of 7.2% during 1994) payable 1999 to 2000 5.0 1.9 NORTH AMERICAN COAL .3 .4 ------- ------- $ 286.7 $ 357.8 ======= =======
F-14 74 NOTE G--REVOLVING CREDIT AGREEMENTS AND NOTES PAYABLE--Continued NOTES PAYABLE--Continued The senior subordinated debentures are callable by NMHG prior to maturity at redemption prices (expressed as percentages of the principal amount) as follows: during the 12-month period beginning August 1, 1994; - 105.0 %; 1995 - 102.5%. The maturities of the subsidiary notes payable for the next five years, including current maturities, are as follows: 1995 $ 47.4 1996 46.5 1997 85.0 1998 80.1 1999 2.6 Thereafter 2.5 ------ $264.1 ======
Interest paid was $44.0 million, $48.4 million and $54.4 million during 1994, 1993 and 1992, respectively. The credit agreements for NMHG, Hamilton Beach Proctor-Silex, North American Coal and Kitchen Collection contain certain covenants and restrictions. Covenants require, among other things, maintenance of certain minimum amounts of net worth and certain specified ratios of working capital, debt to equity, interest coverage and fixed charge coverage. These ratios are calculated at the subsidiary level. Restrictions include limits on capital expenditures and dividends. At December 31, 1994, the subsidiaries were in compliance with all the covenants in their debt agreements. NOTE H--OBLIGATIONS OF PROJECT MINING SUBSIDIARIES North American Coal's project mining subsidiaries have entered into long-term contracts with various utility customers to provide lignite at a sales price based on cost plus a profit per ton. The utility customers have arranged and guaranteed the financing for the development and operation of these subsidiary mines. The obligations of these project mining subsidiaries included in the Company's consolidated balance sheets do not affect the short- or long-term liquidity of the company and are without recourse to NACCO or its North American Coal subsidiary. Obligations of project mining subsidiaries, less current maturities, consist of the following at December 31:
1994 1993 ------------------------ Capitalized lease obligations $ 140.1 $ 145.1 Non-interest-bearing advances from customers 136.0 133.4 Promissory notes with interest rates ranging from 4.4% to 10.9% during 1994 55.7 60.0 ------- --------- $ 331.8 $ 338.5 ======= ==========
The annual maturities of the promissory notes are: 1995 - $6.5 million; 1996 - $4.3 million; 1997 - $1.8 million; 1998 - $3.1 million; 1999 - $3.1 million; thereafter - $43.4 million. Advances from customers are used to develop, operate and provide for the ongoing working capital needs of certain project mining subsidiaries. F-15 75 NOTE H--OBLIGATIONS OF PROJECT MINING SUBSIDIARIES Continued Interest paid was $17.7 million, $17.5 million and $13.2 million during 1994, 1993 and 1992 respectively. Interest expense is included as part of the cost of coal which is passed through to the utility customers. The project mining subsidiaries' lease obligations for mining equipment have the following future minimum lease payments at December 31, 1994:
Capital Operating Leases Leases -------- --------- 1995 $ 20.7 $ .4 1996 19.6 .3 1997 18.8 .3 1998 18.0 .2 1999 17.7 Subsequent to 1999 150.3 ------ ------ Total minimum lease payments 245.1 $ 1.2 ======= Amounts representing interest (95.4) ------ Present value of net minimum lease payments 149.7 Current maturities (9.6) ------ $140.1 ======
Interest expense and amortization in excess of annual lease payments are deferred and recognized in years when annual lease payments exceed interest expense and amortization. Project mining assets recorded under capital leases are included with property, plant and equipment and consist of the following at December 31:
1994 1993 ---------------------- Plant and equipment $ 188.1 $ 187.0 Less accumulated amortization 71.6 63.7 --------- -------- $ 116.5 $ 123.3 ========= ========
During 1994, 1993 and 1992, the project mining subsidiaries incurred capital lease obligations of $5.2 million, $22.4 million and $12.0 million, respectively, in connection with lease agreements to acquire plant and equipment. Rental expense for all of the project mines' operating leases amounted to $0.2 million during 1994,1993 and 1992. The above obligations are secured by substantially all owned assets of the respective project mining subsidiary and the assignment of all rights under its coal sales agreement. F-16 76 NOTE I--LEASE COMMITMENTS Future minimum operating lease payments, excluding project mining subsidiaries, at December 31, 1994, are as follows: 1995 $ 14.2 1996 12.8 1997 10.9 1998 9.0 1999 6.9 Thereafter 9.6 ----------- $ 63.4 ===========
Rental expense for all operating leases, excluding project mining subsidiaries, amounted to $16.9 million, $15.3 million and $13.7 million during 1994, 1993 and 1992, respectively. NOTE J--FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENTS A financial instrument is cash or a contract that imposes an obligation to deliver, or conveys a right to receive, cash or another financial instrument. The fair value of financial instruments, except for NMHG's Hyster-Yale 12 3/8% subordinated debentures, approximated carrying values at December 31, 1994. The fair value of the subordinated debentures was $82.5 million at December 31,1994, compared with the carrying value of $78.5 million. Interest Rate Derivatives The Company's operating subsidiaries enter into interest rate swap agreements. The use of these allows these subsidiaries to enter into long-term credit agreements that have performance-based, floating rates of interest and then swap them into fixed rates, as opposed to entering into higher cost fixed-rate credit arrangements. These agreements are with major commercial banks; therefore, the risk of credit loss from nonperformance by the banks is minimal. The following table summarizes the notional amounts and related rates (including applicable margins) on interest rate swap agreements outstanding at December 31, 1994:
Notional Fixed Rate Amount Paid -------- ------------ NMHG $185.0 6.0% Hamilton Beach<>Proctor-Silex $ 60.0 6.9% North American Coal $ 14.0 6.6% Kitchen Collection $ 5.0 7.6%
F-17 77 NOTE J--FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS--Continued FOREIGN CURRENCY DERIVATIVES NMHG and Hamilton Beach<>Proctor-Silex enter into forward foreign exchange contracts for purposes of hedging their exposure to foreign currency exchange rate fluctuations. These contracts are with major financial institutions. Therefore, the risk of credit loss from non-performance by these institutions is minimal. These contracts hedge primarily firm commitments and, to a lesser degree, forecasted commitments relating to cash flows associated with sales and purchases denominated in foreign currencies. The table below summarizes foreign exchange contracts outstanding as of December 31, 1994:
Deferred Contract Gain Amount (Loss) -------- -------- NMHG $ 190.9 $ (.5) Hamilton Beach<>Proctor-Silex $ 1.0 --
NOTE K--CONTINGENCIES Various legal proceedings and claims have been or may be asserted against NACCO and certain subsidiaries relating to the conduct of its business including product liability and environmental claims. These proceedings are incidental to their ordinary course of business. Management believes that it has meritorious defenses and will vigorously defend itself in these actions. Any costs that management estimates will be paid in these claims are accrued when the liability is considered probable and the amount can be reasonably estimated. Although the ultimate disposition of these proceedings is not presently determinable, management believes, after consultation with its General Counsel, the likelihood that material costs will be incurred in excess of accruals already recognized is remote. NMHG is subject to recourse or repurchase obligations under various financing arrangements for certain independently owned retail dealerships at December 31, 1994. Also, certain dealer loans are guaranteed by NMHG. When NMHG is the guarantor of the principal amount financed, a security interest is usually maintained in certain assets of parties for whom NMHG is guaranteeing debt. Total amounts subject to recourse or repurchase obligation at December 31, 1994, were $91.0 million. Losses anticipated under the terms of the recourse or repurchase obligations are not significant and have been provided for financial reporting purposes. NOTE L--STOCK OPTIONS The 1975 and 1981 stock option plans as amended provide for the granting to officers and other key employees options to purchase Class A and Class B common stock of the Company at a price not less than the market value of such stock at the date of grant. Options become exercisable over a four-year period and expire 10 years from the date of the grant. At December 31, 1994, all stock options outstanding were exercisable. There were options for 80,701 Class A shares at December 31, 1994 and 1993, respectively, and 80,100 Class B shares at December 31, 1994 and 1993, respectively, available for grant under these plans. The Company does not, however, intend to issue any additional stock options. At December 31, 1994, there were options relating to Class A shares for 5,800 shares with an option price of $32.00 that were granted on January 12, 1989, and 25,000 shares at an option price of $35.56 granted on March 1, 1989. F-18 78 NOTE M--OTHER - NET Items included in other-net for the year ended December 31 are as follows:
1994 1993 1992 --------------------------------------- Equity in earnings (losses) of unconsolidated subsidiaries $ 1.0 $ (3.9) $ (.6) Litigation settlement (3.5) Gain (loss) on sale of assets (.1) 2.3 .2 Currency transaction gains (losses) (.8) .1 5.6 Miscellaneous 2.1 .3 (3.4) --------- --------- --------- $ 2.2 $ (4.7) $ 1.8 ========= ========== =========
NOTE N--INCOME TAXES The components of income before income taxes on a legal entity basis for the year ended December 31 are as follows:
1994 1993 1992 --------------------------------------- Domestic $ 57.1 $ 18.3 $ 4.9 Foreign 21.4 6.4 35.4 --------- --------- --------- Income before income taxes and extraordinary charge $ 78.5 $ 24.7 $ 40.3 ========== ========== ==========
Domestic income before income taxes has been reduced by all of the amortization of goodwill and deferred financing costs, and substantially all interest expense. Provision for income taxes consists of the following for the year ended December 31:
1994 1993 1992 -------------------------------------- Current tax expense: Federal $ 24.3 $ 8.4 $ 3.9 State 3.0 2.7 1.3 Foreign 7.8 4.4 6.8 -------- --------- ---------- Total current 35.1 15.5 12.0 -------- --------- ---------- Deferred tax expense (benefit): Federal (1.1) 3.6 2.8 State (.1) (1.2) .6 Foreign (3.2) (4.4) .9 -------- --------- ---------- Total deferred (4.4) (2.0) 4.3 -------- --------- ---------- Provision for income taxes $ 30.7 $ 13.5 $ 16.3 ======== ========= ==========
F-19 79 NOTE N--INCOME TAXES--Continued The Company made income tax payments of $29.0 million, $16.3 million and $30.8 million during 1994, 1993 and 1992, respectively. During the same period, income tax refunds totaled $1.2 million, $5.1 million and $5.3 million, respectively. At December 31, 1994, the Company had cumulative undistributed earnings at its foreign subsidiaries of $93.1 million. It is the Company's intention to reinvest $39.0 million of these undistributed earnings of its foreign subsidiaries and thereby indefinitely postpone their remittance. There has been no provision made for taxes, nor is it practicable to estimate the amount of taxes on the undistributed earnings which are reinvested indefinitely. The remaining undistributed earnings of $54.1 million can be remitted without a material charge to earnings. Upon remittance of earnings, certain foreign countries impose withholding taxes that are then available, subject to certain limitations, for use as credits against the Company's U.S. tax liability. The amount of withholding tax that would be payable upon remittance of the entire amount of undistributed earnings would approximate $5.7 million. A reconciliation of federal statutory and effective income tax for the year ended December 31 follows:
1994 1993 1992 ------------------------------------ Income before taxes $ 78.5 $ 24.7 $ 40.3 ========= ========= ========= Statutory taxes at 35% in 1994 and 1993 and 34% in 1992 $ 27.5 $ 8.6 $ 13.7 Amortization of excess purchase price 5.1 4.8 4.7 State income taxes 1.8 1.0 1.8 Differences between foreign and statutory tax rates .4 .1 (3.6) Percentage depletion (1.6) (1.6) (2.4) Export benefits (1.0) (.8) (.3) Earnings reported net of taxes (.4) 1.1 (.1) Other-net (1.1) .3 2.5 --------- --------- --------- Provision for income taxes $ 30.7 $ 13.5 $ 16.3 ========= ========= ========= Effective rate 39.15% 54.78% 40.53% ========= ========= =========
F-20 80 NOTE N--INCOME TAXES--Continued A summary of the components of the net deferred tax asset (liability) in the Company's consolidated balance sheets at December 31 resulting from differences in the book and tax basis of assets and liabilities follows:
Current Non-Current -------------------------- --------------------------- Domestic Foreign Domestic Foreign -------- ------- -------- ------- 1994 ---- Inventories $ (20.0) $ 1.0 Accrued expenses and reserves 10.9 4.9 $ 24.0 Employee benefits 1.8 15.9 $ (2.6) Net operating loss carryforwards 1.8 .8 3.3 Reserve for Obligation to United Mine Workers of America Combined Benefit Fund 56.2 Depreciation and depletion (40.3) (5.4) Unrepatriated earnings (8.9) Other (1.1) (10.0) .1 -------- -------- -------- ------- $ (5.5) $ 5.6 $ 40.2 $ (7.9) ======== ======== ======== ======== 1993 ---- Inventories $ (26.1) $ 1.4 Accrued expenses and reserves 13.8 .2 $ 24.6 Employee benefits 1.7 12.4 $ (2.3) Net operating loss carryforwards 2.2 6.1 4.8 Reserve for Obligation to United Mine Workers of America Combined Benefit Fund 56.4 Depreciation and depletion (40.3) (5.4) Unrepatriated earnings (4.9) Other 2.0 (.4) (9.6) (.1) -------- -------- -------- ------- $ (6.4) $ 7.3 $ 43.4 $ (7.8) ======== ======== ======== ========
The Company and certain of its subsidiaries are currently under examination for federal and various state income tax returns. The Company has not been informed of any material assessment resulting from these examinations and will vigorously contest any material assessment. Management believes that any potential adjustment would not materially affect future earnings. F-21 81 NOTE O--RETIREMENT BENEFIT PLANS Defined Benefit Plans The Company maintains various defined benefit pension plans covering its employees. These plans provide benefits based on years of service and average compensation during certain periods. The Company's policy is to make contributions to fund these plans within the range allowed by the applicable regulations. Contributions to the various plans were $6.9 million in 1994 and $5.2 million in 1993 and 1992. Plan assets consist primarily of publicly traded stocks, investment contracts and government and corporate bonds. Set forth below is a detail of consolidated worldwide net periodic pension expense and the assumptions used in accounting for the United States defined benefit plans for the year ended December 31. The United Kingdom plans used assumptions that are consistent with, but not identical to, those used by the United States plans.
1994 1993 1992 -------------------------------------------- Service cost $ 6.6 $ 6.3 $ 6.6 Interest cost on projected benefit obligation 9.4 9.0 9.1 Actual loss (gain) on plan assets 1.1 (8.2) (2.1) Curtailment gain (.4) Net amortization and deferral of actuarial (gains) losses (9.5) .1 (6.4) ------------- ----------- ----------- Net periodic pension expense $ 7.6 $ 6.8 $ 7.2 ============ =========== =========== Assumptions: Weighted average discount rates 8.5% 7.5% 8.0-8.3% Rate of increase in compensation levels 5.0 -5.5% 4.0-6.0% 4.5-6.8% Expected long-term rate of return on assets 9.0% 9.0% 9.0%
F-22 82 NOTE O--RETIREMENT BENEFIT PLANS--Continued The following sets forth the funded status of the defined benefit plans and amounts recognized in the consolidated balance sheets at December 31:
Partially Funded Fully Funded Plans Plans ------------------------------------- 1994 1993 1994 1993 ------------------------------------- Actuarial present value of benefit obligation: Vested accumulated benefit obligation $ 66.9 $ 69.1 $ 23.0 $ 21.9 Nonvested accumulated benefit obligation 4.6 5.2 .2 .2 -------- ------- ------- ------ Total accumulated benefit obligation 71.5 74.3 23.2 22.1 Value of future salary projections 19.9 22.8 2.4 2.2 -------- ------- ------- ------ Total projected benefit obligation 91.4 97.1 25.6 24.3 Fair value of plan assets 71.8 71.9 29.4 28.8 -------- ------- ------- ------ Plan assets in excess of (less than) projected benefit obligation (19.6) (25.2) 3.8 4.5 Amounts available to (reduce) increase future pension expense: Unamortized balance of the initial transition amount (2.5) (1.4) (.6) (.6) Unamortized cumulative actuarial loss (gain) (2.0) 4.1 1.6 1.0 Unamortized prior service cost 3.8 3.6 1.3 1.3 Adjustment for minimum pension liability (7.8) (7.9) --------- ------- ------- ------ Pension asset (liability) recognized in consolidated balance sheet $ (28.1) $ (26.8) $ 6.1 $ 6.2 ========= ======= ======= ======
F-23 83 NOTE O--RETIREMENT BENEFIT PLANS--Continued DEFINED CONTRIBUTION PLANS NACCO and its subsidiaries have defined contribution plans for substantially all employees. For NACCO and certain subsidiaries, employee contributions are matched by the Company based on plan provisions. In addition, NACCO and certain other subsidiaries have profit sharing plans whereby the subsidiary's contribution is determined annually based on its operating results. Total contributions to these plans were $5.9 million in 1994, $5.5 million in 1993 and $4.6 million in 1992. RETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFIT PLANS NACCO and certain of its subsidiaries have retirement health care and life insurance benefit plans. These plans provide benefits to pensioners and their survivors if they reach certain age and service requirements while working for NACCO or its subsidiaries. The amounts of expenses and liabilities related to these plans are not material. NOTE P--BUSINESS SEGMENTS The Company has four operating subsidiaries. NMHG designs, manufactures and markets forklift trucks and related service parts under the Hyster(R) and Yale(R) brand names. Hamilton Beach-Proctor-Silex is a leading manufacturer of small electric appliances. North American Coal mines and markets lignite for use primarily as fuel in power generation by electric utilities. Kitchen Collection is a national specialty retailer of kitchenware and small electric appliances. Sales between subsidiaries, which are minimal, are eliminated in consolidation. Information relating to the Company's operations at the subsidiary level is presented below. The results for North American Coal and Bellaire have been adjusted to reflect the reclassification of certain royalty and other payments previously classified with Bellaire that are more appropriately classified with North American Coal. F-24 84 NOTE P--BUSINESS SEGMENTS--Continued
1994 1993 1992 ---------------------------------------- REVENUES NACCO Materials Handling Group $ 1,178.9 $ 908.2 $ 865.9 Hamilton Beach-Proctor-Silex 377.5 356.3 358.6 North American Coal 250.2 233.3 211.9 Kitchen Collection 63.9 53.7 45.5 Bellaire .6 3.0 6.0 Eliminations (6.2) (5.1) (4.1) ----------- ----------- ----------- $ 1,864.9 $ 1,549.4 $ 1,483.8 =========== =========== =========== AMORTIZATION OF GOODWILL NACCO Materials Handling Group $ 10.8 $ 10.8 $ 10.8 Hamilton Beach-Proctor-Silex 2.8 2.9 3.0 Kitchen Collection .1 .1 .1 ----------- ----------- ----------- $ 13.7 $ 13.8 $ 13.9 =========== =========== =========== OPERATING PROFIT NACCO Materials Handling Group $ 65.8 $ 39.6 $ 44.3 Hamilton Beach-Proctor-Silex 25.3 11.8 19.3 North American Coal 48.6 45.2 41.6 Kitchen Collection 5.4 4.8 4.4 Bellaire (.1) (.1) (.1) NACCO (9.9) (7.9) (8.2) ----------- ----------- ----------- $ 135.1 $ 93.4 $ 101.3 =========== =========== =========== OPERATING PROFIT EXCLUDING GOODWILL AMORTIZATION NACCO Materials Handling Group $ 76.6 $ 50.4 $ 55.1 Hamilton Beach-Proctor-Silex 28.1 14.7 22.3 North American Coal 48.6 45.2 41.6 Kitchen Collection 5.5 4.9 4.5 Bellaire (.1) (.1) (.1) NACCO (9.9) (7.9) (8.2) ----------- ----------- ----------- $ 148.8 $ 107.2 $ 115.2 =========== =========== =========== INTEREST INCOME NACCO Materials Handling Group $ .8 $ .8 $ 1.5 North American Coal 3.0 2.1 2.1 Bellaire 1.3 1.0 1.5 NACCO 1.1 1.9 1.2 Eliminations (4.6) (3.9) (3.0) ----------- ----------- ----------- $ 1.6 $ 1.9 $ 3.3 =========== =========== =========== INTEREST EXPENSE NACCO Materials Handling Group $ (33.7) $ (40.4) $ (44.2) Hamilton Beach-Proctor-Silex (7.5) (7.7) (8.6) North American Coal (1.3) (.8) (1.0) Kitchen Collection (.3) (.1) (.2) NACCO (3.6) (2.3) (1.8) Eliminations 4.6 3.9 3.0 ----------- ----------- ----------- (41.8) (47.4) (52.8) Project Mining Subsidiaries (18.6) (18.5) (13.2) ----------- ----------- ----------- $ (60.4) $ (65.9) $ (66.0) =========== =========== =========== OTHER-NET, INCOME (EXPENSE) NACCO Materials Handling Group $ 2.9 $ (1.7) $ 2.9 Hamilton Beach-Proctor-Silex (.3) (4.1) North American Coal (1.1) (1.4) Bellaire .2 .1 .1 NACCO .5 1.0 .2 ----------- ----------- ----------- $ 2.2 $ (4.7) $ 1.8 =========== =========== ===========
F-25 85 NOTE P--BUSINESS SEGMENTS--Continued
1994 1993 1992 ------------------------------------------ NET INCOME (LOSS) Before Extraordinary Charge NACCO Materials Handling Group $ 18.7 $ (5.1) $ 1.3 Hamilton Beach Proctor-Silex 10.2 (1.0) 5.4 North American Coal 21.0 17.4 20.1 Kitchen Collection 3.1 2.7 2.4 Bellaire .8 2.6 .9 NACCO (6.1) (5.4) (6.1) Minority interest (2.4) .4 (1.1) ----------- ---------- ----------- 45.3 11.6 22.9 Extraordinary charge, net-of-tax (3.2) (3.3) (110.0) ----------- ---------- ----------- Net Income (Loss) $ 42.1 $ 8.3 $ (87.1) =========== ========== =========== TOTAL ASSETS NACCO Materials Handling Group $ 906.2 $ 833.0 $ 854.3 Hamilton Beach Proctor-Silex 289.6 300.3 296.8 North American Coal 49.0 44.8 40.5 Kitchen Collection 26.0 23.3 19.9 Bellaire 87.1 93.6 95.5 NACCO 26.6 22.8 34.6 ------------ ---------- ----------- 1,384.5 1,317.8 1,341.6 Project mining subsidiaries 412.3 416.7 410.7 ------------ ---------- ----------- 1,796.8 1,734.5 1,752.3 Consolidating eliminations (102.5) (92.0) (67.4) ------------ ---------- ----------- $ 1,694.3 $ 1,642.5 $ 1,684.9 ============ ========== =========== DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSE NACCO Materials Handling Group $ 32.2 $ 31.7 $ 32.1 Hamilton Beach Proctor-Silex 15.5 15.3 15.3 North American Coal 1.6 1.5 1.5 Kitchen Collection .9 .8 .8 Bellaire .2 NACCO .1 .3 .4 ----------- --------- ----------- 50.3 49.6 50.3 Project mining subsidiaries 29.9 28.5 22.2 ----------- --------- ----------- $ 80.2 $ 78.1 $ 72.5 =========== ========= =========== CAPITAL EXPENDITURES NACCO Materials Handling Group $ 25.9 $ 20.2 $ 24.3 Hamilton Beach Proctor-Silex 13.4 12.2 10.8 North American Coal .4 1.0 1.1 Kitchen Collection 1.0 1.1 .6 NACCO .2 .2 .2 ----------- --------- ---------- 40.9 34.7 37.0 Project mining subsidiaries 11.7 23.0 37.4 ----------- --------- ---------- $ 52.6 $ 57.7 $ 74.4 =========== ========= ==========
F-26 86 NOTE P--BUSINESS SEGMENTS--Continued DATA BY GEOGRAPHIC AREA
Europe, Africa and Asia- Americas Middle East Pacific Eliminations Consolidated -------- ----------- ------- ------------ ------------ 1994 ---- Sales to unaffiliated customers $1,509.4 $ 294.4 $ 61.1 $ 1,864.9 Transfer between geographic areas 49.2 130.6 $ (179.8) --------- -------- -------- --------- ---------- Total revenues $1,558.6 $ 425.0 $ 61.1 $ (179.8) $ 1,864.9 ======== ======== ======== ========= ========== Operating profit $ 114.5 $ 15.4 $ 5.2 $ ---- $ 135.1 ======== ======== ======== ========= ========== Total assets $1,371.1 $ 309.6 $ 24.0 $ (10.4) $ 1,694.3 ======== ======== ======== ========= ========== 1993 ---- Sales to unaffiliated customers $1,284.8 $ 222.2 $ 42.4 $ 1,549.4 Transfer between geographic areas 31.5 81.2 $ (112.7) -------- -------- -------- --------- ---------- Total revenues $1,316.3 $ 303.4 $ 42.4 $ (112.7) $ 1,549.4 ======== ======== ======== ========= ========== Operating profit $ 94.1 $ (2.4) $ 1.7 $ ---- $ 93.4 ======== ======== ======== ========= ========== Total assets $1,381.5 $ 274.8 $ 19.6 $ (33.4) $ 1,642.5 ======== ======== ======== ========= ========== 1992 ---- Sales to unaffiliated customers $1,196.9 $ 251.5 $ 35.4 $ 1,483.8 Transfer between geographic areas 32.1 89.2 $ (121.3) -------- -------- -------- --------- ---------- Total revenues $1,229.0 $ 340.7 $ 35.4 $ (121.3) $ 1,483.8 ======== ======== ======== ========= ========== Operating profit $ 72.5 $ 28.7 $ .8 $ (.7) $ 101.3 ======== ======== ======== ========= ========== Total assets $1,384.4 $ 283.7 $ 18.3 $ (1.5) $ 1,684.9 ======== ======== ======== ========= ==========
NACCO parent company expense reduced Americas operating profit by $9.9 million, $7.9 million and $8.2 million in 1994, 1993 and 1992, respectively. The Asia-Pacific category above does not include the operating results or assets of NMHG's 50% owned Japanese joint venture, Sumitomo-Yale, as it is accounted for using the equity method. F-27 87 NOTE Q--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) A summary of the unaudited quarterly results of operations for the year ended December 31 is as follows:
First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- 1994 ---- TOTAL REVENUES NACCO Materials Handling Group $ 245.3 $ 290.4 $ 289.7 $ 353.5 Hamilton Beach-Proctor-Silex 68.6 76.1 106.9 125.9 North American Coal(1) 59.3 58.8 68.3 63.8 Kitchen Collection 10.7 12.4 17.2 23.6 Bellaire(1) .1 .2 .2 .1 Eliminations (.8) (1.0) (2.0) (2.4) -------- -------- -------- -------- 383.2 436.9 480.3 564.5 GROSS PROFIT 77.8 90.8 97.2 111.6 OPERATING PROFIT NACCO Materials Handling Group 11.1 19.8 14.5 20.4 Hamilton Beach-Proctor-Silex (.4) 3.5 9.6 12.6 North American Coal(1) 12.0 11.6 12.1 12.9 Kitchen Collection (.2) .2 1.6 3.8 Bellaire(1) (.1) (.1) .1 NACCO (2.2) (2.2) (2.4) (3.1) -------- -------- -------- -------- 20.3 32.8 35.3 46.7 -------- -------- -------- -------- INCOME BEFORE EXTRAORDINARY CHARGE 2.8 9.2 11.0 22.3 Extraordinary charge, net-of-tax (3.2) -------- -------- -------- -------- NET INCOME $ 2.8 $ 6.0 $ 11.0 $ 22.3 ======== ======== ======== ======== PER SHARE AMOUNTS: INCOME BEFORE EXTRAORDINARY CHARGE $ .31 $ 1.03 $ 1.23 $ 2.49 Extraordinary charge, net-of-tax (.36) --------- --------- -------- -------- NET INCOME $ .31 $ .67 $ 1.23 $ 2.49 ========= ========= ======== ========
F-28 88 NOTE Q--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)--Continued
First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- 1993 ---- TOTAL REVENUES NACCO Materials Handling Group $ 214.7 $ 228.7 $ 217.5 $ 247.3 Hamilton Beach Proctor-Silex 65.8 65.9 107.7 116.9 North American Coal(1) 54.0 54.0 63.4 61.9 Kitchen Collection 9.1 10.1 14.2 20.3 Bellaire(1) 1.0 1.0 .8 .2 Eliminations (.8) (.9) (1.9) (1.5) --------- --------- --------- --------- 343.8 358.8 401.7 445.1 GROSS PROFIT 67.9 69.2 76.7 91.5 OPERATING PROFIT NACCO Materials Handling Group 9.6 7.9 6.0 16.1 Hamilton Beach Proctor-Silex (2.7) (1.8) 7.3 9.0 North American Coal(1) 11.2 9.7 12.1 12.2 Kitchen Collection (.1) .2 1.4 3.3 Bellaire(1) (.1) NACCO (2.1) (2.2) (2.0) (1.6) --------- --------- --------- --------- 15.9 13.7 24.8 39.0 --------- --------- --------- --------- INCOME BEFORE EXTRAORDINARY CHARGE 0.0 (.2) 2.0 9.8 Extraordinary charge, net-of-tax (3.3) --------- --------- --------- --------- NET INCOME (LOSS) $ 0.0 $ (3.5) $ 2.0 $ 9.8 ========= ========= ========= ========= PER SHARE AMOUNTS: INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE $ .00 $ (.02) $ .23 $ 1.09 Extraordinary charge, net-of-tax (.37) --------- --------- --------- --------- NET INCOME (LOSS) $ .00 $ (.39) $ .23 $ 1.09 ========= ========= ========= ========= (1) The information for the first three quarters of 1994 and all quarters of 1993 have been adjusted from amounts previously reported. These adjustments relate to the reclassification of certain royalty and other payments previously classified with Bellaire that are more appropriately classified with North American Coal.
F-29 89 NOTE R--PARENT COMPANY CONDENSED BALANCE SHEETS The condensed balance sheets of NACCO, the parent company, at December 31 are as follows:
1994 1993 ----------------------- Current assets (including current intercompany amounts) $ 13.0 $ 7.8 Other assets 1.8 1.5 Investment in and advances from subsidiaries, net Investments NACCO Materials Handling Group 300.7 257.2 Hamilton Beach Proctor-Silex 104.7 111.3 North American Coal 15.1 37.2 Kitchen Collection 10.1 12.6 Bellaire (101.3) (102.1) ---------- ---------- 329.3 316.2 Advances from subsidiaries (45.1) (67.8) ---------- ---------- 284.2 248.4 Property, plant and equipment, net 1.2 1.3 Deferred income taxes 1.7 ---------- ---------- Total Assets $ 301.9 $ 259.0 ========== ========== Current liabilities (including current intercompany amounts) $ 18.9 $ 12.1 Deferred income and other 3.6 4.7 Deferred income taxes 6.6 Stockholders' equity 279.4 235.6 ---------- ---------- Total Liabilities and Stockholders' Equity $ 301.9 $ 259.0 ========== ==========
The credit agreement at NMHG prohibits the transfer of assets to NACCO. The credit agreements at Hamilton Beach Proctor-Silex and Kitchen Collection allow the transfer of assets to NACCO under certain circumstances. The amount of NACCO s investment in NMHG, Hamilton Beach Proctor-Silex and Kitchen Collection that was restricted at December 31, 1994, totals approximately $400.8 million. The revised credit agreement at NMHG, see Note G--"Revolving Credit Agreements and Notes Payable" will allow the transfer of $25.0 million to NACCO. There are no restrictions on the transfer of assets from North American Coal and its dividends and advances are the primary source of cash for NACCO. F-30 90 NACCO INDUSTRIES, INC. REPORT OF MANAGEMENT To the Stockholders of NACCO Industries, Inc.: The management of NACCO Industries, Inc. is responsible for the preparation, content and integrity of the financial statements and related information contained within this report. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles and include amounts that are based on informed judgments and estimates. The Company's code of conduct, communicated throughout the organization, requires adherence to high ethical standards in the conduct of the Company s business. NACCO Industries, Inc. and each of its subsidiaries maintain a system of internal controls designed to provide reasonable assurance as to the protection of assets and the integrity of the financial statements. These systems are augmented by the selection of qualified financial management personnel. In addition, an internal audit function periodically assesses the internal controls. Arthur Andersen LLP, independent certified public accountants, audits NACCO Industries, Inc. and its subsidiaries' financial statements. Its audits are conducted in accordance with generally accepted auditing standards and provide an objective and independent assessment that helps ensure fair presentation of the Company s operating results and financial position. The independent accountants have access to all financial records and related data of the Company, as well as to the minutes of stockholders' and directors' meetings. The Audit Committee of the Board of Directors, composed of independent directors, meets regularly with the independent auditors and internal auditors to review the scope of their audit reports and to discuss any action to be taken. The independent auditors and the internal auditors have free and direct access to the Audit Committee. The Audit Committee also reviews the financial reporting process and accounting policies of NACCO Industries, Inc. and each of its subsidiaries. Alfred M. Rankin, Jr. Frank B. O'Brien Steven M. Billick --------------------- ---------------- ----------------- Alfred M. Rankin, Jr. Frank B. O'Brien Steven M. Billick Chairman, President Senior Vice President-- Vice President and Controller and Chief Executive Officer Corporate Development and Chief Financial Officer
F-31 91 SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF THE PARENT NACCO INDUSTRIES, INC. AND SUBSIDIARIES PARENT COMPANY CONDENSED BALANCE SHEETS
December 31 ------------------------ 1994 1993 ----- ---- (In thousands) Current assets $ 279 $ 554 Net amounts receivable from subsidiaries 12,755 7,191 Other assets 1,753 1,544 Investment in and advances from subsidiaries, net Investments NMHG 300,672 257,244 Hamilton Beach<>Proctor-Silex 104,694 111,251 North American Coal 15,125 37,150 Kitchen Collection 10,141 12,625 Bellaire Corporation (101,329) (102,125) -------- -------- 329,303 316,145 Advances from subsidiaries (45,061) (67,793) -------- -------- 284,242 248,352 Property, plant and equipment, net 1,198 1,323 Deferred income taxes 1,699 -------- -------- Total Assets $301,926 $258,964 ======== ======== Current liabilities $ 18,942 $ 12,037 Deferred income and other 3,593 4,719 Deferred income taxes 6,582 Stockholders' equity 279,391 235,626 -------- -------- Total Liabilities and Stockholders' Equity $301,926 $258,964 ======== ======== See notes to parent company financial statements.
F-32 92 SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF THE PARENT NACCO INDUSTRIES, INC. AND SUBSIDIARIES PARENT COMPANY STATEMENTS OF INCOME
Year Ended December 31 ------------------------------------- 1994 1993 1992 ------- ------- -------- (In thousands) Income (expense): Intercompany interest income $ 1,068 $ 1,841 $ 1,283 Intercompany interest expense (3,510) (2,101) (1,676) Other - net 464 829 60 ------- ------- -------- (1,978) 569 (333) Administrative and general expenses 9,903 7,831 8,200 ------- ------- -------- Loss before income taxes (11,881) (7,262) (8,533) Income tax benefit (5,825) (1,748) (2,456) ------- ------- -------- Net loss before equity in earnings of subsidiaries and extraordinary charge (6,056) (5,514) (6,077) Equity in earnings of subsidiaries before extraordinary charge 51,328 17,107 28,945 Extraordinary charge, net-of-tax (3,218) (3,292) (110,000) ------- ------- -------- Net income (loss) $42,054 $ 8,301 $(87,132) ======= ======= ======== See notes to parent company financial statements.
F-33 93 SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF THE PARENT NACCO INDUSTRIES, INC. AND SUBSIDIARIES PARENT COMPANY STATEMENTS OF CASH FLOWS
Year Ended December 31 --------------------------------- 1994 1993 1992 -------- --------- -------- (In thousands) Operating activities Net income (loss) $ 42,054 $ 8,301 $(87,132) Equity in earnings of subsidiaries (51,328) (17,107) (28,945) Extraordinary charge, net-of-tax 3,218 3,292 110,000 -------- --------- -------- Parent company only net loss (6,056) (5,514) (6,077) Deferred income taxes (4,866) 6,908 (2,834) Income taxes net of intercompany tax payments (3,442) (3,954) 1,964 Working capital changes 983 775 (1,469) Changes in current intercompany amounts 69 49 1,106 Items of income or expense not requiring cash outlays (577) 299 530 -------- --------- -------- Net cash used by operating activities (13,889) (1,437) (6,780) Investing Activities Capital contributions to subsidiaries NMHG (24,273) (52,235) Dividends and advances, net, received from subsidiaries 40,009 45,883 33,165 Purchases of Hyster-Yale 12 3/8% debentures (11,832) (22,061) Reduction of investment in Hyster-Yale 12 3/8% debentures 3,946 25,529 Expenditures for equipment (85) (147) (246) -------- --------- -------- Net cash provided by investing activities 19,597 7,198 10,858 Financing Activities Cash dividends (6,040) (5,854) (5,645) Treasury stock sales under stock option and directors' compensation plans - net 251 212 1,622 Other - net 38 (75) (55) -------- --------- -------- Net cash used by financing activities (5,751) (5,717) (4,078) -------- --------- -------- Cash and cash equivalents Increase (decrease) for the period (43) 44 - Balance at the beginning of the period 47 3 3 -------- --------- -------- Balance at the end of the period $ 4 $ 47 $ 3 ======== ========= ======== See notes to parent company financial statements.
F-34 94 SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF THE PARENT NACCO INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO PARENT COMPANY FINANCIAL STATEMENTS For The Year Ended December 31, 1994, 1993 and 1992 The notes to consolidated financial statements, included elsewhere in this Form 10-K, are hereby incorporated by reference into these notes to parent company financial statements. NOTE A - LONG-TERM OBLIGATIONS AND GUARANTEES NACCO Industries, Inc. ("NACCO", the parent company) is a holding company which owns four operating subsidiaries. It is NACCO's policy not to guarantee the debt of such subsidiaries. NOTE B - CASH DIVIDENDS AND ADVANCES TO NACCO Dividends received from the subsidiaries were $62.7 million in 1994 and $23.3 million in 1993 and 1992. NOTE C - CAPITAL CONTRIBUTIONS TO SUBSIDIARIES The 1993 capital contribution to NMHG of $52.2 million includes the $26.7 million of cash contributed by NACCO to NMHG in 1993. In addition, NACCO contributed previously purchased Hyster-Yale 12 3/8% debentures with a cost to NACCO of $25.5 million (face value of $23.7 million) to NMHG in 1993. NOTE D - UNRESTRICTED CASH The amount of unrestricted cash available to NACCO, included in Investment in and advances from subsidiaries, net was $8.8 million at December 31, 1994. F-35 95 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS NACCO INDUSTRIES, INC. AND SUBSIDIARIES YEARS ENDED DECEMBER 31, 1994, 1993 and 1992
---------------------------------------------------------------------------------------------------------- COL A. COL B. COL C COL D. COL E. ---------------------------------------------------------------------------------------------------------- Balance Additions at Charged Charged to (D) Beginning to Other Balance at Description of Costs and Accounts-- Deductions End of Period Expenses Describe -Describe Period ---------------------------------------------------------------------------------------------------------- (In thousands) 1994 Reserves deducted from asset accounts: Allowance for doubtful accounts $5,731 $1,240 $39(C) $2,538 (A) $4,472 Allowance for discounts, adjustments and returns $5,397 $17,878 $17,107 (B) $6,168 1993 Reserves deducted from asset accounts: Allowance for doubtful accounts $5,302 $1,056 $595 (A) $32 (C) $5,731 Allowance for discounts, adjustments and returns $7,097 $16,596 $18,296 (B) $5,397 1992 Reserves deducted from asset accounts: Allowance for doubtful accounts $5,307 $845 $789 (A) $61 (C) $5,302 Allowance for discounts, adjustments and returns $6,860 $22,454 $22,217 (B) $7,097 Note A - Accounts receivable balances written off, net of recoveries. Note B - Payments. Note C - Subsidiary's foreign currency translation adjustments and other. Note D- Balances which are not requiredto be presented andthose which are immaterial have been omitted.
F-36 96 EXHIBIT INDEX (3) Articles of Incorporation and By-laws. (i) Restated Certificate of Incorporation of the Company is incorporated by reference to Exhibit 3(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172. (ii) Restated By-laws of the Company are incorporated by reference to Exhibit 3(ii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172. (4) Instruments defining the rights of security holders, including indentures. (i) The Company by this filing agrees, upon request, to file with the Securities and Exchange Commission the instruments defining the rights of holders of Long-Term debt of the Company and its subsidiaries where the total amount of securities authorized thereunder does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. (ii) The Mortgage and Security Agreement, dated April 8, 1976, between The Falkirk Mining Company (as Mortgagor) and Cooperative Power Association and United Power Association (collectively as Mortgagee) is incorporated by reference to Exhibit 4(ii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172. (iii) Indenture, dated as of August 3, 1989, between the Company and United Trust Company of New York, Trustee, with respect to the 12-3/8% Senior Subordinated Debentures due August 1, 1999 (the form of which Debenture is included in such Indenture) is incorporated herein by reference to Exhibit 4(ii) of the Hyster-Yale Materials Handling, Inc. ("Hyster-Yale") Annual Report on Form 10-K for the fiscal year ended December 31, 1989, Commission File Number 33-28812. (iv) Stockholders' Agreement, dated as of March 15, 1990, among the signatories thereto, the Company and Ameritrust Company National Association, as depository, is incorporated herein by reference to Exhibit 2 to the Schedule 13D filed on March 29, 1990 with respect to the Class B Common Stock, par value $1.00 per share, of NACCO Industries, Inc. (v) Amendment to Stockholders' Agreement, dated as of April 6, 1990, among the signatories thereto, the X-1 97 Company and Ameritrust Company National Association, as depository, is incorporated herein by reference to Exhibit 4 to the Amendment No. 1 of the Schedule 13D filed on April 11, 1990 with respect to the Class B Common Stock, par value $1.00 per share. of NACCO Industries, Inc. (vi) Amendment to Stockholders' Agreement, dated as of April 6, 1990, among the signatories thereto, the Company and Ameritrust Company National Association, as depository, is incorporated herein by reference to Exhibit 5 to the Amendment No. 1 of the Schedule 13D filed on April 11, 1990 with respect to the Class B Common Stock, par value $1.00 per share, of NACCO Industries, Inc. (vii) Amendment to Stockholders' Agreement, dated as of November 17, 1990, among the signatories thereto, the Company and Ameritrust Company National Association, as depository, is incorporated herein by reference to the Amendment No. 2 of the Schedule 13D filed on March 18, 1991 with respect to the Class B Common Stock, par value $1.00 per share, of NACCO Industries, Inc. (10) Material contracts. *(i) The NACCO Industries, Inc. 1975 Stock Option Plan (as amended and restated as of July 17, 1986) is incorporated herein by reference to Exhibit 10(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. *(ii) Form of Incentive Stock Option Agreement for incentive stock options granted before 1987 under The NACCO Industries, Inc. 1975 Stock Option Plan (as amended and restated as of July 17, 1986) is incorporated herein by reference to Exhibit 10(ii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. *(iii) Form of Incentive Stock Option Agreement for incentive stock options granted after 1986 under The NACCO Industries, Inc. 1975 Stock Option Plan (as amended and restated as of July 17, 1986) is incorporated herein by reference to Exhibit 10(iii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. X-2 98 *(iv) Form of Non-Qualified Stock Option Agreement under The NACCO Industries, Inc., 1975 Stock Option Plan (as amended and restated as of July 17, 1986) is incorporated herein by reference to Exhibit 10(iv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. *(v) The NACCO Industries, Inc. 1981 Stock Option Plan (as amended and restated as of July 17, 1986) is incorporated herein by reference to Exhibit 10(v) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. *(vi) Form of Non-Qualified Stock Option Agreement under The NACCO Industries, Inc. 1981 Stock Option Plan (as amended and restated as of July 17, 1986) is incorporated herein by reference to Exhibit 10(vi) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. *(vii) Form of Incentive Stock Option Agreement for incentive stock options granted before 1987 under The NACCO Industries, Inc. 1981 Stock Option Plan (as amended and restated as of July 17, 1986) is incorporated herein by reference to Exhibit 10(vii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. *(viii) Form of Incentive Stock Option Agreement for incentive stock options granted after 1986 under The NACCO Industries, Inc. 1981 Stock Option Plan (as amended and restated as of July 17, 1986) is incorporated herein by reference to Exhibit 10(viii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. *(ix) The Retirement Benefit Plan for Alfred M. Rankin, Jr., effective as of January 1, 1994 is attached hereto as Exhibit 10 (ix). *(x) Amendment No. 1 to the Retirement Benefit Plan for Alfred M. Rankin, Jr., dated as of March 15, 1995, is attached hereto as Exhibit 10 (x). *(xi) The North American Coal Corporation Deferred Compensation Plan for Management Employees (formerly known as the NACCO Industries, Inc. Deferred Compensation Plan for Management Employees) dated X-3 99 December 1, 1989, is incorporated herein by reference to Exhibit 10(xiii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, Commission File Number 1-9172. *(xii) Instrument of Merger by and between North American Coal, Hamilton Beach/Proctor-Silex and NACCO Materials Handling Group, Inc., effective as of December 31, 1994, relating to certain defined benefit plans, is attached hereto as Exhibit 10(xii). *(xiii) Amendment No. 3 to the NACCO Materials Handling Group, Inc. Cash Balance Plan, effective as of December 31, 1994, is incorporated herein by reference to Exhibit 10(ciii) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1994, Commission File Number 33- 28812. *(xiv) Form of the North American Coal Annual Incentive Plan is attached hereto as Exhibit 10(xiv). (xv) Agreement of Merger, dated as of January 20, 1988, among NACCO Industries, Inc., Housewares Holding Company, WE-PS Merger, Inc. and WearEver-ProctorSilex, Inc., is incorporated herein by reference to pages 8 through 97 of Exhibit 2 to the Company's Current Report on Form 8-K, dated February 1, 1988, Commission File Number 1-9172. (xvi) Shareholders Agreement, dated January 20, 1988, among NACCO Industries, Inc. and the shareholders named therein is incorporated herein by reference to pages 98 through 108 of Exhibit 2 to the Company's Current Report on Form 8-K, dated February 1, 1988, Commission File Number 1-9172. *(xvii) Amendment No. 1 to the NACCO Industries, Inc. Deferred Compensation Plan for Management Employees, dated January 1, 1993, is incorporated by reference to Exhibit 10(xvii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172. *(xviii) Amendment No. 1 to the Hyster-Yale Long-Term Incentive Compensation Plan, effective as of January 1, 1994, is incorporated herein by reference to Exhibit 10(lxxxviii) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1994, Commission File Number 33-28812. (xix) Agreement and Plan of Merger, dated as of April 7, 1989, among NACCO Industries, Inc., Yale Materials X-4 100 Handling Corporation, Acquisition I, Esco Corporation, Hyster Company and Newesco, is incorporated herein by reference to Exhibit 2.1 to Hyster-Yale Materials Handling, Inc.'s Registration Statement on Form S-1 filed May 17, 1989 (Registration Statement Number 33-28812). (xx) Agreement and Plan of Merger, dated as of April 7, 1989, among NACCO Industries, Inc., Yale Materials Handling Corporation, Acquisition II, Hyster Company and Newesco, is incorporated herein by reference to Exhibit 2.2 to Hyster-Yale Materials Handling, Inc.'s Registration Statement on Form S-1 filed May 17, 1989 (Registration Statement Number 33-28812). *(xxi) Amendment No. 2 to the NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (As Amended and Restated Effective October 1, 1994), effective as of January 1, 1995, is incorporated by reference to Exhibit 10(cvii) to Hyster- Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1994, Commission File Number 33-28812. *(xxii) Instrument of Adoption and Merger for NACCO Industries, Inc. for the NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (As Amended and Restated Effective October 1, 1994) dated December 30, 1994, is attached here to as Exhibit 10(xxii). *(xxiii) Instrument of Withdrawal and Transfer of Liabilities from The North American Coal Corporation Deferred Compensation Plan for Management Employees, effective as of December 31, 1994, is attached hereto as Exhibit 10(xxiii). *(xxiv) Amendment No. 4 to the NACCO Materials Handling Group, Inc. Profit Sharing Plan, dated as of November 30, 1994, is incorporated herein by reference to Exhibit 10(ci) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1994, Commission File Number 33- 28812. *(xxv) The Hamilton Beach/Proctor-Silex, Inc. Unfunded Benefit Plan (As Amended and Restated Effective as of January 1, 1995), is attached hereto as Exhibit 10(xxv). *(xxvi) Amendment No. 3 to the Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan, dated as of December 31, 1994, is attached hereto as Exhibit 10(xxvi). X-5 101 *(xxvii) Amendment No. 6 to The North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989), effective December 31, 1994, is attached hereto as Exhibit 10(xxvii). *(xxviii) Instrument of Merger, Amendment and Transfer of Sponsorship of Benefit Plans, effective as of August 31, 1994, is attached hereto as Exhibit 10(xxviii). *(xxix) Amendment No. 1 to The Hamilton Beach/Proctor-Silex, Inc. Unfunded Benefit Plan (As Amended and Restated Effective January 1, 1995), effective as of January 1, 1995, is attached hereto as Exhibit 10(xxix). *(xxx) Amendment No. 3 to The North American Coal Corporation Deferred Compensation Plan for Management Employees, effective as of January 1, 1995, is attached hereto as Exhibit 10(xxx). *(xxxi) Amendment No. 4 to The North American Coal Corporation Deferred Compensation Plan for Management Employees, effective April 1, 1995, is attached hereto as Exhibit 10(xxxi). *(xxxii) Amendment No. 5A to The North American Coal Corporation Salaried Employees Pension Plan, dated March 15, 1995, is attached hereto as Exhibit 10(xxxii). *(xxxiiii) Amendment No. 2A to The Hamilton Beach/Proctor- Silex, Inc. Profit Sharing Retirement Plan, dated as of March 15, 1995, is attached hereto as Exhibit 10(xxxiii). *(xxxiv) Amendment No. 3 to The North American Coal Corporation Retirement Savings Plan (As Amended and Restated Effective as of January 1, 1993), dated as of November 30, 1994, is attached as Exhibit 10(xxxiv). *(xxxv) Amendment No. 5 to the NACCO Materials Handling Group, Inc. Profit Sharing Plan, dated March 15, 1995, is incorporated herein by reference to Exhibit 10(cii) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1994, Commission File Number 33-28812. *(xxxvi) Amendment No. 2A to the NACCO Materials Handling Group, Inc. Cash Balance Plans,dated as of March 15, 1995, is incorporated herei by referene to Exhibit 10(cx) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1994, Commission File Number 33-28812. X-6 102 (xxxvii)-(xlvii) Intentionally Left Blank (xlviii) Reorganization and Merger Agreement, dated as of October 11, 1990, among Housewares Holding Company, HB-PS Holding Company, Inc., Proctor-Silex, Inc., Precis [521] Ltd., Glen Electric, Ltd. and Hamilton Beach, Inc. is incorporated herein by reference to Exhibit 10(lv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. The Company by this filing agrees, upon request, to file with the Securities and Exchange Commission any of the Exhibits and/or Schedules to the Reorganization and Merger Agreement. (xlix) Shareholders Agreement, dated as of October 11, 1990, among Housewares Holding Company, HB-PS Holding Company, Inc., Precis [521] Ltd. and Hamilton Beach Inc. is incorporated herein by reference to Exhibit 10(lvi) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (l) Indemnity Agreement, dated as of October 11, 1990, among Hamilton Beach Inc., Glen Dimplex, Precis [521] Ltd. and Glen Electric, Ltd. is incorporated herein by reference to Exhibit 10(lvii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (li) Credit Agreement, dated as of October 11, 1990, among Hamilton Beach/Proctor-Silex, Proctor-Silex Canada Inc. ("Proctor-Silex Canada"), Proctor-Silex S.A. de C.V. ("PSM"), the Lenders party thereto, The Chase Manhattan Bank (National Association), as United States agent for such Lenders (the United States Agent"), and The Chase Manhattan Bank of Canada, as Canadian agent for such Lenders (the Canadian Agent") is incorporated herein by reference to Exhibit 10(lviii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. The Company by this filing agrees, upon request, to file with the Securities and Exchange Commission any of the Exhibits and/or Schedules to the Credit Agreement. (lii) First Amendment to the Credit Agreement, dated as of December 31, 1990, among Hamilton Beach/Proctor-Silex, Proctor-Silex Canada, PSM, the Lenders party thereto, the United States Agent, and the Canadian Agent is incorporated herein by reference to Exhibit 10(lvix) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. X-7 103 (liii) Second Amendment to the Credit Agreement, dated as of March 1, 1991, among Hamilton Beach/Proctor-Silex, Proctor-Silex Canada, PSM, the Lenders party thereto, the United States Agent and the Canadian Agent is incorporated herein by reference to Exhibit 10(lx) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (liv) Pledge Agreement re: 66% Pledge of PSC Stock, dated as of October 11, 1990, between Hamilton Beach/Proctor-Silex and The Chase Manhattan Bank (National Association) is incorporated herein by reference to Exhibit 10(lx) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lv) Pledge Agreement re: 66% Pledge of PSM Stock, dated as of October 11, 1990, between Hamilton Beach/Proctor-Silex and The Chase Manhattan Bank (National Association) is incorporated herein by reference to Exhibit 10(lxii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lvi) Pledge Agreement re: 34% pledge of PSC Stock, dated as of October 11, 1990, between Hamilton Beach/Proctor-Silex and The Chase Manhattan Bank (National Association) is incorporated herein by reference to Exhibit 10(lxiii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lvii) Pledge Agreement re: 33.2% Pledge of PSM Stock, dated as of October 11, 1990, between Hamilton Beach Proctor/Silex and The Chase Manhattan Bank (National Association) is incorporated herein by reference to Exhibit 10(lxiv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lviii) Pledge Agreement, dated as of October 11, 1990, between Housewares Holding Company and The Chase Manhattan Bank (National Association) is incorporated herein by reference to Exhibit 10(lxv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lix) Pledge Agreement, dated as of October 11, 1990, between HB-PS Holding Company, Inc. and The Chase Manhattan Bank (National Association) is incorporated X-8 104 herein by reference to Exhibit 10(lxvi) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lx) Security Agreement, dated as of October 11, 1990, between Hamilton Beach/Proctor-Silex and The Chase Manhattan Bank (National Association), as the United States agent, is incorporated herein by reference to Exhibit 10(lxvii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxi) Collateral Assignment of Patents and Trademarks and Security Agreement, dated as of October 11, 1990, between Hamilton Beach/Proctor-Silex and The Chase Manhattan Bank (National Association), as the United States agent, is incorporated herein by reference to Exhibit 10(lxviii) to the Company s Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxii) NACCO Supplemental Agreement, dated as of October 11, 1990, between NACCO and The Chase Manhattan Bank (National Association), as the United States agent, is incorporated herein by reference to Exhibit 10(lxix) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxiii) Housewares Supplemental Agreement, dated as of October 11, 1990, between Housewares Holding Company and The Chase Manhattan Bank (National Association), as the United States agent, is incorporated herein by reference to Exhibit 10(lxx) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxiv) Holdings Supplemental Agreement, dated as of October 11, 1990, between HB-PS Holding Company, Inc. and The Chase Manhattan Bank (National Association), as the United States agent, is incorporated herein by reference to Exhibit 10(lxxi) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxv) Override Agreement, dated as of October 11, 1990, among the Company, Housewares Holding Company, Glen Dimplex, Precis [521] Ltd., Glen Electric, Ltd. and The Chase Manhattan Bank (National Association), as the United States agent, is incorporated herein by reference to Exhibit 10(lxxii) to the Company's Annual Report on X-9 105 Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxvi) General Security Agreement, dated as of October 11, 1990, by Proctor-Silex Canada to and in favor of The Chase Manhattan Bank of Canada, as the Canadian agent, is incorporated herein by reference to Exhibit 10(lxxiii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. *(lxvii) The Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan (as amended and restated effective January 1, 1992) is incorporated by reference to Exhibit 10(lxvii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172. *(lxviii) Form of the Hamilton Beach/Proctor-Silex, Inc. Annual Incentive Compensation Plan is attached hereto as Exhibit 10(lxviii). *(lxix) Hamilton Beach/Proctor-Silex, Inc. Long-Term Incentive Compensation Plan, effective January 1, 1993, is incorporated by reference to Exhibit 10(lxix) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172. (lxx) Amendment to the Third Amended and Restated Operating Agreement, dated as of January 31, 1990, between Hyster Company and AT&T Commercial Finance Corporation is incorporated herein by reference to Exhibit 10(xlvii) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 33-28812. *(lxxi) The North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989) is attached hereto as Exhibit 10(lxxi). *(lxxii) Amendment No. 1 to the North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989), dated as of August 6, 1993, is attached hereto as Exhibit 10(lxxii). *(lxxiii) Amendment No. 2 to the North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989), dated as of December 29, 1993, is attached hereto as Exhibit 10(lxxiii). X-10 106 (lxxiv) Short-Term Promissory Note, dated October 19, 1990, between the Company and Citibank, N.A. is incorporated herein by reference to Exhibit 10(lxxxi) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxxv) Commitment, dated as of October 1, 1990, between the Company and Morgan Guaranty Trust Company of New York is incorporated herein by reference to Exhibit 10(lxxxii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxxvi) Promissory Grid Note between the Company and Ameritrust Company National Association is incorporated herein by reference to Exhibit 10(lxxxiii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxxvii) First Amendment to the NACCO Supplemental Agreement, dated as of March 1, 1991, between the Company and The Chase Manhattan Bank (National Association), as the United States agent, is incorporated herein by reference to Exhibit 10(lxxxiv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxxviii) First Amendment to the Housewares Supplemental Agreement, dated as of March 1, 1991, between Housewares Holding Company and The Chase Manhattan Bank (National Association), as the United States agent, is incorporated herein by reference to Exhibit 10(lxxxv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxxix) First Amendment to the Holdings Supplemental Agreement, dated as of March 1, 1991, between HB-PS Holding Company and The Chase Manhattan Bank (National Association), as the United States agent, is incorporated herein by reference to Exhibit 10(lxxxvi) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. *(lxxx) The Yale Materials Handling Corporation Deferred Incentive Compensation Plan (also known as The Yale Materials Handling Corporation Short-Term Incentive Compensation Deferral Plan), dated March 1, 1984, is incorporated herein by reference to Exhibit 10(lxxi) to X-11 107 the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 33-28812. *(lxxxi) Hyster-Yale Materials Handling, Inc. Annual Incentive Compensation Plan is incorporated herein by reference to Exhibit 10(lxxxiii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. *(lxxxii) Hyster-Yale Materials Handling, Inc. Long-Term Incentive Compensation Plan, dated as of January 1, 1990, is incorporated herein by reference to Exhibit 10(lxxxix) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 1-9172. (lxxxiii)- (lxxxv) Intentionally Left Blank (lxxxvi) Amendment to the Third Amended and Restated Operating Agreement, dated as of November 7, 1991, between Hyster Company and AT&T Commercial Finance Corporation is incorporated herein by reference to Exhibit 10(1) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 33-28812. *(lxxxvii) Agreement and Plan of Merger dated as of December 20, 1993, between Hyster Company, an Oregon corporation, and Hyster Company, a Delaware corporation, is incorporated herein by reference to Exhibit 10(lxxviii) to Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. *(lxxxviii) Agreement and Plan of Merger dated as of December 20, 1993, between Yale Materials Handling Corporation, a Delaware corporation, Hyster Company, a Delaware corporation, and Hyster-Yale Materials Handling, Inc., a Delaware corporation, is incorporated herein by reference to Exhibit 10(lxxix) to Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. *(lxxxix) Form of NACCO Industries, Inc. Annual Incentive Compensation Plan is attached hereto as Exhibit 10(lxxxix). *(xc) Amendment No. 3 to The North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989), dated as of March 11, 1994, is attached hereto as Exhibit 10(xc). X-12 108 *(xci) The NACCO Materials Handling Group, Inc. Unfunded Benefit Plan, Amended and Restated as of October 1, 1994, is incorporated herein by reference to Exhibit 10(cv) of the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1994, Commission File Number 33-28812. (xcii) Credit Agreement, dated as of September 27, 1991, among the North American Coal Corporation, Citibank, N.A., Ameritrust Company National Association and Morgan Guaranty Trust Company of New York, as agent is incorporated herein by reference to Exhibit 10(xcii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. (xciii) Assumption Agreement, made as of December 20, 1991, between the Company and Citicorp North America, Inc., as agent is incorporated herein by reference to Exhibit 10(xciii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. (xciv) Subordination Agreement, dated September 27, 1991, among The North American Coal Corporation, the Company and Morgan Guaranty Trust Company of New York, as agent, is incorporated herein by reference to Exhibit 10(xciv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. (xcv)-(xcvi) Intentionally Left Blank (xcvii) Marketing Agreement, dated as of January 1, 1992, by and between, Yale Materials Handling Corporation and Jungheinrich Aktiengellschaft (AG) is incorporated herein by reference to Exhibit 10(lviii) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 33-28812. *(xcviii) The North American Coal Corporation Value Appreciation Plan, as amended on March 11, 1992 is incorporated herein by reference to Exhibit 10(xcviii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Commission File Number 1-9172. *(xcix) Amendment No. 1 to The North American Coal Corporation Value Appreciation Plan, dated as of X-13 109 December 14, 1994, is attached hereto as Exhibit 10(xcix). (c)- (civ) Intentionally Left Blank *(cv) Master Trust Agreement between NACCO Industries, Inc. and State Street Bank and Trust Company, dated October 1, 1992, is incorporated by reference to Exhibit 10(cv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172. *(cvi) Amendment No. 1 to the Master Trust Agreement between NACCO Industries, Inc. and State Street Bank and Trust Company, effective January 1, 1993, is attached hereto as Exhibit 10(cvi). *(cvii) The North American Coal Corporation Retirement Savings Plan (formerly known as the NACCO Industries, Inc. Savings Plan), effective January 1, 1993, is incorporated by reference to Exhibit 10(cvii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172. (cviii)-(cix) Intentionally Left Blank *(cx) NACCO Industries, Inc. Executive Long-Term Incentive Compensation Plan, effective January 1, 1991, is incorporated by reference to Exhibit 10(cx) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172. *(cxi) NACCO Industries, Inc. Non-Employee Directors' Equity Compensation Plan, effective January 1, 1992, is incorporated by reference to Exhibit 10(cxi) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172. (cxii)-(cxiii) Intentionally Left Blank *(cxiv) The Hyster-Yale Profit Sharing Plan, amended and restated as of November 11, 1992, is incorporated herein by reference to Exhibit 10(lxii) of the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 33-28812. (cxv) Intentionally Left Blank (cxvi) Amendment to the Third Amended and Restated Operating Agreement, dated as of January 31, 1990, between Hyster Company and PacifiCorp Credit, Inc. is incorporated herein by reference to Exhibit 10(xlvi) to X-14 110 the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1990, Commission File Number 33-28812. *(cxvii) The Hyster-Yale Cash Balance Plan, is incorporated herein by reference to Exhibit 10(lxv) of the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 33-28812. (cxviii)-(cxxiii) Intentionally Left Blank *(cxxiv) Amendment No. 1 to the Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan, as restated effective January 1, 1989, is incorporated by reference to Exhibit 10(cxxiv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 1-9172. *(cxxv) The Hamilton Beach/Proctor-Silex, Inc. Employees' Retirement Savings Plan, as amended and restated effective January 1, 1994, is incorporated by reference to Exhibit 10(cxxv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 1-9172. (cxxvi) Intentionally Left Blank *(cxxix) Amendment No. 1, dated as of May 13, 1993, to the Hyster-Yale Profit Sharing Plan (now known as the NACCO Materials Handling Group Profit Sharing Plan) is incorporated herein by reference to Exhibit 10 (lxxxi) of the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. *(cxxx) Amendment No. 2, dated effective January 1, 1994, to the Hyster-Yale Profit Sharing Plan (now known as the NACCO Materials Handling Group Profit Sharing Plan) is incorporated herein by reference to Exhibit 10 (lxxxv) of the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. *(cxxxi) Amendment No. 1 dated as of May 27, 1993 to the Hyster-Yale Cash Balance Plan (now known as the NACCO Materials Handling Group Cash Balance Plan) is incorporated herein by reference to Exhibit 10 (lxxxvi) of the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. X-15 111 *(cxxxii) Amendment No. 2 effective as of December 31, 1993 to the Hyster-Yale Cash Balance Plan (now known as the NACCO Materials Handling Group Cash Balance Plan) is incorporated herein by reference to Exhibit 10 (lxxxvii) of the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. *(cxxxiii) Amendment No. 2 effective as of December 31, 1993 to the Hyster-Yale Materials Handling, Inc. Long-Term Incentive Compensation Plan is incorporated herein by reference to Exhibit 10 (lxxxxiii) of the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. *(cxxxiv) Amendment No. 1 effective as of January 1, 1994 to The North American Coal Corporation Retirement Savings Plan is incorporated herein by reference to Exhibit 10(cxxxiv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 1-9172. *(cxxxv) Amendment No. 2 effective as of January 1, 1994 to The North American Coal Corporation Retirement Savings Plan is incorporated herein by reference to Exhibit 10(cxxxv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 1-9172. *(cxxxvi) Amendment No. 1 effective as of January 1, 1994 to the Hyster-Yale Materials Handling, Inc. Annual Incentive Compensation Plan (now known as the NACCO Materials Handling Group, Inc. Annual Incentive Compensation Plan) is incorporated herein by reference to Exhibit 10(lxxxx) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. (cxxxvii) Intentionally Left Blank *(cxxxviii) Master Trust Agreement for Defined Benefit Plans between NACCO Industries, Inc. and State Street Bank and Trust Company, dated January 1, 1994 is incorporated herein by reference to Exhibit 10(cxxxviii)to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 1-9172. *(cxxxix) Amendment No. 1 to the Master Trust Agreement for the Defined Benefit Plans between NACCO Industries, Inc. and State Street Bank and Trust Company, effective X-16 112 as of January 1, 1995, is attached hereto as Exhibit 10(cxxxix). (cxl) Amendment No. 4 dated as of June 24, 1993 to the Credit Agreement among Hamilton Beach/Proctor-Silex, Inc., Proctor-Silex Canada, Inc., Proctor-Silex S.A. deC.V., the banks named on the signatory pages and The Chase Manhattan Bank is incorporated herein by reference to Exhibit (cxxxx) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 1-9172. (cxli) Consent and Authorization with reference made to the Credit Agreement dated October 11, 1990, as amended among Hamilton Beach/Proctor-Silex, Inc., Proctor-Silex Canada, Inc., Proctor-Silex S.A. de C.V., the banks named on the signatory pages and The Chase Manhattan Bank is incorporated herein by reference to Exhibit (cxxxxi) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 1-9172. (cxlii) Amendment No. 5 to the Credit Agreement dated as of December 23, 1993 among Hamilton Beach/Proctor-Silex, Inc., Proctor-Silex Canada, Inc., Proctor-Silex S.A. de C.V., the banks and financial institutions listed on the signature pages thereto, The Chase Manhattan Bank, a United States Agent, The Chase Manhattan Bank of Canada, as Canadian Agent is incorporated herein by reference to Exhibit 10(cxxxxii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 1-9172. (cxliii) Amendment No. 1 to the Credit Agreement dated as of July 28, 1993 among The North American Coal Corporation and the banks listed on the signatory pages and Morgan Trust Company of New York, as Agent is incorporated herein by reference to Exhibit 10(cxxxxiii) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 1-9172. (cxliv) Amendment No. 1 to the Term Loan Agreement, effective as of February , 1993, between The Kitchen Collection, Inc. and Society National Bank is incorporated herein by reference to Exhibit 10(cxxxxiv) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 1-9172. (cxlv) Amended and Restated Credit Agreement dated as of July 30, 1993 among Citicorp North America, Inc., X-17 113 Hyster-Yale Materials Handling, Inc., and Hyster Company is incorporated herein by reference to Exhibit 10(lxxvi) to the Hyster-Yale Quarterly Report on Form 10-Q for the quarter ended June 30, 1993, Commission File Number 33- 28812. (cxlvi) Reaffirmation Amendment and Acknowledgment Agreement dated July 30, 1993 among Hyster-Yale Materials Handling, Inc., Yale Materials Handling Corporation, Hyster Company, the Company and Citicorp North America, Inc., individually and as Agent for the various Lenders, is incorporated herein by reference to Exhibit 10(lxxx) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. (cxlvii) Amendment No. 1 dated as of December 31, 1993 to the Amended and Restated Credit Agreement dated as of July 30, 1993 among Hyster-Yale Materials Handling, Inc., Yale Materials Handling Corporation, Hyster Company, the Lenders party thereto, and Citicorp North America, Inc., individually and as Agent, is incorporated herein by reference to Exhibit 10(lxxxi) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. (cxlviii) Reaffirmation, Amendment and Acknowledgment Agreement dated as of December 31, 1993 among Hyster-Yale Materials Handling, Inc., Yale Materials Handling Corporation, Hyster Company and Citicorp North America, Inc., as Agent for the Lenders, is incorporated herein by reference to Exhibit 10(lxxxii) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. (cxlix) Reaffirmation, Amendment and Acknowledgment Agreement dated as of January 1, 1994 among Hyster-Yale Materials Handling, Inc., NACCO Materials Handling Group, Inc. and Citicorp North America, Inc. as Agent for the Lenders, is incorporated herein by reference to Exhibit 10(lxxxiii) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Commission File Number 33-28812. (cl) Amended and Restated Credit Agreement, dated as of May 10, 1994 among Hamilton Beach#Proctor-Silex, Inc., Proctor-Silex Canada, Inc., Proctor-Silex S.A. DE C.V., the banks named on the signatory pages and the Chase Manhattan Bank is incorporated herein by reference to as X-18 114 Exhibit 10 (cl) to the NACCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, Commission File Number 1-9172. (cli) Confirmation Agreement dated May 10, 1994 among Hamilton Beach#Proctor-Silex, Inc., Housewares Holding Company, Precis [521] Ltd., HB-PS Holding Company, Glen Dimplex, Glen Electric, Ltd., the banks named on the signatory pages, the Chase Manhattan Bank and the Chase Manhattan Bank of Canada is incorporated herein by reference to Exhibit 10 (cli) to the NACCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended on June 30, 1994, Commission File Number 1-9172. (clii) Term Note Agreement dated May 10, 1994 by and between The Kitchen Collection, Inc. and Society National Bank is incorporated herein by reference to as Exhibit 10 (clii) to the NACCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, Commission File Number 1-9172. *(cliii) Amendment No. 2 to The North American Coal Corporation Deferred Compensation Plan for Management Employees, effective January 1, 1994, is incorporated herein by reference to Exhibit 10 (cliii) to the NACCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, Commission File Number 1- 9172. *(cliv) Amendment No. 2 to the Hamilton Beach#Proctor- Silex, Inc. Profit Sharing Retirement Plan, effective March 15, 1994 is incorporated herein by reference to as Exhibit 10 (cliv) to the NACCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, Commission File Number 1-9172. (clv) Intentionally Left Blank *(clvii) Amendment No. 3 to The North American Coal Corporation Salaried Employees Pension Plan, effective March 15, 1994 is incorporated herein by reference to as Exhibit 10 (clvii) to the NACCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, Commission File Number 1-9172. *(clviii) Amendment No. 2 to the Hyster-Yale Materials Handling, Inc. Annual Incentive Compensation Plan effective January 1, 1994 is incorporated herein by reference to Exhibit 10 (1xxxxiv) to the Hyster-Yale Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, Commission File Number 33-28812. X-19 115 *(clix) Amendment No. 3 to the Hyster-Yale Materials Handling, Inc. Long-Term Incentive Compensation Plan effective January 1, 1994 is incorporated herein by reference to Exhibit 10 (lxxxxv) to the Hyster-Yale Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, Commission File Number 33-28812. *(clx) Amendment No. 3 to the NACCO Materials Handling Group, Inc. Profit Sharing Plan effective January 1, 1994 is incorporated herein by reference to Exhibit 10 (lxxxxvi) to the Hyster-Yale Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, Commission File Number 33-28812. (clxi) Intentionally Left Blank *(clxii) Amendment No. 2, dated June 29, 1994, to the Amended and Restated Credit Agreement among Hyster-Yale Materials Handling, Inc., NACCO Materials Handling Group, Inc., the banks listed on the signatory page and Citicorp North America, Inc. is incorporated herein by reference to Exhibit 10 (lxxxxviii) to the Hyster-Yale Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, Commission File Number 33-28812. *(clxiii) Amendment No. 4 to the North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989), effective January 1, 1994 is incorporated herein by reference to Exhibit 10 (clxiii) to the NACCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1994, Commission File Number 1-9172. *(clxiv) Amendment No. 5 to The North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989) effective as of July 1, 1994 is incorporated herein by reference to as Exhibit (clxiv) to the NACCO Industries, Inc, Quarterly Report on Form 10-Q for the quarter ended September 30, 1994, Commission File Number 1-9172. *(clxv) The North American Coal Corporation Supplemental Retirement Benefit Plan as amended and restated effective September 1, 1994 is incorporated by reference to Exhibit 10 (clxv) to the NACCO Industries, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 1994, Commission File Number 1- 9172. *(clxvi) Amendment No. 1 to The NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (As Amended and Restated effective October 1, 1994) is incorporated X-20 116 herein by reference to Exhibit 10 (xcix) to the Hyster-Yale Quarterly Report on Form 10-Q for the quarter ended September 30, 1994, Commission File Number 33-28812. (clxvii) Amendment dated as of January 1, 1994 to the Third Amendment and Restated Operating Agreement dated as of November 7, 1991, between NACCO Materials Handling Group and AT&T Commercial Finance Corporation is incorporated herein by reference to Exhibit 10(c) to the Hyster-Yale Quarterly Report on Form 10-Q for the quarter ended September 30, 1994, Commission File Number 330-28812. (11) Statement re computation of per share earnings. The computation of earnings per share is attached hereto as Exhibit 11. (21) Subsidiaries. A list of the subsidiaries of the Company is attached hereto as Exhibit 21. (23) Consents of experts and counsel. (i) The consent of Arthur Andersen LLP, independent accountant, is attached hereto as Exhibit 23(i). (24) Powers of Attorney (i) A manually signed copy of a power of attorney for Owsley Brown II is attached hereto as Exhibit 24(i). (ii) A manually signed copy of a power of attorney for John J. Dwyer is attached hereto as Exhibit 24(ii). (iii) A manually signed copy of a power of attorney for Robert M. Gates is attached as Exhibit 24(iii) (iv) A manually signed copy of a power of attorney for E. Bradley Jones is attached hereto as Exhibit 24(iv). (v) A manually signed copy of a power of attorney for Dennis W. LaBarre is attached hereto as Exhibit 24(v). (vi) A manually signed copy of a power of attorney for Alfred M. Rankin, Jr. is attached hereto as Exhibit 24(vi). (vii) A manually signed copy of a power of attorney for John C. Sawhill is attached hereto as Exhibit 24(vii). (viii) A manually signed copy of a power of attorney for Britton T. Taplin is attached hereto as Exhibit 24 (viii). X-21 117 (ix) A manually signed copy of a power of attorney for Frank E. Taplin, Jr. is attached hereto as Exhibit 24 (ix). (x) A manually signed copy of a power of attorney for Steven M. Billick is attached hereto as Exhibit 24(x). (27) Financial Data Schedule -- filed electronically for SEC information purposes only. (99) Other exhibits not required to otherwise be filed.** (i) Audited Financial Statements for The North American Coal Corporation for the fiscal year ended December 31, 1994, are attached as Exhibit 99(i). (ii) Audited Financial Statements for Hamilton Beach/Proctor-Silex, Inc. for the fiscal year ended December 31, 1994, are attached as Exhibit 99(ii). (iii) Audited Financial Statements for The Kitchen Collection, Inc. for the fiscal year ended December 31, 1994, are attached as Exhibit 99(iii). (iv) Audited Financial Statements for NACCO Materials Handling Group, Inc. for the fiscal year ended December 31, 1994, are incorporated herein by reference to Item 8, Item 14(A)(1) and (2), and Item 14(D) to the Hyster-Yale Annual Report on Form 10-K for the fiscal year ended December 31, 1994, Commission File Number 33-28812. ______________________________ * Management contract or compensation plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of this Annual Report on Form 10-K. ** Audited Financial Statements of subsidiary companies are not required disclosures and are included only for information. These statements do not reflect certain adjustments (including X-22 118 reclassifications and eliminations) that are required by GAAP in the preparation of NACCO Industries, Inc. and subsidiaries consolidated financial statements included in Part IV hereof, and should be read accordingly. Exhibit.doc X-23 EX-10.IX 2 EXHIBIT 10(IX) 1 Exhibit 10(ix) RETIREMENT BENEFIT PLAN FOR ALFRED M. RANKIN, JR. (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994) WHEREAS, NACCO Industries, Inc. (the "Employer") adopted the Retirement Benefit Plan for Alfred M. Rankin Jr. (the "Plan") effective as of March 1, 1989; and WHEREAS, the Plan provided retirement benefits for Mr. Rankin based on benefits which were provided to employees of the Employer under the qualified pension plan known as The NACCO Industries, Inc. Pension Plan for Salaried Employees ("Plan 006"); and WHEREAS, effective as of December 31, 1993, benefits under Plan 006 were frozen for all participants and Plan 006 was merged out of existence; and WHEREAS, effective as of December 31, 1993, benefits under the Plan for Mr. Rankin were also frozen; and WHEREAS, effective as of December 31, 1993, the Employer became a participating employer under the profit sharing portion of the NACCO Materials Handling Group, Inc. Profit Sharing Plan (the "Profit Sharing Plan"); and WHEREAS, pursuant to the Employer's Instrument of Adoption of the Profit Sharing Plan, Mr. Rankin is excluded from participating in the Profit Sharing Plan; and WHEREAS, the Employer now desires to lift the benefit freeze under the Plan retroactive to January 1, 1994 and to provide for Mr. Rankin the benefits which would otherwise have been made for him under the Profit Sharing Plan if he had been eligible to participate in such Plan and such participation was not limited by certain provisions of the Internal Revenue Code; and WHEREAS, the Employer and Mr. Rankin desire to restructure the benefits that accrued under the Plan prior to January 1, 1994. NOW THEREFORE, the Employer hereby adopts and publishes this amendment and restatement of the Plan, which shall contain the following terms and conditions: ARTICLE I PREFACE SECTION 1.1. EFFECTIVE DATE AND PLAN YEAR. The effective date of this amendment and restatement of the Plan is January 1, 1994. The Plan Year of the Plan is the calendar year. VOL402CL Doc: 75539.1 2 2 SECTION 1.2. PURPOSE OF THE PLAN. The purpose of this Plan is to provide retirement benefits to the Participant. SECTION 1.3. GOVERNING LAW. This Plan shall be regulated, construed and administered under the laws of the State of Ohio, except when preempted by federal law. SECTION 1.4. SEVERABILITY. If any provision of this Plan or the application thereof to any circumstances(s) or person(s) is held to be invalid by a court of competent jurisdiction, the remainder of the Plan and the application of such provision to other circumstances or persons shall not be affected thereby. ARTICLE II DEFINITIONS ----------- SECTION 2.1. The following words and phrases when used in this Plan with initial capital letters shall have the following respective meanings, unless the context clearly indicates otherwise. SECTION 2.1 (1). "ACCOUNT" shall mean the record maintained in accordance with Section 3.3 by the Employer for the Participant's Supplemental Benefit. SECTION 2.1 (2). "BENEFICIARY" shall mean such person or persons (natural or otherwise) as may be designated by the Participant as his Beneficiary under this Plan. Such a designation may be made, and may be revoked or changed (without the consent of any previously designated Beneficiary), only by an instrument (in form acceptable to the Employer) signed by the Participant and filed with the Employer prior to the Participant's death. In the absence of such a designation and at any other time when there is no existing Beneficiary designated by the Participant to whom payment is to be made pursuant to his designation, his Beneficiary shall be his surviving spouse or, if none, his estate. A person designated by a Participant as his Beneficiary who or which ceases to exist shall not be entitled to any part of any payment thereafter to be made to the Participant's Beneficiary unless the Participant's designation specifically provided to the contrary. If two or more persons designated as a Participant's Beneficiary are in existence, the amount of any payment to the Beneficiary under this Plan shall be divided equally among such persons unless the Participant's designation specifically provided to the contrary. SECTION 2.1 (3). "CODE" shall mean the Internal Revenue Code of 1986, as it has been and may be amended from time to time. SECTION 2.1 (4). "CODE LIMITATIONS" shall mean the limitations imposed by Sections 401(a)(17) and 415 of the Code, or VOL402CL Doc: 75539.1 3 3 any successor(s) thereto, on the amount of the contributions which may be made to the Profit Sharing Plan for a participant. SECTION 2.1 (5). "COMPENSATION" shall have the same meaning as under the Profit Sharing Plan, except that Compensation (a) shall not be subject to the dollar limitation imposed by Code Section 401(a)(17), and (b) shall be deemed to include cash in lieu of perquisites and the amount of compensation deferred by the Participant under The North American Coal Corporation Deferred Compensation Plan for Management Employees (prior to 1995) or the NACCO Materials Handling Group, Inc., Unfunded Benefit Plan (after 1994). SECTION 2.1 (6). "CONTROLLED GROUP" shall mean the Employer and any other company, the employees of which, together with the employees of the Employer, are required to be treated as if they were employed by a single employer pursuant to Section 414 of the Code. SECTION 2.1 (7). "EMPLOYER" shall mean NACCO Industries, Inc. SECTION 2.1 (8). "INSOLVENT". For purposes of this Plan, the Employer shall be considered Insolvent at such time as it (a) is unable to pay its debts as they mature, or (b) is subject to a pending voluntary or involuntary proceeding as a debtor under the United States Bankruptcy Code. SECTION 2.1 (9). "PARTICIPANT" shall mean Alfred M. Rankin, Jr. SECTION 2.1 (10). "PLAN" shall mean this NACCO Industries, Inc. Retirement Benefit Plan for Alfred M. Rankin, Jr., as it may be amended from time to time. SECTION 2.1 (11). "PROFIT SHARING PLAN" shall mean the profit sharing portion of the NACCO Materials Handling Group, Inc. Profit Sharing Plan, as such plan may be amended from time to time. SECTION 2.1 (12). "SUPPLEMENTAL BENEFIT" shall mean the sum of the Participant's Transitional Benefit and his Supplemental Profit Sharing Plan Benefit. SECTION 2.1 (13). "SUPPLEMENTAL PROFIT SHARING CONTRIBUTIONS" shall mean the amounts credited to a Participant's Account pursuant to Section 3.1(b). SECTION 2.1 (14). "SUPPLEMENTAL PROFIT SHARING PLAN BENEFIT" shall mean the retirement benefit determined under Section 3.1. SECTION 2.1 (15). "TRANSITIONAL BENEFIT" shall mean the amounts credited to the Participant's Account pursuant to Section 3.2. VOL402CL Doc: 75539.1 4 4 SECTION 2.1 (16). "UNFORESEEABLE EMERGENCY" shall mean an event which results (or will result) in severe financial hardship to the Participant as a consequence of unexpected illness or accident or loss of the Participant's property due to casualty or other similar extraordinary or unforeseen circumstances out of the control of the Participant. SECTION 2.1 (17). "VALUATION DATE" shall mean the last day of each Plan Year, plus such additional date(s), if any, selected by the Employer. ARTICLE III ----------- SUPPLEMENTAL BENEFIT -------------------- SECTION 3.1. AMOUNT OF SUPPLEMENTAL PROFIT SHARING BENEFIT. (a) Effective as of January 1, 1994, the Employer shall credit the Participant's Account with an amount (hereinafter the "Opening Account Balance") equal to $487,961, which amount shall be substituted for and completely replace the amount of the Participant's "Supplemental Retirement Benefit" as of December 31, 1993 under the Plan (as such term was defined in Section 1(e) of the Plan prior to the adoption of this amendment and restatement). (b) Effective as of January 1, 1994, the Employer shall also credit the Participant's Account annually with amounts (hereinafter referred to as the "Supplemental Profit Sharing Contributions") equal to the amounts which would have been contributed by the Employer to the Profit Sharing Plan for such Participant, from time to time, as profit sharing contributions if (i) the Participant had been eligible to participate in the Profit Sharing Plan, (ii) the Profit Sharing Plan did not contain the Code Limitations, and (iii) the term "Compensation" (as defined in Section 2.1(5) hereof) were used for purposes of determining the amount of profit sharing contributions under the Plan. (c) The Employer's obligation to credit the Participant's Account with Supplemental Profit Sharing Contributions pursuant to this Section shall automatically terminate on (i) the date the Participant ceases employment with the Controlled Group, or (ii) the date the Plan is terminated pursuant to Article VII. SECTION 3.2. AMOUNT OF TRANSITIONAL BENEFIT. In order to compensate the Participant for pension benefits from his prior employer that he has foregone, the Employer shall also credit the Participant's Account with an amount (hereinafter referred to as the "Transitional Benefits") equal to (a) $34,900 on December 31, 1994 and (b) in each subsequent year, an amount that is 4 percent greater than the amount credited under this Section 3.2 the preceding year. The Transitional Benefits described in the preceding sentence shall be credited annually as of each VOL402CL Doc: 75539.1 5 5 December 31, commencing on December 31, 1994 and ending on the earlier of the Participant's first termination of employment with the Controlled Group for any reason or the termination of the Plan. SECTION 3.3. PARTICIPANT'S ACCOUNT. The Employer shall establish and maintain on its books an Account for the Participant which shall contain the following entries: (a) the Opening Account Balance, which shall be credited to the Participant's Account as of January 1, 1994; and (b) the Supplemental Profit Sharing Contributions which shall be credited to the Participant's Account at the same time as actual profit sharing contributions are credited to the accounts of the participants in the Profit Sharing Plan; (c) The Transitional Benefits, which shall be credited to the Participant's Account on each December 31; (d) Earnings, as determined under Section 3.4; and (e) Debits for any distributions made from the Account pursuant to Article VI. SECTION 3.4. EARNINGS. (a) WHILE ACTIVELY EMPLOYED. At the end of each calendar month during a calendar year while the Participant is employed by an Employer on December 31 of such year, the Account of the Participant shall be credited with an amount determined by multiplying the Participant's average Account balance during such month by the blended rate earned during such month by the Stable Asset Fund under the Profit Sharing Plan. Notwithstanding the foregoing, in the event that the "Adjusted ROE" determined for such calendar year exceeds the rate credited to the Participant's Account under the preceding sentence, the Participant's Account shall retroactively be credited with the difference between (i) the amount determined under the preceding sentence, and (ii) the amount determined by multiplying the Participant's average Account balance during each month of such calendar year by the Adjusted ROE determined for such calendar year, compounded monthly. (b) FOLLOWING TERMINATION. After the Participant has terminated employment with the Controlled Group, his Account shall be credited with earnings as described in subsection (a) of this Section, as modified by this subsection (b), until his Account has been distributed in full in accordance with Article V. The Adjusted ROE calculation described in the second sentence of subsection (a) shall be made during the month in which the Participant terminates employment and shall be based on the year-to-date Adjusted ROE for the month ending prior to the date the Participant terminated employment, as calculated by the Employer. For any subsequent month, the Adjusted ROE calculation described VOL402CL Doc: 75539.1 6 6 in the second sentence of subsection (a) shall not apply. The Stable Asset Fund calculation described in the first sentence of subsection (a) for the month in which the Participant receives a distribution from his Account shall be based on the blended rate earned during the preceding month by the Stable Asset Fund. (c) DEFINITION OF ADJUSTED ROE. For purposes of this Section, "Adjusted ROE" shall mean the average return on equity of the Employer calculated by the Employer for the applicable time period, based on the following formula: Net Income (before extraordinary charges + Current Year - extraordinary items relating to financings) Amortization of Goodwill ----------------------------------------------------------------------- Weighted Average (Shareholder Equity + Accumulated Amortization of Goodwill + UMWA Adjustment) Adjusted ROE shall be determined at least annually by the Employer. ARTICLE IV VESTING ------- SECTION 4.1. VESTING. The Participant shall be 100% vested in his Supplemental Benefit hereunder. ARTICLE V DISTRIBUTION OF SUPPLEMENTAL BENEFIT ------------------------------------ SECTION 5.1. FORM AND TIMING OF DISTRIBUTION. (a) The Participant's Supplemental Benefit shall be distributed to the Participant in the form of ten annual installments with each installment being based on the value of the Participant's Account on the Valuation Date immediately preceding the date such installment is to be paid and being a fraction of such value in which the numerator is one and the denominator is the total number of remaining installments to be paid. The first annual installment payment of the Supplemental Benefit shall be made to the Participant on the first day of the calendar year following the earlier of the year in which the Participant terminates employment with the Controlled Group or the year in which he attains age 70 (but not before the year in which he attains age 65), and each subsequent installment (if any) shall be made to the Participant as soon as practicable following the anniversary of such date. (b) Notwithstanding the foregoing, the Participant may elect an alternate form of distribution (including a lump sum distribution) by filing a notice in writing, signed by the Participant and filed with the Secretary of the Employer while the Participant is alive and at least one year prior to the commencement of benefits under subsection (a) of this Section. Any such selection of the form of benefit may be changed at any VOL402CL Doc: 75539.1 7 7 time and from time to time, without the consent of any existing Beneficiary or any other person, by filing a later selection in writing that is signed by the Participant and filed with the Secretary of the Employer while the Participant is alive and at least one year prior to the commencement of benefits under subsection (a) of this Section. (c) In the event of the death of the Participant, his Beneficiary shall receive a lump sum distribution of the balance of the Participant's Account as soon as practicable after the Participant's death. Notwithstanding the foregoing, the Participant may elect an alternate form of distribution for his Beneficiary by filing a notice in writing, signed by the Participant and filed with the Secretary of the Employer while the Participant is alive and at least one year prior to the commencement of benefits under subsection (a) of this Section. (d) Notwithstanding the foregoing, the Employer may at any time, upon written request of the Participant, cause to be paid to such Participant an amount equal to all or any part of the Participant's Account if the Employer determines, in its absolute discretion based on such reasonable evidence as it shall require, that such a payment or payments is necessary for the purpose of alleviating the consequences of an Unforeseeable Emergency occurring with respect to the Participant. Payments of amounts because of an Unforeseeable Emergency shall be permitted only to the extent reasonably necessary to satisfy the emergency need. ARTICLE VI MISCELLANEOUS ------------- SECTION 6.1. LIMITATION ON RIGHTS OF PARTICIPANT AND BENEFICIARIES - NO LIEN. This Plan is designed to be an unfunded, nonqualified plan and the entire cost of this Plan shall be paid from the general assets of the Employer. No liability for the payment of benefits under the Plan shall be imposed upon any officer, director, employee, or stockholder of the Employer. Nothing contained herein shall be deemed to create a lien in favor of the Participant or any Beneficiary on any assets of any Employer. The establishment of the Participant's Account hereunder is solely for the Employer's convenience in administering the Plan and amounts "credited" to the Account shall continue for all purposes to be part of the general assets of the Employer. The Participant's Account is merely a record of the value of the Employer's unsecured contractual obligation to the Participant and his Beneficiary under the Plan and the Employer shall have no obligation to purchase any assets that do not remain subject to the claims of the creditors of the Employer for use in connection with the Plan. The Participant and each Beneficiary shall have the status of a general unsecured creditor of the Employer and shall have no right to, prior claim to, or security interest in, any assets of the Employer. VOL402CL Doc: 75539.1 8 8 SECTION 6.2. NONALIENATION. No right or interest of the Participant or any Beneficiary under this Plan shall be anticipated, assigned (either at law or in equity) or alienated by the Participant or Beneficiary, nor shall any such right or interest be subject to attachment, garnishment, levy, execution or other legal or equitable process or in any manner be liable for or subject to the debts of the Participant or Beneficiary. If the Participant or any Beneficiary shall attempt to or shall alienate, sell, transfer, assign, pledge or otherwise encumber his benefits under the Plan or any part thereof, or if by reason of his bankruptcy or other event happening at any time such benefits would devolve upon anyone else or would not be enjoyed by him, then the Employer may terminate his interest in any such benefit and hold or apply it to or for his benefit or the benefit of his spouse, children or other person or persons in fact dependent upon him, or any of them, in such a manner as the Employer may deem proper; provided, however, that the provisions of this sentence shall not be applicable to the surviving spouse of the deceased Participant if the Employer consents to such inapplicability, which consent shall not unreasonably be withheld. SECTION 6.3. EMPLOYMENT RIGHTS. Employment rights shall not be enlarged or affected hereby. The Employer shall continue to have the right to discharge or retire the Participant, with or without cause. SECTION 6.4. ADMINISTRATION OF PLAN. (a) The Nominating, Organization and Compensation Committee of the Board of Directors of the Employer (the "Committee") shall be responsible for the general administration of the Plan and for carrying out the provisions hereof and, for purposes of the Employee Retirement Income Security Act of 1974, as amended, the Employer shall be the plan sponsor and the plan administrator. The Committee shall interpret where necessary, in its reasonable and good faith judgment, the provisions of the Plan and shall determine the rights and status of the Participant and Beneficiaries hereunder (including, without limitation, the amount of any Supplemental Benefit to which the Participant or a Beneficiary may be entitled under the Plan). The Participant or Beneficiary shall be entitled to submit issues and comments in writing to the Committee for its consideration in connection with any such interpretation or determination. The interpretations and findings of the Committee shall be final and conclusive as to all interested persons for all purposes of the Plan. (b) Either the Committee or the Employer may, from time to time, delegate all or part of the administrative powers, duties and authorities delegated to it under this Plan to such person or persons, office or committee as it shall select. SECTION 6.5. PAYMENT TO GUARDIAN. If a benefit payable hereunder is payable to a minor, to a person declared incompetent or to a person incapable of handling the disposition of his property, the Employer may direct payment of such benefit to the VOL402CL Doc: 75539.1 9 9 guardian, legal representative or person having the care and custody of such minor, incompetent or person. The Employer may require such proof of incompetency, minority, incapacity or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Employer from all liability with respect to such benefit. SECTION 6.6. STATEMENT OF ACCOUNT. The Employer shall deliver to the Participant a written statement of his Account as of the end of each calendar year. ARTICLE VII AMENDMENT AND TERMINATION ------------------------- SECTION 7.1. AMENDMENT. Subject to Section 7.3, the Committee does hereby reserve the right to amend, at any time, any or all of the provisions of the Plan, without the consent of any the Participant, Beneficiary or any other person. Any such amendment shall be expressed in an instrument executed by an officer of the Employer on the order of the Committee and shall become effective as of the date designated in such instrument or, if no such date is specified, on the date of its execution. SECTION 7.2. TERMINATION. Subject to Section 7.3, the Committee does hereby reserve the right to terminate the Plan at any time without the consent of the Participant, Beneficiary or any other person. Such termination shall be expressed in an instrument executed by an officer of the Employer on the order of the Committee and shall become effective as of the date designated in such instrument, or if no date is specified, on the date of its execution. SECTION 7.3. LIMITATIONS ON AMENDMENT AND TERMINATION. Notwithstanding the foregoing provisions of this Article, no amendment or termination of the Plan shall, without the written consent of the Participant (or, in the case of his death, his Beneficiary), reduce the amount of any Supplemental Benefit under the Plan of the Participant or any Beneficiary as of the date of the amendment or termination. IN WITNESS WHEREOF, NACCO Industries, Inc., has executed this Plan at Cleveland, Ohio, this 31st day of December, 1994. NACCO INDUSTRIES, INC. By Charles A. Bittenbender ----------------------- Title Vice President --------------- VOL402CL Doc: 75539.1 10 10 The undersigned Alfred M. Rankin, Jr. hereby agrees to the terms of this Plan, as amended and restated as of January 1, 1994 and, in particular, acknowledges that the Opening Account Balance described in Section 3.1(a) hereof fully satisfies the Employer's obligation to provide Mr. Rankin with a Supplemental Retirement Benefit (as that term was defined in Section 1(e) of the Plan prior to the adoption of this amendment and restatement). Date:_______________________ Alfred M. Rankin --------------------- Alfred M. Rankin, Jr. VOL402CL Doc: 75539.1 EX-10.X 3 EXHIBIT 10(X) 1 Exhibit 10(x) AMENDMENT NO. 1 TO THE RETIREMENT BENEFIT PLAN FOR ALFRED M. RANKIN, JR. (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994) NACCO Industries, Inc. hereby adopts this Amendment No. 1 to The Retirement Benefit Plan for Alfred M. Rankin, Jr. (the "Plan"). The provisions of this Amendment shall be effective April 1, 1995. Words and phrases used herein with initial capital letters which are defined in the Plan are used herein as so defined. Section 1 --------- Section 3.4 of the Plan is hereby amended in its entirety to read as follows: "SECTION 3.4. EARNINGS. (a) DEFINITIONS. For purposes of this Section, the following terms shall have the following meanings: (i) "NET INCOME (BEFORE EXTRAORDINARY ITEMS)" is defined as consolidated net income, as defined by general accepted accounting principles ("GAAP"), for NACCO Industries, Inc. and its subsidiaries for the subject year before extraordinary items, but including any extraordinary items related to refinancings (net of tax); (ii) "AMORTIZATION OF GOODWILL" is defined as the consolidated amortization expense related to the intangible asset goodwill for NACCO Industries, Inc. and its subsidiaries for the subject year; (iii) "WEIGHTED AVERAGE STOCKHOLDERS' EQUITY" is calculated by adding the consolidated stockholders' equity for NACCO Industries, Inc., as defined by GAAP, at the beginning of the subject year and the end of each month of the subject year and dividing by thirteen; (iv) "WEIGHTED AVERAGE ACCUMULATED AMORTIZATION OF GOODWILL" is calculated by adding consolidated accumulated amortization of goodwill, as defined by GAAP, at the beginning of the subject year and the end of each month of the subject year and dividing by thirteen; (v) "WEIGHTED AVERAGE UMWA ADJUSTMENT" is calculated by adding the balance in the Obligation to United Mine Workers of America Combined Benefit Fund, net of tax, for NACCO Industries, Inc. at the beginning of the subject year and the end of each month of the subject year and dividing by thirteen; VOL402CL Doc: 145311.1 1 2 (vi) "FIXED INCOME FUND" shall mean the Stable Asset Fund under the Profit Sharing Plan or any equivalent fixed income fund under such Plan that is designated by the NACCO Industries, Inc. Retirement Funds Investment Committee as the successor to the Stable Asset Fund; and (vii) "ADJUSTED ROE" shall mean the average return on equity of the Employer calculated by the Employer for the applicable time period, based on A divided by B, where: A = Net Income (before extraordinary items) + Amortization of Goodwill; and B = Weighted Average (Stockholders' Equity + Accumulated Amortization of Goodwill + UMWA Adjustment). Adjusted ROE shall be determined at least annually by the Employer. (b) WHILE ACTIVELY EMPLOYED. At the end of each calendar month during a calendar year while the Participant is employed by an Employer on December 31 of such year, the Account of the Participant shall be credited with an amount determined by multiplying such Participant's average Account balance during such month by the blended rate earned during such month by the Fixed Income Fund. Notwithstanding the foregoing, in the event that the Adjusted ROE determined for such calendar year exceeds the rate credited to the Participant's Account under the preceding sentence, the Participant's Account shall retroactively be credited with the difference between (i) the amount determined under the preceding sentence, and (ii) the amount determined by multiplying the Participant's average Account balance during each month of such year by the Adjusted ROE determined for such year, compounded monthly. (c) FOLLOWING TERMINATION. After the Participant has terminated employment with the Controlled Group, his Account shall be credited with earnings as described in subsection (b), until his Account has been distributed in full in accordance with Article V. The Adjusted ROE calculation described in the second sentence of subsection (b) shall be made during the month in which the Participant terminates employment and shall be based on the year-to-date Adjusted ROE for the month ending prior to the date the Participant terminated employment, as calculated by the Employer. For any subsequent month, the Adjusted ROE calculation described in the second sentence of subsection (b) shall not apply. The Fixed Income Fund calculation described in the first sentence of subsection (b) for the month in which the Participant receives a distribution from his Account shall be based on the blended rate earned during the preceding month by the Fixed Income Fund. VOL402CL Doc: 145311.1 2 3 (d) CHANGES IN EARNINGS ASSUMPTIONS. The Committee (as defined in Section 6.4) may change the earnings rate credited on the Participant's Account hereunder at any time upon at least 30 days advance notice to the Participant." Executed this 13th day of March, 1995. ---- ------ NACCO INDUSTRIES, INC. By: Charles A. Bittenbender ------------------------ Title: Vice President VOL402CL Doc: 145311.1 3 EX-10.XIV 4 EXHIBIT 10(XIV) 1 Exhibit 10(xiv) THE NORTH AMERICAN COAL CORPORATION 1995 INCENTIVE COMPENSATION PLAN December, 1994 2 1995 INCENTIVE COMPENSATION PLAN SUMMARY The Incentive Compensation Plan (Plan) offers a strongly competitive incentive opportunity to senior managers when all performance objectives under their control or influence are achieved. This is accomplished through a structure containing the following elements: - Each participant is assigned an individual incentive target, stated as a percentage of salary midpoint, that establishes the incentive amount they will receive when performance objectives are met. - The individual target amount is allocated among the following performance components: - Percentage weightings are assigned to each component based on the participant's accountabilities and their impact on each component. - One or more performance objectives will be established at the beginning of the year for each performance component. - A performance range, which defines the acceptable level of results, from threshold to maximum, is created around each performance objective. - A payout range is defined which provides for incentive payments up to 150 percent of the incentive target, EXCEPT TO THE EXTENT THE COMMITTEE ELECTS TO INCREASE THE ACTUAL POOL BY UP TO 10%, AS DESCRIBED BELOW. - A performance/payout schedule combines the two ranges into a matrix that defines the level of payout that will result from each level of performance. - After audited financials are available, awards will be calculated based on actual results against the established objectives. - A final individual performance adjustment may be made, within a range of +-10 percent of the calculated award based on a judgment of the participant's overall performance. -1- 3 1995 INCENTIVE COMPENSATION PLAN This incentive compensation plan will allow management and the Board to establish, in advance, the performance expectations and related incentive potential that NAC's executives will work with for the year. At year-end, the structure channels judgment of the managements team's performance along predetermined lines that should convey a sense of fairness in the deter- mination of rewards. PLAN STRUCTURE INDIVIDUAL INCENTIVE TARGETS ---------------------------- The fundamental building block of the proposed Plan structure is the individual incentive target. Each participant is assigned a target, stated as a percentage of base salary, which will be paid when all relevant performance objectives are achieved. The Plan provides for payments above or below the target to reflect acceptable variances from performance objectives. PERFORMANCE GOALS ----------------- Four sets of goals are proposed: Intentionally Omitted INCENTIVE AWARD RANGE --------------------- Actual performance results attained probably will not be exactly equal to the established performance goals. Therefore, the Plan is designed to provide payouts ranging up to 150 percent of the target award if actual results fall within a predetermined range of acceptable performance. -2- 4 1995 INCENTIVE COMPENSATION PLAN The award range is defined as follows:
% of Award Level Target Description ----------- ------ ----------- Maximum 150% Highest level of incentive paid. Target 100% Competitive incentive opportunity for achieving all important goals. Threshold 50% Incentive paid when results meet minimum acceptable standards. Below threshold 0% Performance does not merit incentive payment.
COMPONENT WEIGHTINGS -------------------- Participants' potential incentive awards will be allocated between performance components based on their individual impact on results. The allocations allow for awards to be earned based on the achievement of the performance objectives over which each executive has the most control. Weightings will be stated as a percentage and total 100 percent for each participant. The weightings will be established each year to reflect current organizational accountabilities and the relative importance of the various performance components. Our recommended weightings are as follows: Intentionally Omitted When there is more than one goal for a performance component, further percentage weightings may be assigned, within the overall weightings, to reflect the relative priority of each goal. For example, if the individual component has a 40 percent weighting and there are five individual goals, each individual goal might be assigned a priority weighting of 20 percent. -3- 5 1995 INCENTIVE COMPENSATION PLAN PERFORMANCE RANGE ----------------- A range of performance acceptable for incentive payment will be established around each performance objective. For quantitative goals, the range may be set as a percentage of the objective. For goals that cannot be quantified, the range will be defined in narrative form as clearly as possible. The following general definitions will apply. The percentage ranges indicated are only guidelines; specific percentage ranges or narrative descriptions should be determined for each goal in line with the definitions.
Performance Percentage Level Guideline Definition ----------- ---------- ------------------ Threshold 75% Minimum acceptable results justifying payment of incentives. Objective 100% Results meet high performance demands justifying fully competitive rewards. Maximum 125% Highest foreseeable level of performance.
PERFORMANCE/PAYOUT SCHEDULE --------------------------- Combining the payout and performance ranges yields a performance/payout schedule as in the following example:
Performance Definition Results Levels Payout ----------- -------------- ------- ------------ ------ Threshold Just bonusable 75% Threshold 50% Objective On plan 100% Target 100% Maximum Heavy stretch 125% Maximum 150%
This schedule is applied separately to the results of each established performance element to determine the incentive amount earned in accordance with assigned weightings. Performance that falls between the defined levels would result in proportionally adjusted payouts which may be calculated mathematically or determined judgmentally. CORPORATE PERFORMANCE THRESHOLD ------------------------------- No incentive awards will be earned under the Plan in any year unless the threshold level under the corporate performance component is achieved. Once the corporate performance threshold is attained each performance objective is separate and distinct. This means that partial -4- 6 1995 INCENTIVE COMPENSATION PLAN awards can be earned for the attainment of one performance objective even if another is not sufficient to generate a payout. INDIVIDUAL ADJUSTMENT FACTOR ---------------------------- Each individual award, as calculated above, may be adjusted upward or downward by as much as 10 percent of the total award based on management's perceptions of each individual's overall performance. PARTIAL AWARDS -------------- Executives who are hired or promoted during the year to positions eligible for participation in the Plan may be included in the Plan on a pro ratio basis. COMMITTEE DISCRETION -------------------- It is the intent of the Plan that the total incentive compensation, as determined above, will be the final total corporate incentive compensation to be paid. However, the committee, in its sole discretion, may increase or decrease by up to ten percent the total incentive compensation or may approve an incentive compensation payment where there would normally be no payments due to corporate performance which is below the criteria established for the year. 1995 PERFORMANCE TARGETS See Plan Summary. -5- EX-10.XII 5 EXHIBIT 10(XII) 1 Exhibit 10(xii) INSTRUMENT OF MERGER The North American Coal Corporation, Hamilton Beach-Proctor/Silex, Inc. and NACCO Materials Handling Group, Inc. (the "Employers") hereby take the following actions, effective at the close of business on December 31, 1994, with respect to The North American Coal Corporation Salaried Employees Pension Plan ("Plan 005"), The Hamilton Beach/Proctor-Silex Profit Sharing Retirement Plan (the "PSRP"), the NACCO Materials Handling Group, Inc. Cash Balance Plan for Salaried Employees (the "Salaried Plan"), the NACCO Materials Handling Group, Inc. Cash Balance Plan for Sulligent Shop Employees (the "Sulligent Plan"), and the NACCO Materials Handling Group, Inc. Cash Balance Plan for Berea Shop Employees (the "Berea Plan") (collectively, the "Plans" and individually, a "Plan"), each as amended through the date hereof, and the trusts related thereto (the "Trusts"). Words and phrases used herein with initial capital letters which are defined in the Plans are used herein as so defined. I. The PSRP, Sulligent Plan, Salaried Plan, and Berea Plan are hereby merged into Plan 005 to form a single plan, within the meaning of Treasury Regulations issued under section 414(1) of the Code (the "Merged Plan"). Effective upon such merger, the name of the Merged Plan shall be the "Combined Defined Benefit Plan for NACCO Industries, Inc. and its Subsidiaries (the "Combined Plan")." VOL402CL Doc: 111447.1 2 2 II. The Trust for each Plan shall continue to be maintained pursuant to the instrument currently applicable thereto (the "Master Trust Agreement"). Notwithstanding the foregoing, all of the assets of the Plans shall be available to pay benefits to all Participants and Beneficiaries under the Combined Plan, and the Master Trust Agreement shall be deemed to have been amended to the extent necessary to effectuate this sentence. III. As required by Code section 414(l), each Participant in the Combined Plan shall be entitled to receive benefits from the Combined Plan, if it were to terminate immediately after the merger, at least equal to the benefits that the Participant would have been entitled to receive from the Plan in which he was a Participant prior to the merger, if such Plan had then terminated. In furtherance of the foregoing sentence, if the sum of the assets of the Plans at the time of the merger is less than the sum of the present values of all Accrued Benefits under the Plans (whether or not vested) at that time, the Employers shall comply with the requirements of Treas. Reg. Section 1.414(1)-1(e)(2) (or Treas. Reg. Section 1.414(1)-1(i)) and Treas. Reg. Section 1.414(l)-1(j). VOL402CL Doc: 111447.1 3 3 IV. The Combined Plan shall be comprised of the following "Parts": A. "Part I", which contains Articles I through XVII, and Exhibits thereto, shall contain the provisions of Plan 005 as in effect immediately prior to the merger; B. "Part II", which contains Articles I through XIX, and Exhibits thereto, shall contain the provisions of the PSRP as in effect immediately prior to the merger; and C. "Part III", which contains Articles I through XIX, and Exhibits thereto, shall contain the provisions of the NACCO Materials Handling Group, Inc. Cash Balance Plan as in effect immediately prior to the merger (the "Cash Balance Plan"), which is comprised of: (1) the Berea Plan; (2) the Sulligent Plan; and (3) the Salaried Plan. V. From and after the effective date of the merger, the following Employees (as that term is defined in each Plan immediately prior to the merger) shall be eligible to participate in the respective Parts of the Combined Plan described below: A. PART I OF THE COMBINED PLAN: Salaried Employees of the Falkirk Mining Company, the Coteau Properties Company, the Sabine Mining Company, Bellaire Corporation, North American Coal VOL402CL Doc: 111447.1 4 4 Royalty Company, The North American Coal Corporation, or NACCO Industries, Inc., but excluding Leased Employees or Employees employed in an Excluded Bargaining Unit and Employees who work for an Employer primarily outside of the United States who are not citizens of the United States. B. PART II OF THE COMBINED PLAN: Regular, full-time (as defined in the PSRP) Employees who are on the U.S. payroll of Hamilton Beach/Proctor-Silex, Inc. ("HB-PS"), but excluding nonresident aliens, Leased Employees, temporary or seasonal Employees, or Employees who are members of a collective bargaining unit recognized by HB-PS or certified by the National Labor Relations Board unless there is a written agreement between HB-PS and the collective bargaining representative for such Employees, that such Employees shall be eligible to participate in the Plan. C. PART III OF THE COMBINED PLAN: Employees of NACCO Materials Handling Group, Inc. ("NMHG") who (1) are employed on a salaried payroll, excluding, however, (i) such Employees of NMHG who first perform an Hour of Service on or after July 1, 1992 and who are classified in salary grades 27 and above, and (ii) such Employees of NMHG who are employed at or report to the Flemington, New Jersey, Greenville, North Carolina or Lenoir, North Carolina facilities; (2) are employed on the shop hourly payroll at the Sulligent, Alabama location; or (3) are employed on the shop hourly payroll at the Berea, Kentucky location; provided, however, that Employees who are nonresident aliens, VOL402CL Doc: 111447.1 5 5 Leased Employees, temporary or seasonal Employees, or who are members of a collective bargaining unit recognized by NMHG or certified by the National Labor Relations Board shall not be eligible to participate in the Plan, unless, in the case of Employees who are collective bargaining unit members, there is a written agreement between NMHG and the collective bargaining representative of such Employees that such Employees shall be eligible to participate in the Plan. VI. The terms and conditions of the Combined Plan shall be comprised of the combined terms and conditions and all other provisions of each Plan, which shall remain in effect in the same manner as they were immediately prior to the merger, but incorporating any changes therein made herein or in Amendment No. 6 to Plan 005, Amendment No. 3 to the PSRP, and Amendment No. 3 to the Cash Balance Plan, which Amendments were adopted together with this Instrument of Merger; provided, however, that the terms, conditions and other provisions of each Part of the Combined Plan, as so amended, shall be applicable and controlling only with respect to each of the respective Employees thereof, as such individuals are specified in Section V above. THE NORTH AMERICAN COAL CORPORATION By: Charles A. Bittenbender ------------------------ Title: Assistant Secretary Date: December 31, 1994 VOL402CL Doc: 111447.1 6 6 HAMILTON BEACH/PROCTOR-SILEX, INC. By: Charles A. Bittenbender ------------------------ Title: Assistant Secretary Date: December 31, 1994 NACCO MATERIALS HANDLING GROUP, INC. By: Charles A. Bittenbender ------------------------ Title: Assistant Secretary Date: December 31, 1994 VOL402CL Doc: 111447.1 EX-10.XXIII 6 EXHIBIT 10(XXIII) 1 Exhibit 10(xxiii) INSTRUMENT OF WITHDRAWAL AND TRANSFER OF LIABILITIES FROM THE NORTH AMERICAN COAL CORPORATION DEFERRED COMPENSATION PLAN FOR MANAGEMENT EMPLOYEES --------------------------------------------------- NACCO Industries, Inc. ("NACCO") has provided excess Before Tax and Matching Employer Contributions to certain of its employees ("NACCO 401(k) Employees") through The North American Coal Corporation Deferred Compensation Plan for Management Employees (the "North American Coal Plan"). Effective January 1, 1995, NACCO shall provide such excess Before Tax and Matching Employer Contributions to NACCO 401(k) Employees through the NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (the "Plan"). The liabilities of NACCO to NACCO 401(k) Employees for such excess Before Tax and Matching Employer Contributions shall continue after January 1, 1995, under the Plan. Any such liabilities of NACCO existing as of December 31, 1994 under the North American Coal Plan shall be transferred from the North American Coal Plan to the Plan effective January 1, 1995. NACCO hereby withdraws from the North American Coal Plan effective December 31, 1994. Date: 12/30/94 NACCO INDUSTRIES, INC. By: Steven M. Billick ------------------ Title: Vice President & Controller ---------------------------- This Instrument of Withdrawal and Transfer of Liabilities and the terms and provisions hereof are hereby consented to by The North American Coal Corporation, the sponsor of the North American Coal Plan. THE NORTH AMERICAN COAL CORPORATION By: Charles A. Bittenbender ------------------------ Title: Assistant Secretary -------------------- CL Doc: 137632.1 NYMAIN Doc: 93993.1 504810-145-019 EX-10.XXV 7 EXHIBIT 10(XXV) 1 Exhibit 10(xxv) THE HAMILTON BEACH/PROCTOR-SILEX, INC. UNFUNDED BENEFIT PLAN (As Amended and Restated Effective January 1, 1995) NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 2 HAMILTON BEACH/PROCTOR-SILEX, INC. UNFUNDED BENEFIT PLAN Hamilton Beach/Proctor-Silex, Inc. (the "Company") does hereby amend and completely restate the Hamilton Beach/Proctor-Silex, Inc. Unfunded Benefit Plan to read as follows, effective January 1, 1995. ARTICLE I PREFACE --------- SECTION 1.1. EFFECTIVE DATE. The original effective date of this Plan was March 10, 1993. The effective date of this amendment and restatement is January 1, 1995. SECTION 1.2. PURPOSE OF THE PLAN. The purpose of this Plan is to provide for certain Employees of the Company benefits they would have received (a) under the Cash Balance Plan but for (i) the dollar limitation on Compensation taken into account as a result of Section 401(a)(17) of the Code, and (2) the limitations imposed under Section 415 of the Code, and/or (b) under the Savings Plan but for the limitations imposed under Section 402(g), 401(a)(17) or 401(k)(3) of the Code. SECTION 1.3. GOVERNING LAW. This Plan shall be regulated, construed and administered under the laws of the State of Ohio, except when preempted by federal law. SECTION 1.4. GENDER AND NUMBER. For purposes of interpreting the provisions of this Plan, the masculine gender shall be deemed to include the feminine, the feminine gender shall be deemed to include the masculine, and the singular shall NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 3 2 include the plural unless otherwise clearly required by the context. ARTICLE II DEFINITIONS ----------- Except as otherwise provided in this Plan, terms defined in the Qualified Plans as they may be amended from time to time shall have the same meanings when used herein, unless a different meaning is clearly required by the context of this Plan. In addition, the following words and phrases shall have the following respective meanings for purposes of this Plan. SECTION 2.1. ACCOUNT shall mean the record maintained in accordance with Section 3.2 by the Company as the Participant's Excess 401(k) Sub-Account. SECTION 2.2. ADJUSTED ROE shall mean the average return on equity of the Company calculated for the applicable time period, based on A divided by B, where: A = Net Income Before Extraordinary Items (but including extraordinary Items related to financings) + Current Year Amortization of Goodwill; and B = Weighted Average (Shareholder Equity + Accumulated Amortization of Goodwill) Adjusted ROE shall be determined at least annually by the Company. SECTION 2.3. BENEFICIARY shall mean the person or persons designated by the Participant as his Beneficiary under this Plan, in accordance with the provisions of Article VII hereof. NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 4 3 SECTION 2.4. CASH BALANCE EMPLOYEE shall mean a participant in the Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan (or any successor plan). NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 5 4 SECTION 2.5. CASH BALANCE PLAN shall mean the Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan (or any successor thereto), as the same may be amended from time to time. SECTION 2.6. COMPANY shall mean Hamilton Beach/Proctor-Silex, Inc. or any entity that succeeds Hamilton Beach/Proctor-Silex, Inc. by merger, reorganization or otherwise. SECTION 2.7. EXCESS RETIREMENT BENEFIT shall mean an Excess Pension Benefit and an Excess 401(k) Benefit (as described in Article III) which is payable to or with respect to a Participant under this Plan. SECTION 2.8. 401(K) EMPLOYEE shall mean a participant in the Hamilton Beach/Proctor-Silex, Inc. Employees' Retirement Savings Plan (401(k)) who is eligible for Before-Tax Contributions thereunder. SECTION 2.9. INSOLVENT. For purposes of this Plan, the Company shall be considered Insolvent at such time as it (a) is unable to pay its debts as they mature, or (b) is subject to a pending voluntary or involuntary proceeding as a debtor under the United States Bankruptcy Code. SECTION 2.10. PARTICIPANT shall mean (a) a Cash Balance Employee whose benefit under the Cash Balance Plan is limited by the application of Section 401(a)(17) or 415 of the Code and/or (b) a 401(k) Employee (i) who is unable to make all of the Before-Tax Contributions that he has elected to make to the Savings Plan because of the limitations imposed under Section NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 6 5 402(g), 401(a)(17), or 401(k)(3) of the Code and (ii) who has at least 943 Hay points. SECTION 2.11. PLAN shall mean the Hamilton Beach/Proctor-Silex, Inc. Unfunded Benefit Plan as herein set forth or as duly amended. SECTION 2.12. PLAN ADMINISTRATOR shall mean the Company. SECTION 2.13. PLAN YEAR shall mean the calendar year. SECTION 2.14. QUALIFIED PLAN shall mean (a) for Cash Balance Employees, the Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan (or any successor plan) and (b) for 401(k) Employees, the Hamilton Beach/Proctor-Silex, Inc. Employees' Retirement Savings Plan (401(k)). SECTION 2.15 SAVINGS PLAN shall mean the Hamilton Beach/Proctor-Silex, Inc. Employees' Retirement Savings Plan (401(k)), as the same may be amended from time to time. SECTION 2.16. UNFORESEEABLE EMERGENCY shall mean an event which results (or will result) in severe financial hardship to the Participant as a consequence of an unexpected illness or accident or loss of the Participant's property due to casualty or other similar extraordinary or unforeseen circumstances out of the control of the Participant. SECTION 2.17. VALUATION DATE shall mean the last business day of each Plan Year. NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 7 6 ARTICLE III EXCESS RETIREMENT BENEFITS -------------------------- SECTION 3.1. EXCESS PENSION BENEFITS. The Excess Pension Benefit payable to a Participant who is a Cash Balance Employee shall be a monthly benefit equal to the excess, if any, of (a) the amount of the monthly benefit that would be payable to such Participant under the Cash Balance Plan (in the form actually paid) if such Plan did not contain the limitations imposed under Sections 401(a)(17) and 415 of the Code, over (b) the amount of the monthly benefit that is actually payable to the Participant under the Cash Balance Plan. SECTION 3.2. EXCESS 401(K) BENEFITS. (a) AMOUNT OF EXCESS 401(K) BENEFITS. Each 401(k) Employee who is a Participant under the terms of this Plan, may, prior to the first day of any Plan Year, by completing a Notice of Election to Defer Compensation or other form approved by the Company ("Deferral Election Form"), direct the Company: (i) to reduce his Compensation (as that term is defined in the Savings Plan, but including amounts received in excess of the limitations imposed under Code Section 401(a)(17) and amounts deferred under this Plan) by the difference between (A) a certain percentage, in 1% increments, with a maximum of 15%, of his Compensation for the calendar year, and (B) the maximum Before-Tax Contributions actually permitted to be contributed for him to the Savings Plan by reason of the application of the limitations imposed under Sections 402(g), 401(a)(17), or 401(k)(3) of the Code; NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 8 7 (ii) to credit the deferrals to the Sub-Account described in Section 3.3(a) at the times described therein. (b) DEFERRAL PERIOD. The deferral election described in Subsection (a) above shall also contain such Participant's election regarding the time of the commencement of payment of his Excess 401(k) Sub-Account. In the Deferral Election Form, such Participant may elect to commence payment of his Excess 401(k) Sub-Account on (i) the date on which he ceases to be an employee of a Controlled Group member, (ii) the date on which he attains an age specified in the Deferral Election Form, or (iii) the earlier or later of such dates. (c) EFFECT AND DURATION OF DEFERRAL ELECTION. Any direction by a 401(k) Employee who is a Participant in this Plan to make deferrals of Excess 401(k) Benefits hereunder shall be effective with respect to Compensation otherwise payable to the Participant, and the Participant shall not be eligible to receive such Excess 401(k) Benefits. Instead, such amounts shall be credited to the Participant's Sub-Account as provided in Section 3.3(a). Any directions made in accordance with Subsections (a) or (b) above shall be irrevocable and shall remain in effect for subsequent Plan Years unless for subsequent Plan Years the directions are changed or terminated by the Participant, on the appropriate form provided by the Plan Administrator, prior to the first day of such subsequent Plan Year. Notwithstanding the foregoing, a Participant's direction to make deferrals of Excess 401(k) Benefits shall automatically terminate on the earlier of NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 9 8 the date on which (i) the Participant ceases employment with the Company, (ii) the Company is deemed Insolvent, (iii) the Participant is no longer eligible to make deferrals of Excess 401(k) Benefits hereunder, or (iv) the Plan is terminated. (d) Notwithstanding the foregoing, any Participant whose eligibility to make Before-Tax Contributions to the Savings Plan has been suspended because he has taken a hardship withdrawal from such plan shall not be eligible to make deferrals of Excess 401(k) Benefits under this Plan for the period of his suspension from the Savings Plan. SECTION 3.3. PARTICIPANT'S ACCOUNTS. The Company shall establish and maintain on its books an Account for each Participant which shall contain the following entries: (a) Credits to an Excess 401(k) Sub-Account for the Excess 401(k) Benefits described in Section 3.2, which shall be credited to the Sub-Account when a Participant is prevented from making a Before-Tax Contribution under the Savings Plan. (b) Credits to such Sub-Account for the earnings described in Article IV, which shall continue until the vested portions of such Sub-Account has been distributed to the Participant or his Beneficiary; and (c) Debits for any distributions made from such Sub-Account. SECTION 3.4. EFFECT ON OTHER BENEFITS. Benefits payable to or with respect to a Participant under the Qualified Plans or any other Company-sponsored (qualified or nonqualified) plan, if any, are in addition to those provided under this Plan. NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 10 9 ARTICLE IV EARNINGS ---------- SECTION 4.1. FOR ACTIVE 401(K) EMPLOYEES. At the end of each calendar month during a Plan Year, the Excess 401(k) Sub- Account of each 401(k) Employee who is a Participant under the terms of this Plan and who is employed by the Company on December 31 of such Year shall be credited with an amount of earnings determined from time to time by the Company. Effective January 1, 1995, such amount shall be determined as follows: (a) For Excess 401(k) Benefits attributable to amounts deferred by a 401(k) Employee up to 7% of his Compensation, at the end of each calendar month during a Plan Year, the portion of the Excess 401(k) Sub-Account attributable to such Benefits for each such Participant shall be credited with an amount determined by multiplying such portion of the Participant's average Sub-Account balance during such month by the blended rate earned during such month by the Stable Asset Fund under the Savings Plan. Notwithstanding the foregoing, in the event that the Adjusted ROE determined for such Plan Year that is applicable to the Participant exceeds the rate credited to the Participant's Sub-Account under the preceding sentence, the Participant's Sub-Account shall retroactively be credited with the difference between (i) the amount determined under the preceding sentence, and (ii) the amount determined by multiplying such portion of the Participant's average Sub- Account balance during each month of such Plan Year by the Adjusted ROE determined for such Plan Year, compounded monthly. NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 11 10 (b) For Excess 401(k) Benefits attributable to amounts deferred by a 401(k) Employee in excess of 7% of his Compensation, at the end of each calendar month during a Plan Year, the portion of the Excess 401(k) Sub-Account attributable to such Benefits for each such Participant shall be credited with an amount determined by multiplying such portion of such 401(k) Employee's average Sub-Account balance during such month by the blended rate earned during such month by the Stable Asset Fund under the Savings Plan. (c) The Company may change the earnings rate credited on an Excess 401(k) Sub-Account balance at any time upon at least 30 days advance notice to 401(k) Employees. SECTION 4.2. FOR TERMINATED EMPLOYEES. The Sub-Account of a Participant who has terminated employment with the Controlled Group shall be credited with earnings as described in Section 4.1, as modified by this Section 4.2, until each Sub-Account has been distributed in full. The Adjusted ROE calculation described in the second sentence of Section 4.1(a) shall be made during the month in which the Participant terminates employment and shall be based on the year-to-date Adjusted ROE for the month ending prior to the date the Participant terminated employment, as calculated by the Company. For any subsequent month, the Adjusted ROE calculation described in the second sentence of Section 4.1(a) shall not apply. The Stable Asset Fund calculation described in the first sentence of Section 4.1(a) and in Section 4.1(b) for the month in which the Participant receives a distribution from his Sub-Account shall be NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 12 11 based on the blended rate earned during the preceding month by the Stable Asset Fund. ARTICLE V VESTING --------- A Participant shall not become vested in his Excess Pension Benefit until he becomes vested in his benefit under the Cash Balance Plan and the Excess Pension Benefit of a Participant who is partially or fully vested under the Cash Balance Plan shall at all times be vested hereunder to the extent he is so vested. A Participant shall always be 100% vested in his Excess 401(k) Benefit hereunder. ARTICLE VI DISTRIBUTION OF BENEFITS TO PARTICIPANTS ---------------------------------------- SECTION 6.1. TIME AND MANNER OF PAYMENT. (a) EXCESS PENSION BENEFITS. (i) TIMING. A Participant who is a Cash Balance Employee is required to elect the time and manner of payment of his benefits under the Cash Balance Plan before he will be eligible to receive payment of his Excess Pension Benefit hereunder. The Excess Pension Benefit payable to a Participant shall be paid at the same time or times and in the same manner as the benefits payable to the Participant under the Cash Balance Plan. (ii) FORM. Notwithstanding the foregoing, in the event that the monthly payments of the Excess Pension Benefits payable to a Participant hereunder following the Participant's termination of the employment with the Controlled Group amount to NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 13 12 less than Fifty Dollars ($50) per month, such Excess Pension Benefits shall be paid in the form of a single lump sum payment. Such lump sum amount shall be equal to the Actuarial Equivalent present value of such Excess Pension Benefits. (b) EXCESS 401(K) BENEFITS. (i) TIMING. The Excess 401(k) Benefit shall be paid (or commence to be paid) to the Participant at the time specified in the Participant's Deferral Election Form pursuant to Section 3.2(b). (ii) FORM. The Excess 401(k) Benefit shall be distributed to the Participant in the form of ten annual installments with each installment being based on the value of the Participant's Excess 401(k) Sub-Account on the Valuation Date immediately preceding the date such installment is to be paid and being a fraction of such value in which the numerator is one and the denominator is the total number of remaining installments to be paid. Notwithstanding the foregoing, the Participant may elect to receive his Excess 401(k) Benefit in the form of a single lump sum payment or in annual installments for a period of less than 10 years by filing a notice in writing, signed by the Participant while he is alive and filed with the Plan Administrator at least one year prior to the time he had elected to commence receiving payment of the portion his Excess 401(k) Sub-Account to which his election applies. Any such election of the form of benefit may be changed at any time and from time to time, without the consent of any other person, by filing a later election in writing that is signed by a Participant who is a NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 14 13 401(k) Employee and filed with the Plan Administrator while such Participant is alive and at least one year prior to the time he had elected to commence receiving payment of his Excess 401(k) Sub-Account. (iii) UNFORESEEABLE EMERGENCY DISTRIBUTIONS. Notwithstanding the foregoing, the Company may at any time, upon written request of the Participant who is a 401(k) Employee, cause to be paid to such Participant an amount equal to all or any part of the Participant's Excess 401(k) Sub-Account if the Company determines, in its absolute discretion based on such reasonable evidence that it shall require, that such a payment or payments is necessary for the purpose of alleviating the consequences of an Unforeseeable Emergency occurring with respect to the Participant. Payments of amounts because of an Unforeseeable Emergency shall be permitted only to the extent reasonably necessary to satisfy the emergency need. (iv) SMALL SUB-ACCOUNTS. Notwithstanding the foregoing, in the event that the Excess 401(k) Sub-Account of a Participant who is a 401(k) Employee does not exceed $5,000 at the time of such Participant's termination of employment with the Controlled Group, such Sub-Account shall automatically be paid to him in a single lump sum payment as soon as practicable following his termination of employment. SECTION 6.2. LIABILITY FOR PAYMENT/EXPENSES. The Company shall be liable for the payment of the Excess Retirement Benefits which are payable hereunder to the Participants. NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 15 14 Expenses of administering the Plan shall be paid by the Company, as directed by the Company. ARTICLE VII BENEFICIARIES ------------- SECTION 7.1. BENEFICIARY DESIGNATIONS. A designation of a Beneficiary hereunder may be made only by an instrument (in form acceptable to the Plan Administrator) signed by the Participant and filed with the Plan Administrator prior to the Participant's death. In the absence of such a designation and at any other time when there is no existing Beneficiary designated hereunder, the Beneficiary of a Participant for his Excess Pension Benefits and/or Excess 401(k) Benefits shall be his Beneficiary under the Cash Balance Plan and the Savings Plan, respectively. A person designated by a Participant as his Beneficiary who or which ceases to exist shall not be entitled to any part of any payment thereafter to be made to the Participant's Beneficiary unless the Participant's designation specifically provided to the contrary. If two or more persons designated as a Participant's Beneficiary are in existence with respect to a single Excess Retirement Benefit the amount of any payment to the Beneficiary under this Plan shall be divided equally among such persons unless the Participant's designation specifically provided to the contrary. SECTION 7.2. CHANGE IN BENEFICIARY. (a) Anything herein or in the Qualified Plans to the contrary notwithstanding, a Participant may, at any time and from time to time, change a Beneficiary designation hereunder without the consent of any NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 16 15 existing Beneficiary or any other person. A change in Beneficiary hereunder may be made regardless of whether such a change is also made under the applicable underlying Qualified Plan. In other words, the Beneficiary hereunder need not be the same as under the applicable underlying Qualified Plan. (b) Any change in Beneficiary shall be made by giving written notice thereof to the Plan Administrator and any change shall be effective only if received by the Plan Administrator prior to the death of the Participant. SECTION 7.3. DISTRIBUTIONS TO BENEFICIARIES. (a) AMOUNT OF BENEFITS. (i) AMOUNT OF EXCESS PENSION BENEFIT. The Excess Pension Benefit payable to a Beneficiary under this Plan shall be a monthly benefit equal to the excess, if any, of (A) the amount of the monthly benefit that would be payable to the Beneficiary last effectively designated by the Participant under the Cash Balance Plan (in the form actually paid) if such Plan did not contain the limitations imposed under Sections 401(a)(17) or 415 of the Code over (B) the amount of the monthly benefit that is actually paid to such Beneficiary under such plan. (ii) AMOUNT OF EXCESS 401(K) BENEFIT. The Excess 401(k) Benefit payable to a Participant's Beneficiary under this Plan shall be equal to such Participant's Excess 401(k) Sub-Account balance on the date of the distribution of the Sub-Account to the Beneficiary. NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 17 16 (b) TIME AND MANNER OF PAYMENT. (i) EXCESS PENSION BENEFIT. The Excess Pension Benefit payable to a Beneficiary under this plan shall be paid at the same time or times and in the same manner as the benefits payable to the Beneficiary last effectively designated by the Participant under the Cash Balance Plan; provided however, that the provisions of Subsection 6.1(a)(ii) shall apply to such Benefit, treating the Beneficiary hereunder as if he were the Participant. (ii) EXCESS 401(K) BENEFIT. The Excess 401(k) Benefit payable to a Beneficiary under this Plan shall be paid as soon as practicable following the death of the Participant. The Excess 401(k) Benefits payable to a Beneficiary hereunder shall be paid in the form of a lump sum payment. (c) EFFECT OF DIFFERENT BENEFICIARIES. In the event the Beneficiary hereunder is different than the Beneficiary under the appropriate underlying Qualified Plan, (i) if the Beneficiary hereunder dies after the Participant but while the Beneficiary under the applicable underlying Qualified Plan is still living, any remaining payments hereunder shall be payable, as they come due, to the estate of the Beneficiary hereunder and (ii) if the Beneficiary hereunder predeceases the Beneficiary under the applicable underlying Qualified Plan and the Participant, the Beneficiary hereunder shall revert to the Beneficiary last effectively designated under the Qualified Plan unless and until NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 18 17 the Participant again makes a change of Beneficiary pursuant to Section 7.2 ARTICLE VIII MISCELLANEOUS ------------- SECTION 8.1. LIABILITY OF COMPANY. Nothing in this Plan shall constitute the creation of a trust or other fiduciary relationship between the Company and any Participant, Beneficiary or any other person. SECTION 8.2. LIMITATION ON RIGHTS OF PARTICIPANTS AND BENEFICIARIES - NO LIEN. The Plan is designed to be an unfunded, nonqualified plan. Nothing contained herein shall be deemed to create a trust or lien in favor of any Participant or Beneficiary on any assets of the Company. The Company shall have no obligation to purchase any assets that do not remain subject to the claims of the creditors of the Company for use in connection with the Plan. No Participant or Beneficiary or any other person shall have any preferred claim on, or any beneficial ownership interest in, any assets of the Company prior to the time that such assets are paid to the Participant or Beneficiary as provided herein. Each Participant and Beneficiary shall have the status of a general unsecured creditor of the Company. SECTION 8.3. NO GUARANTEE OF EMPLOYMENT. Nothing in this Plan shall be construed as guaranteeing future employment to Participants. A Participant continues to be an Employee of the Company solely at the will of the Company subject to discharge at any time, with or without cause. NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 19 18 SECTION 8.4. PAYMENT TO GUARDIAN. If a benefit payable hereunder is payable to a minor, to a person declared incompetent or to a person incapable of handling the disposition of his property, the Plan Administrator may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or person. The Plan Administrator may require such proof of incompetency, minority, incapacity or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit. SECTION 8.5. ASSIGNMENT. No right or interest under this Plan of any Participant or Beneficiary shall be assignable or transferable in any manner or be subject to alienation, anticipation, sale, pledge, encumbrance or other legal process or in any manner be liable for or subject to the debts or liabilities of the Participant or Beneficiary. SECTION 8.6. SEVERABILITY. If any provision of this Plan or the application thereof to any circumstance(s) or person(s) is held to be invalid by a court of competent jurisdiction, the remainder of the Plan and the application of such provision to other circumstances or persons shall not be affected thereby. ARTICLE IX ADMINISTRATION OF PLAN ---------------------- SECTION 9.1. ADMINISTRATION. (a) IN GENERAL. The Plan shall be administered by the Plan Administrator. The Plan NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 20 19 Administrator shall have sole and absolute discretion to interpret where necessary all provisions of the Plan (including, without limitation, by supplying omissions from, correcting deficiencies in, or resolving inconsistencies or ambiguities in, the language of the Plan), to determine the rights and status under the Plan of Participants, or other persons, to resolve questions or disputes arising under the Plan and to make any determinations with respect to the benefits payable under the Plan and the persons entitled thereto as may be necessary for the purposes of the Plan. Without limiting the generality of the foregoing, the Plan Administrator is hereby granted the authority (i) to determine whether a particular employee is a Participant, and (ii) to determine if an employee is entitled to Excess Retirement Benefits hereunder and, if so, the amount and duration of such Benefits. The Plan Administrator's determination of the rights of any employee or former employee hereunder shall be final and binding on all persons, subject only to the claims procedures outlined in Section 9.3 hereof. (b) DELEGATION OF DUTIES. The Plan Administrator may delegate any of its administrative duties, including, without limitation, duties with respect to the processing, review, investigation, approval and payment of Excess Retirement Benefits, to a named administrator or administrators. SECTION 9.2. REGULATIONS. The Plan Administrator shall promulgate any rules and regulations it deems necessary in order to carry out the purposes of the Plan or to interpret the provisions of the Plan; provided, however, that no rule, NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 21 20 regulation or interpretation shall be contrary to the provisions of the Plan. The rules, regulations and interpretations made by the Plan Administrator shall, subject only to the claims procedure outlined in Section 9.3 hereof, be final and binding on all persons. SECTION 9.3. CLAIMS PROCEDURES. The Plan Administrator shall determine the rights of any employee or former employee to any Excess Retirement Benefits hereunder. Any employee or former employee who believes that he has not received the Excess Retirement Benefits to which he is entitled under the Plan may file a claim in writing with the Plan Administrator. The Plan Administrator shall, no later than 90 days after the receipt of a claim (plus an additional period of 90 days if required for processing, provided that notice of the extension of time is given to the claimant within the first 90 day period), either allow or deny the claim in writing. If a claimant does not receive written notice of the Plan Administrator's decision on his claim within the above-mentioned period, the claim shall be deemed to have been denied in full. A denial of a claim by the Plan Administrator, wholly or partially, shall be written in a manner calculated to be understood by the claimant and shall include: (a) the specific reasons for the denial; (b) specific reference to pertinent Plan provisions on which the denial is based; (c) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 22 21 (d) an explanation of the claim review procedure. A claimant whose claim is denied (or his duly authorized representative) may within 60 days after receipt of denial of a claim file with the Plan Administrator a written request for a review of such claim. If the claimant does not file a request for review of his claim within such 60-day period, the claimant shall be deemed to have acquiesced in the original decision of the Plan Administrator on his claim. If such an appeal is so filed within such 60 day period, the Company (or its delegate) shall conduct a full and fair review of such claim. During such review, the claimant shall be given the opportunity to review documents that are pertinent to his claim and to submit issues and comments in writing. The Company shall mail or deliver to the claimant a written decision on the matter based on the facts and the pertinent provisions of the Plan within 60 days after the receipt of the request for review (unless special circumstances require an extension of up to 60 additional days, in which case written notice of such extension shall be given to the claimant prior to the commencement of such extension). Such decision shall be written in a manner calculated to be understood by the claimant, shall state the specific reasons for the decision and the specific Plan provisions on which the decision was based and shall, to the extent permitted by law, be final and binding on all interested persons. If the decision on review is not furnished to the claimant within the above-mentioned time period, the claim shall be deemed to have been denied on review. NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 23 22 SECTION 9.4. REVOCABILITY OF PLAN ADMINISTRATOR/ COMPANY ACTION. Any action taken by the Plan Administrator or the Company with respect to the rights or benefits under the Plan of any employee or former employee shall be revocable by the Plan Administrator or the Company as to payments not yet made to such person, and acceptance of any Excess Retirement Benefits under the Plan constitutes acceptance of and agreement to the Plan Administrator's or the Company's making any appropriate adjustments in future payments to such person (or to recover from such person) any excess payment or underpayment previously made to him. SECTION 9.5. AMENDMENT. The Nominating, Organization and Compensation Committee of the Board of Directors of the Company (the "Committee") may at any time amend any or all of the provisions of this Plan, except that (a) no such amendment may adversely affect any Participant's vested Excess Retirement Benefit as of the date of such amendment, without the prior written consent of such Participant, and (b) no such amendment may suspend the crediting of earnings on the balance of a Participant's Account, until the entire balance of such Account has been distributed. Any amendment shall be in the form of a written instrument executed by an officer of the Company on the order of the Committee. Subject to the foregoing provisions of this Section, such amendment shall become effective as of the date specified in such instrument or, if no such date is specified, on the date of its execution. NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 24 23 SECTION 9.6. TERMINATION. (a) The Committee, in its sole discretion, may terminate this Plan at any time and for any reason whatsoever, except that (i) no such termination may adversely affect any Participant's vested Excess Retirement Benefit as of the date of such termination, without the prior written consent of such Participant, and (ii) no such termination may suspend the crediting of earnings on the balance of a Participant's Account, until the entire balance of such Account has been distributed. Any such termination shall be expressed in the form of a written instrument executed by an officer of the Company on the order of the Committee. Subject to the foregoing provisions of this Section, such termination shall become effective as of the date specified in such instrument or, if no such date is specified, on the date of its execution. Written notice of any termination shall be given to the Participants as soon as practicable after the instrument is executed. (b) Notwithstanding anything in the Plan to the contrary, in the event of a termination of the Plan, the Company, in its sole and absolute discretion, shall have the right to change the time and form of distribution of Participants' Excess Retirement Benefits. NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 25 24 Executed, this 31st day of December, 1994, to be effective January 1, 1995. HAMILTON BEACH/PROCTOR-SILEX, INC. By: Charles A. Bittenbender ----------------------- Title: Assistant Secretary NYMAIN Doc: 94598.1/CLMAIN Doc: 138396.1 EX-10.XXVI 8 EXHIBIT 10(XXVI) 1 Exhibit 10(xxvi) AMENDMENT NO. 3 TO THE HAMILTON BEACH/PROCTOR-SILEX, INC. PROFIT SHARING RETIREMENT PLAN Hamilton Beach/Proctor-Silex, Inc. hereby adopts this Amendment No. 3 to The Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan (the "Plan"). The purpose of this Amendment is (a) to merge the Plan and the NACCO Materials Handling Group, Inc. Cash Balance Plan for Berea Shop Employees, the NACCO Materials Handling Group, Inc. Cash Balance Plan for Sulligent Shop Employees, and the NACCO Materials Handling Group, Inc. Cash Balance Plan for Salaried Employees into the North American Coal Corporation Salaried Employees Pension Plan effective December 31, 1994. After the merger, the merged plan shall be known as the Combined Defined Benefit Plan for NACCO Industries, Inc. and Its Subsidiaries (the "Combined Plan"). The provisions of this Amendment shall be effective December 31, 1994, except as otherwise specified herein. Words and phrases used herein with initial capital letters which are defined in the Plan are used herein as so defined. Section 1 --------- The Preamble to the Plan is hereby amended by adding the following new provision at the end thereof: "Effective December 31, 1994, the Plan, along with the NACCO Materials Handling Group, Inc. Cash Balance Plan for Berea Shop NYMAIN Doc: 92294.1 VOL402CL Doc. 137969.1 2 2 Employees, the NACCO Materials Handling Group, Inc. Cash Balance Plan for Sulligent Shop Employees and the NACCO Materials Handling Group, Inc. Cash Balance Plan for Salaried Employees, were merged into The North American Coal Corporation Salaried Employees Pension Plan and the name of such merged Plan was changed to the Combined Defined Benefit Plan for NACCO Industries, Inc. and Its Subsidiaries." Section 2 --------- The Plan is hereby amended in its entirety by adding the words "Part II of" prior to the words "the Plan" wherever such words may appear throughout the Plan. In addition, all references to Sections of the Plan throughout the Plan are hereby amended to refer to Sections of Part II of the Plan. Section 3 --------- The first sentence of Article I is hereby amended by adding the words "for construction of the provisions of Part II of the Plan" after the words "meanings given below." Section 4 --------- A new Section 1.46A is hereby added to the Plan immediately following Section 1.46, to read as follows: "1.46A PART II OF THE PLAN: The portion of the Combined Plan that consists of The Hamilton Beach/Proctor- Silex, Inc. Profit Sharing Retirement Plan." NYMAIN Doc: 92294.1 VOL402CL Doc. 137969.1 3 3 Section 5 --------- Section 1.50 of the Plan is hereby deleted in its entirety and the following substituted therefor: "The pension plan known as the Combined Defined Benefit Plan for NACCO Industries, Inc. and Its Subsidiaries, as the same may be amended or restated from time to time." Section 6 --------- Sections 15.1, 15.2 and 16.1(a) of the Plan, as amended by Amendment No. 1 thereof (which incorrectly referred to Section 15.3 instead of 16.1(a)), are each hereby further amended by adding the phrase "its Board of Directors or" after the phrase "by action of" each time it appears therein. In addition, Sections 15.2 and 16.1(a) of the Plan are each hereby amended by adding the words "an officer of" after the words "executed by". Executed this 31st day of December, 1994. HAMILTON BEACH/PROCTOR-SILEX, INC. By: Charles A. Bittenbender ----------------------- Title: Assistant Secretary -------------------- NYMAIN Doc: 92294.1 VOL402CL Doc. 137969.1 EX-10.XXVII 9 EXHIBIT 10(XXVII) 1 Exhibit 10(xxvii) AMENDMENT NO. 6 TO THE NORTH AMERICAN COAL CORPORATION SALARIED EMPLOYEES PENSION PLAN (As Amended and Restated as of January 1, 1989) ----------------------------------------------- The North American Coal Corporation hereby adopts this Amendment No. 6 to the North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989) as heretofore amended ("Plan 005"). The purpose of this Amendment is (a) to provide for the merger into Plan 005 of the NACCO Materials Handling Group, Inc. Cash Balance Plan for Berea Shop Employees, the NACCO Materials Handling Group, Inc. Cash Balance Plan for Sulligent Shop Employees, the NACCO Materials Handling Group, Inc. Cash Balance Plan for Salaried Employees, and The Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan, effective December 31, 1994, and (b) to amend certain other provisions. After the merger, the merged plan shall be known as the Combined Defined Benefit Plan for NACCO Industries, Inc. and Its Subsidiaries (the "Combined Plan"). The provisions of this Amendment shall be effective as of the dates indicated below. Words and phrases used herein with initial capital letters which are defined in the Plan are used herein as so defined. Section 1 --------- The Preamble to Plan 005 as amended by Amendment No. 2 thereto is hereby further amended by adding the following new provisions at the end thereof: VOL402CL Doc: 137966.1 2 2 Effective December 31, 1994, the NACCO Materials Handling Group, Inc. Cash Balance Plan for Berea Shop Employees (the "Berea Plan"), the NACCO Materials Handling Group, Inc. Cash Balance Plan for Sulligent Shop Employees (the "Sulligent Plan"), the NACCO Materials Handling Group, Inc. Cash Balance Plan for Salaried Employees (the "Salaried Plan") and The Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Plan (the "PSRP") were merged into Plan 005. Effective December 31, 1994, the name of Plan 005 was changed to the Combined Defined Benefit Plan for NACCO Industries, Inc. and Its Subsidiaries (the "Combined Plan"). Effective December 31, 1994, the Combined Plan shall be comprised of the following Parts: 1. Part I, which contains Articles I through XVII and Exhibits thereto, is Plan 005 as in effect immediately prior to the merger and this Amendment; 2. Part II, which contains Articles I through XIX and Exhibits thereto, is the PSRP as in effect immediately prior to the merger; 3. Part III, which contains Articles I through XIX and Exhibits thereto, is the NACCO Materials Handling Group, Inc. Cash Balance Plan which is comprised of three separate portions: (i) the Berea Plan, (ii) the Sulligent Plan, and (iii) the Salaried Plan, as each such portion was in effect immediately prior to the merger. The provisions of each Part as described above shall apply only to that Part and not to any other Part of the Combined Plan. The provisions of each Part shall remain controlling as to the group of Employees covered under such Part immediately prior to the merger, as described in the Instrument of Merger. In addition, each Part of the Combined Plan shall be administered separately and in the same manner as immediately prior to the date of merger. Section 2 --------- Effective December 31, 1994, Plan 005 is hereby amended in its entirety by adding the words "Part I of" prior to the words "the Plan" each time such words appear throughout Plan 005. VOL402CL Doc: 137966.1 3 3 In addition, all references to Sections of the Plan throughout Plan 005 are hereby amended to refer to Sections of Part I of the Plan. Section 3 --------- Effective December 31, 1994, Section 1.01 of Plan 005 is hereby amended by adding the words "for construction of the provisions of Part I of the Plan" after the words "respective meanings". Section 4 --------- Effective December 31, 1994, a new Section 1.43A is hereby added to Plan 005 immediately following Section 1.43A, to read as follows: "1.43A PART I OF THE PLAN: The portion of the Combined Plan which consists of The North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989), and any Exhibits or Amendments thereto. Section 5 --------- Effective December 31, 1994, Section 1.49 of Plan 005 is hereby amended in its entirety to read as follows: "The pension plan known as the Combined Defined Benefit Plan for NACCO Industries, Inc. and Its Subsidiaries, as the same may be amended or restated from time to time. VOL402CL Doc: 137966.1 4 4 Section 6 --------- Effective December 31, 1994, Section 2.01 of Plan 005 is hereby amended by adding a new Section 2.01(c) thereto to read as follows: "(c) (NACCO Industries, Inc. Employees). Any person who was a participant in the Merged Plan on December 31, 1993 shall become a Participant herein as of January 1, 1994." Section 7 --------- Effective December 31, 1994, Sections 14.02(a) and 15.01(a) of the Plan 005 is hereby amended by inserting the phrase "an officer of" after the phrase "executed by". EXECUTED this 31st day of December, 1994. THE NORTH AMERICAN COAL CORPORATION By: Charles A. Bittenbender ----------------------- Title: Assistant Secretary -------------------- VOL402CL Doc: 137966.1 EX-10.XXVIII 10 EXHIBIT 10(XXVIII) 1 Exhibit 10(xxviii) INSTRUMENT OF MERGER, AMENDMENT AND TRANSFER OF SPONSORSHIP OF BENEFIT PLANS -------------------- NACCO Industries, Inc. ("NACCO") and The North American Coal Corporation ("North American Coal") hereby adopt this Instrument of Merger, Amendment and Transfer of Sponsorship of Benefit Plans, taking the following actions relating to The NACCO Industries, Inc. Supplemental Retirement Benefit Plan (the "Supplemental Retirement Plan") and The NACCO Industries, Inc. $200,000 Cap Plan (the "$200,000 Cap Plan") effective August 31, 1994. I. The $200,000 Cap Plan shall be merged into the Supplemental Retirement Plan to form a single plan. II. Following the merger, the sponsorship of the Supplemental Retirement Plan shall be transferred from NACCO to North American Coal and the name of the Plan shall be changed to "The North American Coal Corporation Supplemental Retirement Benefit Plan." III. The terms and conditions and all other provisions of the Supplemental Retirement Plan shall continue to be expressed in the two separate plan documents entitled The North American Coal Corporation Supplemental Retirement Benefit Plan and The NACCO Industries, Inc. $200,000 Cap Plan, until such time as such documents are amended or superceded. IV. Each participant in the $200,000 Cap Plan shall be entitled to receive a benefit from the Supplemental Retirement Plan, if it were to terminate immediately after the merger, at least equal to the benefit the participant would have been entitled to receive from the $200,000 Cap Plan if the $200,000 Cap Plan had terminated immediately before the merger. VOL402CL Doc: 3936.1 2 2 NACCO INDUSTRIES, INC. Charles A Bittenbender By: ------------------------------- Title: Vice President Date: October 27, 1994 THE NORTH AMERICAN COAL CORPORATION Thomas A. Koza By: ------------------------------ Title: Vice President-Law Administration Date: October 25, 1994 VOL402CL Doc: 3936.1 EX-10.XXIX 11 EXHIBIT 10(XXIX) 1 Exhibit 10(xxix) AMENDMENT NO. 1 TO THE HAMILTON BEACH/PROCTOR-SILEX, INC. UNFUNDED BENEFIT PLAN (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1995) --------------------------------------------------- Hamilton Beach/Proctor-Silex, Inc. hereby adopts this Amendment No. 1 to the Hamilton Beach/Proctor-Silex, Inc. Unfunded Benefit Plan (the "Plan"). The provisions of this Amendment shall be effective as of January 1, 1995. Words and phrases used herein with initial capital letters which are defined in the Plan are used herein as so defined. Section 1 --------- Section 2.2 of the Plan is hereby amended in its entirety to read as follows: "SECTION 2.2. Adjusted ROE. -------------------------- (a) For purposes of this Section, the following terms shall have the following meanings: (i) "NET INCOME (BEFORE EXTRAORDINARY ITEMS)" is defined as consolidated net income, as defined by general accepted accounting principles ("GAAP"), for the Company for the subject year before extraordinary items, but including any extraordinary items related to refinancings (net of tax); (ii) "AMORTIZATION OF GOODWILL" is defined as the consolidated amortization expense related to the intangible asset goodwill for the Company for the subject year; (iii) "WEIGHTED AVERAGE STOCKHOLDERS' EQUITY" is calculated by adding the consolidated stockholders' equity for the Company, as defined by GAAP, at the beginning of the subject year and the end of each month of the subject year and dividing by thirteen; (iv) "WEIGHTED AVERAGE ACCUMULATED AMORTIZATION OF GOODWILL" is calculated by adding consolidated accumulated amortization of goodwill, as defined by GAAP, at the beginning of the subject year and the end of each month of the subject year and dividing by thirteen. (b) "ADJUSTED ROE" shall mean the average return on equity of the Company calculated for the applicable time period, based on A divided by B, where: VOL402CL Doc: 145317.1 1 2 A = Net Income (before extraordinary items) + Amortization of Goodwill; and B = Weighted Average (Stockholders' Equity + Accumulated Amortization of Goodwill). Adjusted ROE shall be determined at least annually by the Company." Section 2 --------- A new Section 2.12A is hereby added to the Plan, immediately following Section 2.12, to read as follows: "SECTION 2.12A. FIXED INCOME FUND shall mean the Stable Asset Fund under the Savings Plan or any equivalent fixed income fund thereunder which is designated by the NACCO Industries, Inc. Retirement Funds Investment Committee as the successor to the Stable Asset Fund." Section 3 --------- Article IV of the Plan is hereby amended in its entirety to read as follows: "ARTICLE IV EARNINGS -------- SECTION 4.1. FOR ACTIVE 401(K) EMPLOYEES. (a) For purposes of determining the earnings to be credited to a 401(k) Employee's Excess 401(k) Sub-Account, such Sub- Account shall be divided into two additional Sub-Accounts, the "7% 401(k) Deferral Sub-Account" and the "Additional 401(k) Deferral Sub-Account." The 7% 401(k) Deferral Sub-Account shall contain Excess 401(k) Benefits attributable to amounts deferred by a 401(k) Employee of up to 7% of his Compensation, plus any earnings attributable thereto. The Additional 401(k) Deferral Sub-Account shall contain the Excess 401(k) Benefits attributable to amounts deferred by a 401(k) Employee in excess of 7% of his Compensation, plus any earnings attributable thereto. (b) At the end of each calendar month during a Plan Year, the 7% 401(k) Deferral Sub-Account of each 401(k) Employee who is employed by an Employer on December 31 of a Plan Year shall be credited with an amount determined by multiplying such Participant's average 7% 401(k) Deferral Sub-Account balance during such month by the blended rate earned during such month by the Fixed Income Fund. Notwithstanding the foregoing, in the event that the Adjusted ROE determined for such Plan Year exceeds the rate credited to the Participant's 7% 401(k) Deferral Sub-Account under the preceding sentence, the Participant's 7% 401(k) VOL402CL Doc: 145317.1 2 3 Deferral Sub-Account shall retroactively be credited with the difference between (i) the amount determined under the preceding sentence, and (ii) the amount determined by multiplying the Participant's average 7% 401(k) Deferral Sub-Account balance during each month of such Plan Year by the Adjusted ROE determined for such Plan Year, compounded monthly. (c) At the end of each calendar month during a Plan Year, the Additional 401(k) Deferral Sub-Account of each Participant who is employed by an Employer on December 31 of such Year shall be credited with an amount determined by multiplying such Participant's average Additional 401(k) Deferral Sub-Account balance during such month by the blended rate earned during such month by the Fixed Income Fund. SECTION 4.2. FOR TERMINATED EMPLOYEES. The Sub-Account of a Participant who has terminated employment with the Controlled Group shall be credited with earnings as described in Section 4.1, as modified by this Section 4.2, until each Sub-Account has been distributed in full. The Adjusted ROE calculation described in the second sentence of Section 4.1(b) shall be made during the month in which the Participant terminates employment and shall be based on the year-to-date Adjusted ROE for the month ending prior to the date the Participant terminated employment, as calculated by the Company. For any subsequent month, the Adjusted ROE calculation described in the second sentence of Section 4.1(b) shall not apply. The Fixed Income Fund calculation described in the first sentence of Section 4.1(b) and in Section 4.1(c) for the month in which the Participant receives a distribution from his Sub-Account shall be based on the blended rate earned during the preceding month by the Fixed Income Fund. SECTION 4.3. CHANGES IN EARNINGS ASSUMPTIONS. The Committee (as defined in Section 9.5) may change the earnings rate credited on Accounts hereunder at any time upon at least 30 days advance notice to Participants." Executed this 15th day of March, 1995. HAMILTON BEACH/PROCTOR-SILEX, INC. By: Charles A. Bittenbender -------------------------- Title: Assistant Secretary VOL402CL Doc: 145317.1 3 EX-10.XXX 12 EXHIBIT 10(XXX) 1 Exhibit 10(xxx) AMENDMENT NO. 3 TO THE NORTH AMERICAN COAL CORPORATION DEFERRED COMPENSATION PLAN FOR MANAGEMENT EMPLOYEES ------------------------------- The North American Coal Corporation hereby adopts this Amendment No. 3 to The North American Coal Corporation Deferred Compensation Plan for Management Employees (the "Plan"), effective as of January 1, 1995. Words used herein with initial capital letters which are defined in the Plan shall be used herein as so defined. SECTION 1 --------- Paragraph 9(b) of the Plan is hereby amended in its entirety to read as follows: "(b) Notwithstanding the provisions of subparagraph (a) above, the Company, in its absolute discretion exercised in good faith, may accelerate the rate of distribution provided for in subparagraph (a) above, only in the case of an "Unforeseeable Emergency." For this purpose, an Unforeseeable Emergency is an event which results (or will result) in severe financial hardship to the Participant (or his Beneficiary) as a consequence of unexpected illness or accident or loss of the Participant's (or Beneficiary's) property due to casualty or other similar extraordinary or unforeseen circumstances out of the control of the Participant (or Beneficiary), as determined by and in the sole discretion of the Board of Directors of the Company or the Nominating, Organization and Compensation Committee of the Board of Directors of the Company. Payments of amounts because of an Unforeseeable Emergency shall be permitted only to the extent reasonably necessary to satisfy the emergency need." Section 2 --------- Effective December 31, 1994, the Employees of NACCO Industries, Inc. ("NACCO") discontinued participation in the Plan and the liabilities of NACCO to these former Participants in the Plan were transferred from the Plan to the NACCO Materials Handling Group, Inc. Unfunded Benefit Plan. VOL402CL Doc: 7753.1 2 2 Section 3 --------- Section 16 of the Plan is hereby amended in its entirety to read as follows: "16. AMENDMENT OR TERMINATION OF THE PLAN. ------------------------------------- (a) The Plan may be amended prospectively at any time, and from time to time, at the sole discretion of the Board or the Nominating, Organization and Compensation Committee of the Board (the "Committee"); provided, however, that no such Amendment may adversely affect any Participant's Account as of the date of such amendment, without the prior written consent of such Participant. (b) The Board and/or the Committee, in its sole discretion, may terminate this Plan at any time and for any reason whatsoever, except that no such termination may adversely affect any Participant's Account as of the date of such termination, without the prior written consent of the Participant. (c) Any such amendment or termination shall be expressed in a written instrument executed by an officer of the Company on the order of the Board or the Committee and shall become effective as of the date specified in such instrument or, if no such date is specified, on the date of its execution. (d) In the event of an amendment or termination, the amounts theretofore credited to the Account of each Participant, and all subsequent additions to such Account to reflect earnings provided in Paragraph 8 for the period prior to the payment of the Account at the time or times provided in Paragraphs 9 and 10 (as such Paragraphs existed prior to such termination or amendment) shall be distributed at the time or times provided in Paragraphs 9 or 10 (as such Paragraphs existed prior to any such termination or amendment). Notwithstanding the foregoing, the Board and/or the Committee may make any change in the Plan that, under all the circumstances, is beneficial and equitable to the Participants and is consistent with the spirit and purposes of the Plan. VOL402CL Doc: 7753.1 3 3 (e) Notwithstanding the foregoing, in the event the Board has adopted a plan of liquidation or dissolution of the Company, other than a plan of reorganization, the Plan shall be automatically terminated and all amounts credited to the Participants' Accounts shall be immediately payable notwithstanding any other provisions contained herein." Executed this 15th day of March, 1995. ---- ------ THE NORTH AMERICAN COAL CORPORATION By: Thomas A. Koza --------------------- Title: Vice President VOL402CL Doc: 7753.1 EX-10.XXXI 13 EXHIBIT 10(XXXI) 1 Exhibit 10(xxxi) AMENDMENT NO. 4 TO THE NORTH AMERICAN COAL CORPORATION DEFERRED COMPENSATION PLAN FOR MANAGEMENT EMPLOYEES The North American Coal Corporation hereby adopts this Amendment No. 4 to The North American Coal Deferred Compensation Plan for Management Employees (the "Plan"). The provisions of this Amendment shall be effective April 1, 1995. Words and phrases used herein with initial capital letters which are defined in the Plan are used herein as so defined. Section 1 --------- Paragraph 8 of the Plan is hereby amended in its entirety to read as follows: "8. EARNINGS. -------- (a) DEFINITIONS. For purposes of this Section, the following terms shall have the following meanings: (i) "NET INCOME (BEFORE EXTRAORDINARY ITEMS)" is defined as consolidated net income, as defined by general accepted accounting principles ("GAAP"), for NACCO Industries, Inc. and its subsidiaries for the subject year before extraordinary items, but including any extraordinary items related to refinancings (net of tax); (ii) "AMORTIZATION OF GOODWILL" is defined as the consolidated amortization expense related to the intangible asset goodwill for NACCO Industries, Inc. and its subsidiaries for the subject year; (iii) "WEIGHTED AVERAGE STOCKHOLDERS' EQUITY" is calculated by adding the consolidated stockholders' equity for NACCO Industries, Inc., as defined by GAAP, at the beginning of the subject year and the end of each month of the subject year and dividing by thirteen; (iv) "WEIGHTED AVERAGE ACCUMULATED AMORTIZATION OF GOODWILL" is calculated by adding consolidated accumulated amortization of goodwill, as defined by GAAP, at the beginning of the subject year and the end of each month of the subject year and dividing by thirteen; (v) "WEIGHTED AVERAGE UMWA ADJUSTMENT" is calculated by adding the balance in the obligation to United Mine Workers of America Combined Benefit Fund, net of tax, for NACCO Industries, Inc. at the beginning of the subject year and the end of each month of the subject year and dividing by thirteen; 1 VOL402CL Doc. 145291.1 2 (vi) "FIXED INCOME FUND" shall mean the Stable Asset Fund under the Savings Plan or any equivalent fixed income fund under such Plan that is designated by the NACCO Industries, Inc. Retirement Funds Investment Committee as the successor to the Stable Asset Fund; and (vii) "ADJUSTED ROE" shall mean the average return on equity of NACCO Industries, Inc. calculated by NACCO Industries, Inc. for the applicable time period, based on A divided by B, where: A = Net Income (before extraordinary items) + Amortization of Goodwill; and B = Weighted Average (Stockholders' Equity + Accumulated Amortization of Goodwill + UMWA Adjustment). Adjusted ROE shall be determined at least annually by NACCO Industries, Inc. (b) FOR ACTIVE EMPLOYEES. At the end of each calendar month during a calendar year, the Account of each Participant who is employed by an Employer on December 31 of such year shall be credited with an amount determined by multiplying such Participant's average Account balance during such month by the blended rate earned during such month by the Fixed Income Fund. Notwithstanding the foregoing, in the event that the Adjusted ROE determined for such calendar year exceeds the rate credited to the Participant's Account under the preceding sentence, the Participant's Account shall retroactively be credited with the difference between (i) the amount determined under the preceding sentence, and (ii) the amount determined by multiplying the Participant's average Account balance during each month of such year by the Adjusted ROE determined for such year, compounded monthly. (c) FOR TERMINATED EMPLOYEES. The Account of a Participant who has terminated employment with the Controlled Group shall be credited with earnings as described in subparagraph (b), as modified by this subparagraph (c), until his Account has been distributed in full in accordance with Paragraphs (9) and (10). The Adjusted ROE calculation described in the second sentence of subparagraph (b) shall be made during the month in which the Participant terminates employment and shall be based on the year-to-date Adjusted ROE for the month ending prior to the date the Participant terminated employment, as calculated by NACCO Industries, Inc. For any subsequent month, the Adjusted ROE calculation described in the second sentence of subparagraph (b) shall not apply. The Fixed Income Fund calculation described in the first sentence of subparagraph (b) for the month in which the Participant receives a distribution from his Account shall be based on the blended rate earned during the preceding month by the Fixed Income Fund. 2 VOLA02CL Doc. 145291.1 3 (d) CHANGES IN EARNINGS ASSUMPTIONS. The Nominating, Organization and Compensation Committee of the Board of Directors of the Company (the "Committee") or the Board of Directors of the Company (the "Board") may change the earnings rate credited on Accounts hereunder at any time upon at least 30 days advance notice to Participants." Executed this 15th day of March 1995. ------ ------- THE NORTH AMERICAN COAL CORPORATION By: /s/ Thomas A. Koza -------------------------------------------- Title: Vice President 3 VOLA02CL Doc. 145291.1 EX-10.XXXII 14 EXHIBIT 10(XXXII) 1 Exhibit 10(xxxii) AMENDMENT NO. 5A TO THE NORTH AMERICAN COAL CORPORATION SALARIED EMPLOYEES PENSION PLAN ------------------------------- The North American Coal Corporation hereby adopts this Amendment No. 5A to the plan document entitled "The North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989)" (the "Plan"). The provisions of this Amendment shall be effective as of the dates specified herein. Words and phrases used herein with initial capital letters which are defined in the Plan are used herein as so defined. Section 1 --------- Effective June 1, 1995, (1) Section 1.07 of the Plan is deleted in its entirety, and (2) new Sections 1.07 and 1.07A are hereby added to the Plan to read as follows: "1.07 APPLICABLE INTEREST RATE: The annual rate of interest on 30-year Treasury securities for the month before the date of distribution (which interest rate is the 'applicable interest rate' under Section 417(e)(3)(A)(ii)(II) of the Code as amended by the Retirement Protection Act of 1994). To the extent permitted by applicable Treasury Regulations, January 1 of the Plan Year in which the distribution occurs shall be treated as the date of distribution. 1.07A APPLICABLE MORTALITY TABLE: The 1983 Group Annuity Mortality Table, assuming a fixed blend of 50% of the male mortality rates and 50% of the female mortality rates (or such other mortality table which is prescribed by the Secretary of the Treasury for this purpose under Section 417(e)(3)(A)(ii)(I) of the Code)." Section 2 --------- Effective June 1, 1995, Section 5.04(c) of the Plan is hereby amended in its entirety to read as follows: "(c) If the amount of benefit is less than $30 a month, the benefit shall be paid quarterly, half yearly or yearly in advance as the Participant or Beneficiary directs. Notwithstanding the foregoing, if the present value of any benefit hereunder, at any time after the Participant's termination of employment or death and prior to the Pension Commencement Date, is $3,500 or less (and such benefit never exceeded $3,500 at the time of any prior distribution), such benefit shall be paid to the recipient as soon as 2 2 administratively practicable after such termination or death. Such present value shall be calculated using the Applicable Interest Rate and the Applicable Mortality Table." Section 3 --------- Effective as of January 1, 1993, Section 5.04(d) of the Plan is hereby amended in its entirety to read as follows: "(d) (1) The provisions of this Section shall be effective as of January 1, 1993. (2) The Committee shall provide a Participant or Beneficiary with an application form (which shall contain a general description of the forms of benefit available under the Plan) and such other information required to be provided under Section 402(f) of the Code no less than 30 days and no more than 90 days before a distribution is to be made. (3) Notwithstanding any provision of the Plan to the contrary, if a Participant or Spouse is eligible to receive a distribution from the Plan that constitutes an "eligible rollover distribution" (as defined in Paragraph (6) of this Subsection) and the Participant or Spouse elects to have all or a portion of such distribution paid directly to an "eligible retirement plan" (as defined in Paragraph (5) of this Subsection) and specifies the eligible retirement plan to which the distribution is to be paid, such distribution (or portion thereof) shall be made in the form of a direct rollover to the eligible retirement plan so specified. A direct rollover is a payment made by the Plan to the eligible retirement plan so specified for the benefit of the Participant or Spouse. Unless otherwise specifically provided herein, for purposes of this Subsection, the term "Spouse" shall include a former Spouse who is an alternate payee under the terms of a qualified domestic relations order. (4) The Committee shall prescribe reasonable procedures for the elections to be made pursuant to this Section. (5) For purposes of this Subsection, the term "eligible retirement plan" means an individual retirement account or annuity under Code Section 408, a defined contribution plan that satisfies the requirements of Code Section 401(a) and accepts rollovers, an annuity plan under Code Section 403(a) or any other type of plan that is included within the definition of "eligible retirement plan" under Section 401(a)(31)(D) of the Code; provided that with 3 3 respect to a spouse (but not a former spouse who is an alternate payee) who receives a distribution after a Participant's death, an "eligible retirement plan" shall mean only an individual retirement account or annuity under Code Section 408. (6) For purposes of this Subsection, the term "eligible rollover distribution" shall mean any distribution of all or any portion of the balance to the credit of the distributee from an employees' trust described in Code Section 401(a) which is exempt from tax under Code Section 501(a), except (i) distributions which are not expected to exceed $200 in any given Plan Year, (ii) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) over the life (or life expectancy) of the distributee or the joint lives (or life expectancies) of the distributee and a designated beneficiary or for a period of 10 or more years, (iii) any distribution to the extent required under Code Section 401(a)(9), (iv) the portion of any distribution that is not includible in gross income, and (v) such other amounts specified in Treasury regulations and rulings, notices or announcements issued under Section 402(c) of the Code. (7) The provisions of this Subsection are intended to comply with the provisions of Section 401(a)(31) of the Code and shall be interpreted in accordance with such section and Treasury regulations and rulings thereunder." Section 4 --------- Effective June 1, 1995, Section 11.09(c) of the Plan is hereby amended in its entirety to read as follows: "(c) Notwithstanding the foregoing provisions of this Section: (1) If the benefit under the Plan is payable in any form other than the life annuity form, or if the Employees contribute to the Plan or make rollover contributions or plan to plan transfers, for purposes of determining whether the limitations described in Subsection (b) of this Section have been satisfied, such benefit shall be adjusted, in accordance with rules determined by the Commissioner of the Internal Revenue under Treasury Regulation Section 1.415-3(c), so that such benefit is equivalent to an annual benefit. For purposes of this part (1), any ancillary benefit which is not directly related to retirement income benefits shall not be taken into account, and 4 4 that portion of any joint and survivor annuity which constitutes a qualified joint and survivor annuity (as defined in Section 417(b) of the Code) shall not be taken into account. (2) If the benefit under the Plan begins before the Social Security Retirement Age, for purposes of determining whether the limitation set forth in Paragraph (1) of Subsection (b) has been satisfied, such benefit shall be reduced in accordance with the following rules: (X) if an Employee's Social Security Retirement Age is age 65, the dollar limitation for benefits commencing on or after age 62 is reduced by 5/9 of 1% for each month by which benefits commence before the month in which the Employee attains age 65; (Y) if an Employee's Social Security Retirement Age is greater than age 65, the dollar limitation for benefits commencing at or after age 62 is reduced by 5/9 of 1% for each of the first 36 months and 5/12 of 1% for each of the additional months (up to 24 months) by which benefits commence before the month of the Employee's Social Security Retirement Age; (Z) the dollar limitation for benefits commencing prior to age 62 is the Actuarial Equivalent of the limitation for benefits commencing at age 62. (3) If the benefit begins after the Social Security Retirement Age, for purposes of determining whether the limitation set forth in Paragraph (1) of Subsection (b) of this Section has been satisfied, such limitation shall be increased, in accordance with regulations prescribed by the Secretary of the Treasury pursuant to Code Section 415(b)(2)(E), so that such limitation (as so increased) equals an annual benefit (beginning when such benefit begins under the Plan) which is Actuarial Equivalent to an annual benefit equal to the limitation set forth in such Paragraph (1) beginning at the Social Security Retirement Age. (4) The interest rate assumption used to determine Actuarial Equivalence for purposes of (1) or (2) above shall be the greater of the Applicable Interest Rate or the rate specified in Exhibit A. Adjustments under (1), (2) and (3) above shall be made through the use of the Applicable Mortality Table." 5 5 EXECUTED this 15th day of March, 1995. ---- THE NORTH AMERICAN COAL CORPORATION By: Charles A. Bittenbender -------------------------- Title: Assistant Secretary 149475.1 EX-10.XXXIII 15 EXHIBIT 10(XXXIII) 1 Exhibit 10(xxxiii) AMENDMENT NO. 2A TO THE HAMILTON BEACH/PROCTOR-SILEX, INC. PROFIT SHARING RETIREMENT PLAN ------------------------------ Hamilton Beach/Proctor-Silex, Inc. hereby adopts this Amendment No. 2A to the plan document entitled "The Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan (As Amended and Restated Effective as of January 1, 1992)" (the "Plan"). The provisions of this Amendment shall be effective as of the dates specified herein. Words and phrases used herein with initial capital letters which are defined in the Plan are used herein as so defined. Section 1 --------- Effective June 1, 1995, Sections 1.A. and 1.B. of Exhibit A to the Plan are hereby amended in its entirety to read as follows: "A. CASH BALANCE CONVERSION. The annual rate of interest on 30-year Treasury securities for the month before the date of distribution (which interest rate is the 'applicable interest rate' under Section 417(e)(3)(A)(ii)(II) of the Code as amended by the Retirement Protection Act of 1994). To the extent permitted by applicable Treasury Regulations, January 1 of the Plan Year in which the distribution occurs shall be treated as the date of distribution. B. LUMP SUM DISTRIBUTIONS. The annual rate of interest on 30-year Treasury securities for the month before the date of distribution (which interest rate is the 'applicable interest rate' under Section 417(e)(3)(A)(ii)(II) of the Code as amended by the Retirement Protection Act of 1994). To the extent permitted by applicable Treasury Regulations, January 1 of the Plan Year in which the distribution occurs shall be treated as the date of distribution." Section 2 --------- Effective June 1, 1995, Section 2 of Exhibit A to the Plan is hereby amended by renumbering Subsection B as C and by adding the following new Subsection B thereto: 2 2 "B. CASH BALANCE CONVERSIONS AND LUMP SUM DISTRIBUTIONS. The 1983 Group Annuity Mortality Table, assuming a fixed blend of 50% of the male mortality rates and 50% of the female mortality rates (or such other mortality table (which is prescribed by the Secretary of the Treasury for this purpose under Section 417(e)(3)(A)(ii)(I) of the Code)." Section 3 --------- Effective as of January 1, 1992, Section 1.40 of the Plan is hereby amended in its entirety to read as follows: "1.40 MINIMUM BENEFIT: For a Participant who was previously covered under the Prior Plans listed in Section 1.52(c) or 1.52(d) hereof, the Participant's Prior Plan Benefit. For a Participant who was previously covered under the Prior Plans listed in Section 1.52(a) or 1.52(b) hereof, the Participant's Accrued Benefit on the earlier of his Qualifying Termination or December 31, 1994, determined in accordance with the terms of the Prior Plan as in effect on December 31, 1991, expressed as a monthly benefit in the form of a Single Life Annuity (without ancillary benefits) commencing on the Participant's Normal Retirement Date." Section 4 --------- Effective as of December 31, 1994, a new Section 5.2A is hereby added to the Plan, immediately following Section 5.2, to read as follows: "5.2A ADDITIONAL CASH BALANCE CREDIT FOR THE 1994 PLAN YEAR. For the Plan Year commencing on January 1, 1994, the following Cash Balance Credit shall be added to the Cash Balance Account of each Participant who completed an Hour of Service during the 1994 Plan Year. The additional Cash Balance Credit shall be in addition to the Cash Balance Credit under Section 5.2 hereof and shall be equal to the sum of (a) plus (b), where (a) is the Participant's Compensation for the 1994 Plan Year multiplied by a percentage factor and (b) is the Participant's Compensation for the 1994 Plan Year which exceeds the Social Security Wage Base for the 1994 Plan Year multiplied by a percentage factor, both of which are determined in accordance with the following schedule: 3 3
Percentage of Percentage Compensation Exceeding Age Compensation Social Security Wage Base --- ------------ ------------------------- 0-34 .40% .40% 35-39 .47% .47% 40-44 .57% .57% 45-49 .70% .70% 50-54 .87% .87% 55-59 1.07% .37% 60+ 1.27% 0%
For purposes of determining the age to be used in the above calculation, age shall mean the Participant's age in full years on his birthday in the 1994 Plan Year." Section 5 --------- Effective as of January 1, 1993, the last two sentences of Section 7.2(d) of the Plan are hereby deleted in their entirety. Section 6 --------- Effective as of January 1, 1993, a new Section 7.2(e) is hereby added to the Plan, immediately following Section 7.2(d), to read as follows: "(e) (1) The provisions of this Section shall be effective as of January 1, 1993. (2) The Administrative Committee shall provide a Participant or Beneficiary with an application form (which shall contain a general description of the forms of benefit available under the Plan) and such other information required to be provided under Section 402(f) of the Code no less than 30 days and no more than 90 days before a distribution is to be made. (3) Notwithstanding any provision of the Plan to the contrary, if a Participant or Spouse is eligible to receive a distribution from the Plan that constitutes an "eligible rollover distribution" (as defined in Paragraph (6) of this Subsection) and the Participant or Spouse elects to have all or a portion of such distribution paid directly to an "eligible retirement plan" (as defined in Paragraph (5) of this Subsection) and specifies the eligible retirement plan to which the distribution is to be paid, such distribution (or portion thereof) shall be made in the form of a direct 4 4 rollover to the eligible retirement plan so specified. A direct rollover is a payment made by the Plan to the eligible retirement plan so specified for the benefit of the Participant or Spouse. Unless otherwise specifically provided herein, for purposes of this Subsection, the term "Spouse" shall include a former Spouse who is an alternate payee under the terms of a qualified domestic relations order. (4) The Committee shall prescribe reasonable procedures for the elections to be made pursuant to this Section. (5) For purposes of this Subsection, the term "eligible retirement plan" means an individual retirement account or annuity under Code Section 408, a defined contribution plan that satisfies the requirements of Code Section 401(a) and accepts rollovers, an annuity plan under Code Section 403(a) or any other type of plan that is included within the definition of "eligible retirement plan" under Section 401(a)(31)(D) of the Code; provided that with respect to a spouse (but not a former spouse who is an alternate payee) who receives a distribution after a Participant's death, an "eligible retirement plan" shall mean only an individual retirement account or annuity under Code Section 408. (6) For purposes of this Subsection, the term "eligible rollover distribution" shall mean any distribution of all or any portion of the balance to the credit of the distributee from an employees' trust described in Code Section 401(a) which is exempt from tax under Code Section 501(a), except (i) distributions which are not expected to exceed $200 in any given Plan Year, (ii) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) over the life (or life expectancy) of the distributee or the joint lives (or life expectancies) of the distributee and a designated beneficiary or for a period of 10 or more years, (iii) any distribution to the extent required under Code Section 401(a)(9), (iv) the portion of any distribution that is not includible in gross income, and (v) such other amounts specified in Treasury regulations and rulings, notices or announcements issued under Section 402(c) of the Code. (7) The provisions of this Subsection are intended to comply with the provisions of Section 401(a)(31) of the Code and shall be interpreted in accordance with such section and Treasury regulations and rulings thereunder." 5 5 Section 7 --------- Effective June 1, 1995, Section 12.10(c) of the Plan is hereby amended in its entirety to read as follows: "(c) Notwithstanding the foregoing provisions of this Section: (1) If the benefit under the Plan is payable in any form other than the life annuity form, or if the Employees contribute to the Plan or make rollover contributions or plan to plan transfers, for purposes of determining whether the limitations described in Subsection (b) of this Section have been satisfied, such benefit shall be adjusted, in accordance with rules determined by the Commissioner of the Internal Revenue under Treasury Regulation Section 1.415-3(c), so that such benefit is equivalent to an annual benefit. For purposes of this part (1), any ancillary benefit which is not directly related to retirement income benefits shall not be taken into account, and that portion of any joint and survivor annuity which constitutes a qualified joint and survivor annuity (as defined in Section 417(b) of the Code) shall not be taken into account. (2) If the benefit under the Plan begins before the Social Security Retirement Age, for purposes of determining whether the limitation set forth in Paragraph (1) of Subsection (b) of this Section has been satisfied, such benefit shall be reduced in accordance with the following rules: (X) if an Employee's Social Security Retirement Age is age 65, the dollar limitation for benefits commencing on or after age 62 is reduced by 5/9 of 1% for each month by which benefits commence before the month in which the Employee attains age 65; (Y) if an Employee's Social Security Retirement Age is greater than age 65, the dollar limitation for benefits commencing at or after age 62 is reduced by 5/9 of 1% for each of the first 36 months and 5/12 of 1% for each of the additional months (up to 24 months) by which benefits commence before the month of the Employee's Social Security Retirement Age; 6 6 (Z) the dollar limitation for benefits commencing prior to age 62 is the Actuarial Equivalent of the limitation for benefits commencing at age 62. (3) If the benefit begins after the Social Security Retirement Age, for purposes of determining whether the limitation set forth in Paragraph (1) of Subsection (b) of this Section has been satisfied, such limitation shall be increased, in accordance with regulations prescribed by the Secretary of the Treasury pursuant to Code Section 415(b)(2)(E), so that such limitation (as so increased) equals an annual benefit (beginning when such benefit begins under the Plan) which is Actuarial Equivalent to an annual benefit equal to the limitation set forth in such Paragraph (1) beginning at the Social Security Retirement Age. (4) The interest rate assumption used to determine Actuarial Equivalence for purposes of (1) or (2) above shall be the greater of the rate specified in Section 1.B. of Exhibit A or the rate specified in section 1.C. of Exhibit A. Adjustments under (1), (2) and (3) above shall be made through the use of the mortality table specified in Section 2.B. of Exhibit A." EXECUTED this 15th day of March, 1995. ---- HAMILTON BEACH/PROCTOR-SILEX, INC. By: Charles A. Bittenbender -------------------------- Title: Assistant Secretary 149475.1 EX-10.XXXIV 16 EXHIBIT 10(XXXIV) 1 Exhibit 10(xxxiv) AMENDMENT NO. 3 TO THE NORTH AMERICAN COAL CORPORATION RETIREMENT SAVINGS PLAN ----------------------------------------------------------- The North American Coal Corporation hereby adopts this Amendment No. 3 to The North American Coal Corporation Retirement Savings Plan (As Amended and Restated Effective as of January 1 1993) (the "Plan"), effective as of the dates indicated herein. Words and phrases used herein with initial capital letters which are defined in the Plan are used herein as so defined. Section 1 --------- Effective December 1, 1994, the Preamble to the Plan is hereby amended by adding the following sentence to the end thereof: "Effective December 1, 1994, the Total Account balance as of November 30, 1994 under the Plan, of each Participant who was employed by NACCO Industries, Inc. on that date was transferred to the NACCO Materials Handling Group, Inc. Profit Sharing Plan." Section 2 --------- Effective as of January 1, 1993, Section 1.1(8)(a) of the Plan is hereby amended by adding the word "such" after the phrase "or which would have been subject to such withholding if the Employee had not signed". Section 3 --------- Effective December 1, 1994, the third sentence of Section 1.1(16) of the Plan is hereby deleted and the following sentence is substituted therefor: "Effective December 1, 1994, NACCO Industries, Inc. ceased to be an Employer and the Employers under the Plan are the Company, North American Coal Royalty Company, Bellaire Corporation, The Coteau Properties Company, The Falkirk Mining Company, and the Sabine Mining Company." Section 4 --------- Effective December 1, 1994, the second sentence of Section 4.1 of the Plan, as added by Amendment No. 2 to the Plan, VOL402CL Doc: 119893.1 2 2 (relating to Matching Contributions for Employees of NACCO Industries, Inc.) is hereby deleted. Section 5 --------- Effective December 1, 1994, Section 4.3(2)(b) of the Plan, as amended by Amendment No. 2 to the Plan, is hereby further amended by deleting the phrase "(2-1/2% of Compensation for Participants who are Employees of NACCO Industries, Inc. effective for 1994 and subsequent Plan Years)". Section 6 --------- Effective as of October 1, 1994, Section 14.2 of the Plan is hereby amended by adding the phrase "an officer of the Company on the order of" before the phrase "the Nominating, Organization and Compensation Committee". EXECUTED this 30th day of November, 1994, to be effective as of the dates indicated above. THE NORTH AMERICAN COAL CORPORATION By: Charles A. Bittenbender -------------------------- Title: Assistant Secretary -------------------- VOL402CL Doc: 119893.1 EX-10.LXVIII 17 EXHIBIT 10(LXVIII) 1 Exhibit 10(lxviii) HAMILTON BEACH/PROCTOR-SILEX, INC. Annual Incentive Compensation Plan GENERAL ------- Hamilton Beach/Proctor-Silex, Inc. (the "Company") has established an Annual Incentive Compensation Plan (the "Plan") as part of a competitive compensation program for the Officers and key management employees of the Company and its Subsidiaries. PLAN OBJECTIVE -------------- The Company desires to attract and retain talented employees to enable the Company to meet its financial and business objectives. The objective of the Plan is to provide an opportunity to earn annual incentive compensation to those employees whose performance has a significant impact on the Company's short-term and long-term profitability. ADMINISTRATION AND PARTICIPATION -------------------------------- The Plan is administered by the Nominating, Organization and Compensation Committee of the Board of Directors of the Company (the "Committee"). The Committee: a. May amend, modify, or discontinue the Plan. b. Will approve participation in the Plan. Generally, participants will include all employee in Hay Salary Job Grades 14 and above. Employees who voluntarily terminate their employment prior to year-end are not entitled to an award and employees joining the Company after August of any year will not be entitied to an award. However, the Committee may select any employee who has contributed significantly to the Company's profitability to participate in the Plan and receive an annual incentive compensation award. c. Will determine the annual performance criteria which generates the incentive compensation pool. d. Will determine the total amount of both the target and actual annual incentive compensation pool. e. Will approve individual incentive compensation awards to Officers and employees above Hay Salary Job Grade 17. f. May delegate to the Chief Executive Officer of the Company the power to approve incentive compensation awards to employees in and below Hay Salary Job Grade 17. g. May consider at the end of each year the award of a discretionary bonus amount to non-participants as an addition to the regular incentive 2 compensation pool on a special one-time basis to motivate individuals not eligible to participate in the Plan. h. May approve a pro rata incentive compensation award for participants in the Plan whose employment is terminated (1) due to death, disability, retirement or facility closure; such award to be determined pursuant to the provisions of subparagraphs e. and f. above or (2) under other circumstances at the recommendation of the Chief Executive Officer of the Company. DETERMINATION OF CORPORATE INCENTIVE COMPENSATION POOL ------------------------------------------------------ Each participant in the Plan will have an individual target incentive compensation percentage which is determined by the participant's Salary Job Grade. This percentage is multiplied by the midpoint of the participant's Salary Job Grade to determine his individual target incentive compensation award. The total of the target incentive compensation awards of all participants equals the target corporate incentive compensation pool (the "Target Pool"). The Target Pool is approved each year by the Committee. The actual corporate incentive compensation pool (the "Actual Pool") is determined at the end of each year based on the Company's actual performance against specific criteria established in the beginning of the year by the Committee. The Target Pool is adjusted upwards or downwards by corporate performance adjustment factor to determine the Actual Pool. In no event will the Actual Pool exceed 150% of the Target Pool, except to the extent that the Committee elects to increase the Actual Pool by up to 10%, as described below. It is the intent of the Plan that the Actual Pool, as determined above, will be the final total corporate incentive compensation pool. However, the Committee, in its sole discretion, may increase or decrease by up to 10% the Actual Pool or may approve an incentive compensation pool where thee would normally be no pool due to Company performance which is below the criteria established for the year. The Actual and Target Pools exclude commission personnel as salespersons, regional general manager and manufacturing representatives. DETERMINATION OF INDIVIDUAL INCENTIVE COMPENSATION AWARDS --------------------------------------------------------- Salary Job Grades and the corresponding target incentive percentage for each participant in the Plan will be established at the beginning of each year and approved by the Committee. Individual target incentive compensation will then be adjusted by the appropriate pool factor. Such adjusted individual incentive compensation will then be further modified based on a participant's performance as compared to his individual goals for the year. The total of all individual incentive compensation awards must not exceed the Actual Pool for the year. PERFORMANCE TARGETS - See Plan Summary. ------------------- EX-10.LXXI 18 NACCO EXHIBIT 10.LXXI 1 EXHIBIT (lxxi) THE NORTH AMERICAN COAL CORPORATION SALARIED EMPLOYEES PENSION PLAN (As Amended and Restated as of January 1, 1989) ----------------------------------------------- The North American Coal Corporation (Western Operations) Pension Plan for Salaried Employees (the "Plan") was adopted effective September 1, 1986 by Bellaire Corporation (formerly known as The North American Coal Corporation, an Ohio corporation) when it was spun off from The NACCO Industries, Inc. Pension Plan for Salaried Employees (as amended and restated September 1, 1986). Effective January 1, 1989, The North American Coal Corporation, a Delaware corporation (formerly known as Nortex Mining Company) became the sponsor of the Plan. Effective on the date of the adoption of this Amendment and Restatement, the name of the Plan is changed to "The North American Coal Corporation Salaried Employees Pension Plan". ARTICLE I - DEFINITIONS AND CONSTRUCTION ---------------------------------------- 1.01 DEFINITIONS. The following terms when used herein with initial capital letters shall have the following respective meanings unless the context clearly indicates otherwise. Terms used herein in reference to the Prior Plan or any Other Group Plan shall have the meanings assigned to such terms by such plans. 1.02 ACCRUED BENEFIT: The amount of Pension to which a Participant is entitled under the terms of the Plan on any date (determined without application of any vesting requirements) expressed as a monthly benefit payable in the form of a single VOL402CL Doc: 154112.1 2 2 life annuity (without ancillary benefits) commencing on the Participant's Normal Retirement Date. 1.03 ACTUARIAL EQUIVALENT: A benefit of equivalent actuarial value when computed on the basis of the actuarial factors, assumptions and procedures recommended by the Actuary and adopted for such purpose by the Committee. To the extent not otherwise provided in various Sections of the Plan, such factors and assumptions are set forth in Exhibit A attached to the Plan. 1.04 ACTUARY: An individual actuary who is an enrolled actuary under the provisions of Section 3042 of ERISA or a firm of actuaries, at least one of whose members is such an enrolled actuary, which individual or firm is selected from time to time by the Committee and is, at the time involved, acting as actuary for the Plan. 1.05 ADMINISTRATOR OR PLAN ADMINISTRATOR: The Company. 1.06 AGE: A person's "Age" at any time shall be his age on the then most recent anniversary of his date of birth, except for the purpose of making actuarial calculations and determinations. The anniversary of the date of birth of a person born on February 29 shall, in years other than leap years, be deemed to be February 28. 1.07 APPLICABLE INTEREST RATE: Effective as of January 1, 1987, the interest rate or rates which would be used by the Pension Benefit Guaranty Corporation for purposes of determining the present value of a lump sum distribution on plan termination. VOL402CL Doc: 154112.1 3 3 1.08 AUTOMATIC 50% SPOUSE OPTION: The normal form of benefit payment provided in Section 4.09(b). 1.09 BENEFICIARY: The person or persons designated by the Participant as his Beneficiary or Joint Pensioner under the Plan. Such a designation may be made, revoked, or changed (without, except as provided below, the consent of any Beneficiary), only by an instrument (in form acceptable to the Committee) signed by the Participant and filed with the Secretary of the Committee before the Participant's death. A designation by a married Participant of a person other than his Spouse as his Beneficiary shall not take effect unless the Participant's Spouse consents in writing thereto. A Spouse's consent required by this Section shall (a) be signed by the Spouse, (b) acknowledge the effect of such consent, (c) be witnessed by a Plan representative or notary public, (d) be effective only with respect to such Spouse, and (e) designate a Beneficiary which cannot be changed without spousal consent. Such consent is not required if it is established to the satisfaction of a Plan representative that the consent cannot be obtained because there is no Spouse, because the Spouse cannot be located, or because of such other circumstances as the Secretary of the Treasury may prescribe by regulations. In the absence of an effective designation of a Beneficiary, a Participant's Beneficiary shall be his estate. A Spouse or any other person receiving or eligible to receive a benefit hereunder shall also be considered a Beneficiary. 1.10 BENEFIT SERVICE: (a) (General Rule for Employment After 1975) A Participant shall receive Benefit VOL402CL Doc: 154112.1 4 4 Service for the period of his employment as a Covered Employee under this Plan on and after September 1, 1986. Calculation of Benefit Service shall begin with a Participant's most recent date of hire as a Covered Employee under the Plan and shall end with his next following Severance from Service. In addition, a Participant shall receive the Benefit Service he was credited with under the Prior Plan on and after January 1, 1976. (b) (Previous Periods of Employment After 1975) If a Participant's last Severance from Service occurs on or after January 1, 1985, Benefit Service shall also include any prior periods of employment as a Covered Employee under the Prior Plan or as a Covered Employee under the Plan (regardless of whether there has been a break in the Participant's employment by the Controlled Group) that end subsequent to December 31, 1975; provided, however, that Benefit Service for purposes of this Subsection shall not include the period of a Participant's service, if any, before January 1, 1976. (c) (Employment Before 1976) A Participant shall also receive Benefit Service for the period of his continuous service, if any, before the earlier of January 1, 1976 and his Normal Retirement Date, in accordance with the definition of "NACCO Service" in Amendment A to the January 1, 1976 restatement of the Prior Plan. (d) (Employment as Non-Covered Employee) (i) A Participant who was covered under a UMW Negotiated Plan shall also receive Benefit Service equal to any period of his employment by a Controlled Group Member which counts for VOL402CL Doc: 154112.1 5 5 benefit purposes under the UMW Negotiated Plan and which is subsequent to December 31, 1975 and prior to the commencement of the period of employment for which the Participant receives Benefit Service under Subsection (a). (ii) A Participant who was covered under an Other Group Plan shall also receive Benefit Service equal to any period of his employment by a Controlled Group Member which counts as Benefit Service under the Other Group Plan and which is subsequent to August 31, 1986 and prior to the commencement of the period of employment for which the Participant receives Benefit Service under Subsection (a); provided, however, that a Participant shall not receive Benefit Service under this paragraph (ii) for any period of employment for which he receives Benefit Service under Subsection (b) or paragraph (i) of this Subsection. (e) (Disability) A Covered Employee having at least one year of Vesting Service as a salaried Employee who is disabled and receiving benefits under a Disability Income Plan shall also receive Benefit Service for the period for which he receives (or is entitled to receive) such Disability Income Plan benefits. (f) (Additional Restrictions) For purposes of this Section, a Covered Employee shall be considered to be employed and shall, therefore, receive Benefit Service only while he is receiving Compensation or is on approved leave of absence, temporary lay-off or suspension; provided, however, that the VOL402CL Doc: 154112.1 6 6 period during which a former Employee receives severance pay shall not be credited as Benefit Service. (g) (Military Service) To the extent required by applicable law, an Employee shall receive Benefit Service (and/or Vesting Service) for periods of military service in the armed forces of the United States during which he had re-employment rights under the Vietnam Era Veterans Readjustment Assistance Act of 1974 (or under any prior or subsequent similar law), based on an assumed continuation of his customary employment during such period, provided that he was an Employee at the time he entered such military service and that he returned to employment as an Employee while he retained such re-employment rights. (h) (Rounding) When an Employee's Benefit Service or Vesting Service is computed, it shall be computed in full years and full months; the remaining days that are not included in such computation shall be ignored. Where more than one period of employment are to be aggregated in order to determine an Employee's Benefit Service or Vesting Service, his Benefit Service and Vesting Service from all periods shall be aggregated and rounded following such aggregation. For purposes of such computations, a full year shall consist of 365 days and a full month shall consist of 30 days. (i) (Previous Exclusions) For the purposes of this Section, an Employee who becomes a Participant on January 1, 1988 as a result of the elimination of the Plan provision prohibiting participation by persons hired after Age 60 shall be deemed to have been a Participant for that period of his employment with VOL402CL Doc: 154112.1 7 7 the Employers which would otherwise have been counted as Benefit Service pursuant to the provisions of this Section or which otherwise would have been counted as Benefit Service under the applicable provisions of the Plan prior to this Amendment and Restatement. With respect to a Participant who attained Age 65 prior to January 1, 1988 and who performs an Hour of Service for the Controlled Group on or after January 1, 1988, all of the Participant's periods of employment with the Employers after his attainment of Age 65 during which he was a Covered Employee shall be counted as Benefit Service in accordance with the provisions of this Section. (j) (Non-duplication) Notwithstanding any other provision hereof, no Participant shall receive Benefit Service credit hereunder more than once for the same period of employment. 1.10A AM 2. 1.11 CODE: The Internal Revenue Code of 1986, as amended. 1.12 COMMITTEE OR PENSION COMMITTEE: The Pension Committee provided for in Article VII hereof. 1.13 COMPANY: The North American Coal Corporation, a Delaware corporation (known prior to June 30, 1988, as Nortex Mining Company). Prior to January 1, 1989, the Company was Bellaire Corporation (known prior to June 30, 1988 as The North American Coal Corporation, an Ohio corporation). 1.14 COMPENSATION: (a) All remuneration paid to an Employee by a Controlled Group Member, or which would have been VOL402CL Doc: 154112.1 8 8 paid to such Employee had he not signed a compensation deferral agreement which satisfies the requirements of Sections 401(k), 125 or 129 of the Code, which is subject to withholding for federal income tax purposes, or which would have been subject to such withholding if the Employee had not signed such a compensation deferral agreement, excluding, however, relocation allowances, tuition refunds, foreign service premiums, severance payments (including any salary continuation in lieu of severance payments) and other similar fringe benefits or perquisites. (b) Notwithstanding the foregoing, Compensation in excess of the limitation contained in Section 401(a)(17) of the Code shall not be taken into account for any purpose under the Plan. For purposes of the preceding sentence, in the case of a Highly Compensated Employee who is a 5-percent owner (as defined in Section 416(i)(1) of the Code) or one of the ten most Highly Compensated Employees, (i) such Highly Compensated Employee and his family members (as such term is hereinafter defined) shall be treated as a single Employee and the Compensation of each such family member shall be aggregated with the Compensation of such Highly Compensated Employee, and (ii) the limitation on Compensation shall be allocated among such Highly Compensated Employee and his family members in proportion to each individual's Compensation. For purposes of this Section, the term "family members" shall mean an Employee's Spouse and lineal descendants who have not attained age 19 before the close of the year in question. VOL402CL Doc: 154112.1 9 9 1.15 CONTROLLED GROUP: The Company and any and all other corporations, trades and/or businesses, the Employees of which together with Employees of the Company are required by Section 414 of the Code to be treated as if they were employed by a single employer. 1.16 CONTROLLED GROUP MEMBER: Each corporation or unincorporated trade or business that is or was a member of the Controlled Group, but only during such period as it is or was a member of the Controlled Group. 1.17 COVERED COMPENSATION: For a Plan Year, the average (without indexing) of the contribution and benefit bases (the "taxable wage bases") in effect under Section 230 of the Social Security Act for the 35 calendar years ending with the year an individual attains (or will attain) his Social Security Retirement Age. In determining a Participant's Covered Compensation for a Plan Year, the taxable wage base for the current Plan Year and any subsequent Plan Year shall be assumed to be the same as the taxable wage base in effect as of the beginning of the Plan Year for which the determination is being made. A Participant's Covered Compensation for a Plan Year after the 35-year period described in this Section is the Participant's Covered Compensation for the Plan Year during which the Participant attained the Social Security Retirement Age. A Participant's Covered Compensation for a Plan Year before the 35-year period described in this Section is the taxable wage base in effect as of the beginning of the Plan Year. A Participant's Covered Compensation shall be automatically adjusted for each VOL402CL Doc: 154112.1 10 10 Plan Year, provided that no such adjustment shall have the effect of decreasing any Participant's Accrued Benefit because of increases in Social Security benefits. For purposes of any Section of the Plan where the context requires a monthly amount, a Participant's Covered Compensation as determined under this Subsection shall be divided by 12. 1.18 COVERED EMPLOYEE: Effective September 1, 1986, a salaried Employee of Bellaire Corporation (known prior to June 30, 1988, as The North American Coal Corporation, an Ohio corporation) who was associated with the Indian Head Mine or the Western or Southwestern Divisions of Bellaire Corporation, or a salaried employee of North American Consultants, Inc. ("NACI"). The salaried Employees of Bellaire Corporation who were associated with its Western or Southwestern Divisions became Employees of The North American Coal Corporation (known prior to June 30, 1988 as Nortex Mining Company) or of North American Coal Royalty Company ("NAC Royalty") (known prior to July 18, 1988 as Nortex Royalty Company) in 1988. The North American Coal Corporation (a Delaware corporation) and NAC Royalty adopted the Plan as of June 30, 1988, and such Employees continued to be Covered Employees. Effective December 23, 1988, the salaried Employees of The North American Coal Corporation (a Delaware corporation) who were associated with the Dallas Accounting Division ceased to be Covered Employees under the Plan, and became covered employees under the NACCO Industries, Inc. Pension Plan for Salaried Employees (Plan No. 006). In addition, effective December 23, 1988, the salaried employees of NACI, the VOL402CL Doc: 154112.1 11 11 salaried Employees of Bellaire Corporation associated with the Indian Head Mine, the salaried Employees of NAC Royalty associated with the North Dakota Land Division, and the salaried Employees of the Bismarck Office Division of The North American Coal Corporation (a Delaware corporation) ceased to be Covered Employees under the Plan, and became covered employees under the North American Coal Corporation Pension Plan for Salaried Employees (Plan No. 004) (the "Eastern Plan"). Effective December 31, 1989, the Eastern Plan was terminated. Effective January 1, 1989, Bellaire Corporation, NAC Royalty and NACI adopted the Plan. Accordingly, effective January 1, 1989, a Covered Employee is a salaried Employee of The Falkirk Mining Company, The Coteau Properties Company, The Sabine Mining Company, Bellaire Corporation, North American Coal Royalty Company or North American Consultants, Inc., or a salaried Employee of The North American Coal Corporation (a Delaware corporation) associated with the Bismarck Office Division or the Dallas Accounting Division, or a salaried Employee of any other Employer. Notwithstanding the preceding, no Employee who is employed in an Excluded Bargaining Unit or is a leased employee (as defined in Section 1.24) shall be a Covered Employee. 1.19 DEFERRED VESTED PENSION: A Pension payable pursuant to Sections 3.05 and 4.04. 1.20 DISABILITY INCOME PLAN: A written plan or program adopted by a Controlled Group Member which is designed to provide, for salaried Employees who become disabled while covered by such Plan or program, periodic income during periods while VOL402CL Doc: 154112.1 12 12 they are not at work for a Controlled Group Member due to disability. 1.21 EARLIEST RETIREMENT DATE: The first date on which a Participant is entitled to receive a Pension hereunder, or would be entitled to receive a Pension hereunder if he terminated employment with the Controlled Group or retired on or before such date, assuming, in the case of a deceased Participant, that he had not died. 1.22 EARLY RETIREMENT DATE: The Early Retirement Date described in Section 3.04. 1.23 EARLY RETIREMENT PENSION: A Pension payable pursuant to Sections 3.04 and 4.03. 1.24 EMPLOYEE: An employee of a Controlled Group Member (including a salaried officer, but not a director as such) and, to the extent required by Section 414(n) of the Code, any person who is a "leased employee" of a Controlled Group Member. A "leased employee" means any person who, pursuant to an agreement between a Controlled Group Member and any other person ("leasing organization"), has performed services for the Controlled Group Member on a substantially full time basis for a period of at least one year, and such services are of a type historically performed by employees in the business field of the Controlled Group Member. Contributions or benefits provided a leased employee by the leasing organization which are attributable to services performed for a Controlled Group Member will be treated as provided by the Controlled Group Member. A leased employee will not be considered an Employee of a VOL402CL Doc: 154112.1 13 13 Controlled Group Member, however, if (A) leased employees do not constitute more than 20 percent of the Controlled Group Member's nonhighly compensated work force (within the meaning of Section 414(n)(5)(C)(ii) of the Code) and (B) such leased employee is covered by a money purchase pension plan maintained by the leasing organization that provides (i) a nonintegrated employer contribution rate of at least 10 percent of Compensation, but including amount contributed pursuant to a salary reduction agreement which are excludable from the leased employee's gross income under Section 125, Section 402(a)(8), Section 402(h) or Section 403(b) of the Code, (ii) immediate participation and (iii) full and immediate vesting. 1.25 EMPLOYER: Any person which adopts the Plan pursuant to Article XIII hereof. As of September 1, 1986, the Employers were Bellaire Corporation (known prior to June 30, 1988 as The North American Coal Corporation, an Ohio corporation) and North American Consultants, Inc. ("NACI"). As of June 30, 1988, The North American Coal Corporation, a Delaware corporation, (known prior to June 30, 1988 as Nortex Mining Company) and North American Coal Royalty Company ("NAC Royalty") (known prior to July 18, 1988 as Nortex Royalty Company) became Employers. As of December 23, 1988, NACI and NAC Royalty ceased to be Employers. As of December 30, 1988, The Falkirk Mining Company ("Falkirk"), The Coteau Properties Company ("Coteau") and The Sabine Mining Company ("Sabine") became Employers. As of December 31, 1988, Bellaire Corporation ceased to be an Employer. Due to the termination of The North American Coal Corporation Pension Plan VOL402CL Doc: 154112.1 14 14 for Salaried Employees, Bellaire Corporation, NACI and NAC Royalty adopted the Plan effective as of January 1, 1989. Accordingly, as of January 1, 1989, the Employers are Falkirk, Coteau, Sabine, The North American Coal Corporation (a Delaware corporation), Bellaire Corporation, NACI and NAC Royalty. In the case of any person which adopts the Plan and which (a) ceases to exist, (b) ceases to be a member of the Controlled Group or (c) withdraws or is eliminated from the Plan, it shall not thereafter be an Employer. 1.26 ERISA: The Employee Retirement Income Security Act of 1974, as amended. 1.27 EXCLUDED BARGAINING UNIT: A collective bargaining unit which includes Employees and which is recognized by a Controlled Group Member or certified by the National Labor Relations Board (or a successor thereto), unless there is a written agreement, between the Employer of the Employees in such collective bargaining unit and the collective bargaining representative for such Employees, that such Employees shall be eligible to participate in the Plan. 1.28 FIDUCIARY: Any person who (a) exercises any discretionary authority or discretionary control respecting management of the Plan or exercises any authority or control respecting management or disposition of its assets, (b) renders investment advice for a fee or other compensation, direct or indirect, with respect to any money or other property of the Plan, or has any authority or responsibility to do so, or (c) has any discretionary authority or discretionary responsibility in VOL402CL Doc: 154112.1 15 15 the administration of the Plan or the Trust Fund. The term "Fiduciary" shall also include any person to whom a Named Fiduciary delegates any fiduciary responsibilities in accordance with the provisions hereof or of the Trust Agreement as long as such delegation is in effect. 1.29 FINAL AVERAGE MONTHLY PAY: The average rate of monthly pay determined by dividing by 60 the total amount of a Participant's Compensation during the five consecutive calendar years during which his aggregate Compensation was the highest, selected from the ten consecutive calendar years ending with the calendar year in which occurs his Qualifying Termination. However, (a) any calendar year during which the Participant did not have any Compensation for working shall be ignored for all purposes in calculating his Final Average Monthly Pay, (b) in case of a Participant whose Qualifying Termination occurs after reaching Age 55, his Final Average Monthly Pay shall not be less than what it would have been if his Qualifying Termination had occurred at any earlier time after reaching Age 55, (c) if in such ten consecutive calendar years the Participant did not have Compensation during any five consecutive calendar years, his Final Average Monthly Pay shall not be less than the amount determined by dividing his Compensation during such ten years by the number of months (rounding to two decimal places any fraction of a month) in which he had Compensation during those ten years, (d) a Participant shall be deemed to have had no Compensation in a calendar year if he received or was entitled to receive Disability Income Plan benefits in such year which were at a rate VOL402CL Doc: 154112.1 16 16 that was less than his regular salary rate, but only if so deeming him to have received no Compensation will result in a larger Final Average Monthly Pay than will result from counting the Participant's Compensation during such year, and (e) in the case of a Participant who ceases to be a Covered Employee but remains an Employee and is not thereafter re-employed as a Covered Employee, such Participant's Final Average Monthly Pay shall be calculated as if he had a Qualifying Termination on the date he ceased to be a Covered Employee. 1.30 HIGHLY COMPENSATED EMPLOYEE: (a) For a particular Plan Year, any Employee (i) who, during the preceding Plan Year, (A) was at any time a 5-percent owner (as such term is defined in Section 416(i)(1) of the Code), (B) received compensation from the Controlled Group in excess of $75,000 (as such amount may be adjusted for increases in the cost of living pursuant to regulations prescribed by the Secretary of the Treasury), (C) received compensation from the Controlled Group in excess of $50,000 (as such amount may be adjusted for increases in the cost of living pursuant to regulations prescribed by the Secretary of the Treasury) and was in the top-paid group of Employees for such Year, or (D) VOL402CL Doc: 154112.1 17 17 was at any time an officer (limited to no more than 50 Employees or, if lesser, the greater of 3 Employees or 10 percent (10%) of the Employees) and received compensation, effective January 1, 1987, greater than 50 percent (50%) of the amount in effect under Section 415(b)(1)(A) of the Code for such Year, or (ii) who during the particular Plan Year (but not the prior Plan Year) (A) was at any time a 5-percent owner (as such term is defined in Section 416(i)(l) of the Code) or (B) was included in the foregoing clauses (B), (C) or (D) and was in the group consisting of the 100 Employees paid the greatest compensation by the Controlled Group during such Plan Year. (b) "Highly Compensated Employee" shall include a former Employee whose employment with the Controlled Group terminated prior to the Plan Year and who was a Highly Compensated Employee for the Plan Year in which his employment terminated or for any Plan Year ending on or after his 55th birthday. (c) For the purposes of this Section, (i) the term "compensation" shall mean the sum of an Employee's compensation as described in Section 11.09(a)(2) (subject to the limitations described in Section 1.14(b)), and the Employee's before-tax contributions (if any) under any qualified retirement plan sponsored by a Controlled Group Member, and (ii) the term "top-paid group of Employees" shall mean that group of Employees of the Controlled Group consisting of the top 20 percent (20%) of such Employees when ranked on the basis of compensation paid by the Controlled Group during the Plan Year. 1.31 HOUR OF SERVICE: An hour for which an Employee is paid, or entitled to payment, by a Controlled Group Member for the performance of duties as an Employee. 1.31A Amend 4 1.32 INVESTMENT COMMITTEE: The Investment Committee provided for in Article VIII hereof. VOL402CL Doc: 154112.1 18 18 1.33 JOINT PENSIONER: See Section 4.10(a)(1). The term "Joint Pensioner" shall include the Spouse of a Participant whose Pension is payable as provided in Section 4.09(b). 1.34 LATE RETIREMENT DATE. The Late Retirement Date described in Section 3.03. 1.35 LATE RETIREMENT PENSION. A Pension payable pursuant to Sections 3.03 and 4.02. 1.35A Am 2 1.36 MINIMUM BENEFIT: The Participant's Accrued Benefit as of December 31, 1988 determined in accordance with the benefit formula contained in Exhibit B attached hereto. 1.37 NAMED FIDUCIARIES: See Section 10.02. 1.38 NORMAL RETIREMENT AGE: Age 65; provided that, effective as of January 1, 1988, with respect to a Participant who commences participation in the Plan within 5 years before his attainment of Age 65, "Normal Retirement Age" shall mean the fifth anniversary of the date such Participant commenced participation in the Plan. 1.39 NORMAL RETIREMENT DATE: The first day of the month coinciding with or next following the day the Participant attains his Normal Retirement Age. 1.40 NORMAL RETIREMENT PENSION: A Pension payable pursuant to Sections 3.02 and 4.01. 1.41 OTHER GROUP PLAN: The NACCO Industries, Inc. Pension Plan for Salaried Employees (including both the plan in existence on September 1, 1986 that was terminated effective November 30, 1986 and the new plan with the same name that was VOL402CL Doc: 154112.1 19 19 established effective December 1, 1986) and The North American Coal Corporation Pension Plan for Salaried Employees, which was terminated effective December 31, 1989. 1.42 OTHER PENSION: A pension, annuity or similar benefit provided under any Other Pension Plan, including the amount of the Participant's vested accrued benefit which has been annuitized, settled or discharged under (a) The NACCO Industries, Inc. Pension Plan for Salaried Employees on November 30, 1986, the termination date of such plan, or (b) The North American Coal Corporation Pension Plan for Salaried Employees on December 31, 1989, the termination date of such Plan, expressed as a monthly benefit in the form of a straight-life annuity (with no ancillary benefits) commencing on his Normal Retirement Date. 1.43 OTHER PENSION PLAN: Any UMW Negotiated Plan and any Other Group Plan. 1.44 PARTICIPANT: A Pensioner or a person who satisfies the participation requirements set forth in Sections 2.01 and 2.02 and continues to be a Participant pursuant to Section 2.03 hereof. 1.45 PENSION: A Normal Retirement Pension, a Late Retirement Pension, an Early Retirement Pension or a Deferred Vested Pension. 1.46 PENSION COMMENCEMENT DATE: Effective as of January 1, 1985, the first day of the first period for which an amount is payable under the Plan as an annuity or in any other form, regardless of whether such amount is in fact paid on such day. An individual whose Pension is suspended pursuant to Section VOL402CL Doc: 154112.1 20 20 4.02(b) or Section 5.02 shall be treated as not having reached his Pension Commencement Date, and the Pension Commencement Date for any amount which later becomes payable shall be determined pursuant to the preceding sentence. An individual who commences to receive a Pension pursuant to Section 11.12 shall be treated as having reached his Pension Commencement Date. 1.47 PENSIONER: A former Employee whose employment with the Controlled Group shall have terminated under such conditions that he is eligible for or receiving a Pension under the Plan, even though such Pension has not begun and will not begin until the arrival of the time at which such Pension becomes payable. 1.48 PERIOD OF SEVERANCE: The period of time beginning with a Severance from Service of an Employee and ending on the day on which he next thereafter performs an Hour of Service. 1.49 PLAN: The pension plan known as The North American Coal Corporation Salaried Employees Pension Plan, as the same may hereafter be amended or restated from time to time. The Plan was spun off from The NACCO Industries, Inc. Pension Plan for Salaried Employees effective September 1, 1986. 1.50 PLAN YEAR: A calendar year. 1.51 PRIOR PLAN: The NACCO Industries, Inc. Pension Plan for Salaried Employees, as in effect from time to time prior to September 1, 1986. Effective September 1, 1986, the Plan was spun off from the Prior Plan. 1.52 PUBLIC PENSION: See Section 4.05(b). VOL402CL Doc: 154112.1 21 21 1.53 QUALIFYING TERMINATION: The Retirement of a Participant, the termination of a Participant's employment with the Controlled Group that makes him eligible for a Deferred Vested Pension, or the death of a Participant if as a result of his death a benefit is payable hereunder for his Beneficiary. 1.54 RETIREMENT: The termination of a Participant's employment with the Controlled Group which makes him eligible for a Normal, Late or Early Retirement Pension. The term "Retire" when referring to a Participant refers to the fact that his employment with the Controlled Group is being or has been terminated under conditions that constitute Retirement. 1.55 SEVERANCE FROM SERVICE: An Employee incurs a Severance from Service on the earlier of (a) the day on which he ceases to be an Employee by reason of his resignation, discharge, permanent layoff, Retirement or death or (b) the first annual anniversary of the first day of a period in which he remains absent from service with the Controlled Group (with or without pay) for any reason other than his resignation, permanent layoff, Retirement, discharge or death (such as vacation, holiday, sickness, suspension, disability (other than disability entitling the Employee to benefits under a Disability Income Plan), leave of absence or temporary layoff). Notwithstanding the foregoing provisions of this Section, an Employee who is absent from service beyond the first annual anniversary of the first date of absence (i) by reason of the pregnancy of the individual, VOL402CL Doc: 154112.1 22 22 (ii) by reason of the birth of a child of the individual, (iii) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (iv) for purposes of caring for such child for a period beginning immediately following such birth or placement, shall not have a "Severance from Service" until the second annual anniversary of the first date of such absence. The period between the first and second anniversaries of the first date of absence from work shall not count, however, as Benefit Service, Vesting Service, or a Period of Severance. 1.56 SOCIAL SECURITY RETIREMENT AGE: The age used as the retirement age under Section 216(1) of the Social Security Act, as amended, except that such Section shall be applied (a) without regard to the age increase factor, and (b) as if the early retirement age under Section 216(1)(2) of the Social Security Act were 62. 1.57 SPOUSE: The person to whom an Employee is legally married at the time in question; provided, however, that a former Spouse may be treated as a Spouse or surviving Spouse to the extent required under a "qualified domestic relations order" (as such term is defined by Section 414(p) of the Code). 1.58 TRUST: The Trust created by the Trust Agreement and known as The North American Coal Corporation (Western Operations) Pension Trust for Salaried Employees. VOL402CL Doc: 154112.1 23 23 1.59 TRUST AGREEMENT: The Agreement and Declaration of Trust dated as of September 1, 1986, between the Company and Ameritrust Company National Association as such Agreement and Declaration of Trust may be amended, supplemented or restated from time to time, or any Agreement and Declaration of Trust superseding the same. 1.60 TRUST FUND: The assets held in trust under the provisions of the Plan and the Trust Agreement, without distinction as to principal or income. 1.61 TRUSTEE: Ameritrust Company National Association, or its successor or successors in trust under the Trust Agreement. 1.62 UMW NEGOTIATED PLAN: Any plan or fund, established or maintained pursuant to negotiations with the United Mine Workers of America or a successor thereto or district or local thereof, which provides for pension, annuity or similar benefits, provided a Controlled Group Member makes or has made contributions to provide benefits under such plan or from such fund. 1.63 VESTING SERVICE: (a) An Employee shall receive Vesting Service for the period of his Benefit Service. In addition, an Employee shall receive Vesting Service for (i) periods of time not counted as Benefit Service that would count as Benefit Service except for the fact that he is employed (A) by an Employer in a capacity other than as a Covered Employee or (B) by a non-Employer Controlled Group Member, or (ii) any Period of Severance which commences by reason of a quit, discharge, VOL402CL Doc: 154112.1 24 24 permanent layoff or Retirement and which continues for less than one year; provided, however, that no work, employment or time before an Employee attains Age 18 shall be counted in determining his Vesting Service. (b) Notwithstanding anything in the Plan to the contrary, employment with and remuneration paid by The Warner Collieries Company and its Associated Companies (as defined in Section 9.3 of the Plan is in effect on December 31, 1975 and as amended by Amendment No. 1 thereto) shall be considered as Vesting Services as a salaried Employee and Compensation to the extent provided in said Section 9.3 with respect to "service", "service as a full-time salaried employee" and "credited compensation". 1.64 CONSTRUCTION OF DOCUMENTS: (a) Unless the context clearly otherwise requires, masculine words wherever used herein or in the Trust Agreement shall include feminine and neuter words and the singular shall include the plural wherever appropriate. (b) The words "herein", "hereof", "hereunder" and other words of similar import in the Plan or the Trust Agreement refer to the entire Plan or the Trust Agreement (as the case may be) rather than to the portion of the Plan or the Trust Agreement in which they appear. (c) Present tense verbs herein shall be construed as being both past tense verbs and present tense verbs where it is apparent from the context of the passage involved that as applied VOL402CL Doc: 154112.1 25 25 to some person the event or situation involved may have occurred in the past. (d) Where headings have been supplied for portions of the Plan or of the Trust Agreement (other than the headings to the defined terms in Sections 1.02 through 1.63) they have been supplied for convenience only and are not to be taken as limiting or extending the meaning of any of such portions of such documents. (e) As used herein, the phrase benefits "with respect to" a Participant, Pensioner or Employee means benefits under the Plan for such person and his Beneficiaries. (f) A number of the provisions hereof and of the Trust Agreement are designed to contain provisions required or contemplated by certain federal laws and/or regulations thereunder. Each such provision herein and in the Trust Agreement is intended to have the meaning required or contemplated by such provision of such law or regulations and shall be construed in accordance with valid regulations and valid published governmental rulings and interpretations of such provision. In applying such provisions hereof or of the Trust Agreement, each Fiduciary may rely (and shall be protected in relying) on any determination or ruling made by any agency of the United States Government that has authority to issue regulations, rulings, interpretations or determinations with respect to the federal law thus involved. (g) Except to the extent federal law controls, the Plan shall be governed, construed and administered according to VOL402CL Doc: 154112.1 26 26 the laws of the State of Ohio. All persons accepting or claiming benefits under the Plan or Trust Agreement shall be bound by and deemed to consent to their provisions. (h) Wherever the word "person" appears in the Plan, it shall refer to both natural and legal persons. (i) This Amendment and Restatement of the Plan shall constitute an amendment, restatement and continuation of the Plan. This Amendment and Restatement is generally effective as of January 1, 1989. During the period from January 1, 1989 until the date of the adoption of this Amendment and Restatement, benefits under the Plan were frozen for all Participants as a result of the adoption of the Model Amendments No. 1, 2 and 3 from IRS Notice 88-131. The adoption of this Amendment and Restatement retroactively extinguishes the freeze on benefit accruals to January 1, 1989. Certain provisions of this Amendment and Restatement of the Plan are effective as of some other date. The provisions of this Amendment and Restatement of the Plan which are effective prior to January 1, 1989 shall be deemed to amend the corresponding provisions of the Plan as in effect before this Amendment and Restatement and all amendments thereto. Events occurring before the applicable effective date of any provision of this Amendment and Restatement of the Plan shall be governed by the applicable provision of the Plan in effect on the date of the event. (j) Nothing contained in this Amendment and Restatement of the Plan shall reduce or have the effect of VOL402CL Doc: 154112.1 27 27 reducing the Accrued Benefit (within the meaning of Section 411(d)(6) of the Code) of any Participant under the terms of the Plan as in effect before this Amendment and Restatement. This Amendment and Restatement of the Plan shall be interpreted and administered accordingly. VOL402CL Doc: 154112.1 28 28 ARTICLE II - BECOMING A PARTICIPANT AND TERMINATION OF PARTICIPATION -------------------------------------------------------------------- 2.01 COMMENCEMENT OF PARTICIPATION. (a) (Participation as of January 1, 1989). Each Employee who was a Participant in the Plan on January 1, 1989 shall continue to be a Participant in the Plan as hereby restated, if he is a Covered Employee on January 1, 1989. (b) (Participation After January 1, 1989) Any other Employee shall become a Participant in the Plan on the day on which he becomes a Covered Employee. 2.02 EXCLUSIONS. An Employee may not become a Participant if he works for an Employer primarily outside of the United States and he is not a citizen of the United States. 2.03 TERMINATION OF PARTICIPATION. A Participant who is not a Pensioner shall only cease to be a Participant when he ceases to be an Employee. Such a former Participant shall again become a Participant as soon as he again becomes a Covered Employee or becomes a Pensioner. VOL402CL Doc: 154112.1 29 29 ARTICLE III - ELIGIBILITY FOR PENSIONS -------------------------------------- 3.01 REQUIREMENTS FOR PENSION. An Employee or former Employee shall not be eligible for a Pension under the Plan as hereby restated unless, in addition to any other requirements set forth in the Plan, the termination of his employment with the Employers occurs on or after January 1, 1989. The benefit, if any, payable with respect to a former Employee whose employment with the Employers terminated before January 1, 1989 (and who is not rehired by an Employer thereafter) shall be determined by and paid in accordance with the terms and provisions of the Plan as in effect at the date of such termination, except to the extent that certain provisions of the Plan, as amended and restated hereby as of January 1, 1989, apply to such individual as a result of applicable law or to the extent that the context clearly requires the application of such provision to such individual. 3.02 NORMAL RETIREMENT. A Participant whose employment with the Controlled Group is terminated on his Normal Retirement Date shall be entitled to a Normal Retirement Pension as provided in Section 4.01. A Participant's right to his Normal Retirement Pension shall be nonforfeitable upon the attainment of his Normal Retirement Age while he is an Employee. 3.03 LATE RETIREMENT. A Participant who postpones his Retirement to a date subsequent to his Normal Retirement Date (his "Late Retirement Date") shall be entitled to a Late Retirement Pension as provided in Section 4.02. VOL402CL Doc: 154112.1 30 30 3.04 EARLY RETIREMENT. A Participant having at least ten years of Vesting Service as a salaried Employee whose employment with the Controlled Group is terminated at a date at or after Age 55 but before his Normal Retirement Date and while he is a salaried Employee (his "Early Retirement Date") shall be eligible for an Early Retirement Pension as provided in Section 4.03. 3.05 DEFERRED VESTED TERMINATIONS. A Participant having at least five years of Vesting Service whose employment with the Controlled Group is terminated before he becomes eligible for any other Pension hereunder shall be eligible for a Deferred Vested Pension as provided in Section 4.04. 3.06 DISABILITY. If a Covered Employee having at least one year of Vesting Service as a salaried Employee becomes disabled and as a result thereof he receives benefits under a Disability Income Plan, (a) he shall be credited with Benefit and Vesting Service for the period provided in Section 1.10(e) and (b) except as provided in Section 3.07, he shall for purposes of the Plan be deemed to be a Covered Employee during the period for which he continues to receive (or to be entitled to receive) such Disability Income Plan benefits. 3.07 SURVIVING SPOUSE PENSION. If a Participant having at least ten years of Vesting Service as a salaried Employee and having attained Age 52 dies before his Pension Commencement Date and while he is a Covered Employee, and if he is survived by his Spouse to whom he has been legally married during the entire year immediately preceding his death, such VOL402CL Doc: 154112.1 31 31 Spouse shall be eligible for a Surviving Spouse Pension as provided in Section 4.07. However, if such a Participant's death occurs while he is not in fact an Employee but is deemed (pursuant to Section 3.06) to be a Covered Employee due to the receipt of or entitlement to benefits under a Disability Income Plan, such Spouse shall only be entitled to a Surviving Spouse Pension if such Spouse was legally married to the Participant when he became so disabled as to be entitled to such disability benefits. 3.08 PRE-RETIREMENT SPOUSE PENSION. (a) If a Participant having a nonforfeitable right to a Pension hereunder dies before his Pension Commencement Date and after having any service or paid leave after August 22, 1984 that is recognized hereunder, and if he is survived by his Spouse to whom he has been legally married during the entire year immediately preceding his death who is not eligible for the Surviving Spouse Pension, such Spouse shall be eligible for a Pre-Retirement Spouse Pension as provided in Section 4.08. (b) Any Participant (1) who had any service after December 31, 1975 that is recognized hereunder, (2) to whom Subsection (a) of this Section would not apply but for this Subsection, (3) who, when he terminated employment with the Controlled Group, had at least ten years of Vesting Service, and (4) who was alive, and whose Pension Commencement Date had not occurred, on July 19, 1985, may elect, during the period beginning on July 19, 1985 and ending on the earlier of the date of the Participant's Pension Commencement Date or the date of VOL402CL Doc: 154112.1 32 32 his death, to have the rules of Subsection (a) of this Section apply to him. If the Participant makes such an election, the Pension otherwise payable with respect to him shall be reduced, to reflect the increased cost attributable to having the pre-retirement survivor coverage for the period during which it was in effect, on the basis of the actuarial factors, assumptions and procedures set forth in Exhibit A. The Committee shall give participants described in this Subsection notice of its provisions and the reduction described herein shall not apply to the period between July 19, 1985 and the time such notice is given. VOL402CL Doc: 154112.1 33 33 ARTICLE IV - PENSION AND DEATH BENEFITS --------------------------------------- 4.01 NORMAL RETIREMENT PENSION. The Normal Retirement Pension for a Participant entitled to such a Pension shall be a Pension payable, except as otherwise provided in the Plan, for the Participant's lifetime, in a monthly amount equal to the greater of (a) the Participant's Minimum Benefit, or (b) A plus B, multiplied by C, plus D ([(A+B) x C] + D) where: A = 1.1% of the Participant's Final Average Monthly Pay not exceeding the Participant's Covered Compensation; B = 1.6% of the Participant's Final Average Monthly Pay in excess of the Participant's Covered Compensation; C = The Participant's number of years of Benefit Service not in excess of 30 years; and D = 0.5% of the Participant's Final Average Monthly Pay, multiplied by the Participant's number of years of Benefit Service in excess of 30 years. Except as otherwise provided herein, such Pension shall begin on the first of the month coincident with or following the Participant's Normal Retirement Date. 4.02 LATE RETIREMENT PENSION. (a) The Late Retirement Pension for a Participant entitled to such a Pension shall be determined in the same manner as a Normal Retirement Pension but based on the Participant's Benefit Service, Covered Compensation and Final Average Monthly Pay as of his Late Retirement Date. Except as otherwise provided herein, such Pension shall begin on the first day of the month coincident with or following the Participant's Late Retirement Date. (b) Notwithstanding Subsection (a) of this Section, a Participant's Late Retirement Pension shall begin as of the VOL402CL Doc: 154112.1 34 34 first day of any month after his Normal Retirement Date and before his Retirement (1) during which he is credited with less than 40 Hours of Service (including, for this purpose, hours for which he is paid, or entitled to payment, by a Controlled Group Member on account of the period of time during which no duties are performed) or (2) during which he is credited with at least 40 Hours of Service (as so defined) and the Company has not given him the notice required by 29 C.F.R. Section 2530.203-3(b)(4) that payment of his Normal Retirement Pension is being withheld. If a benefit becomes payable to a Participant pursuant to the preceding sentence, the benefit accruals, if any, required by the Plan for the period of payment with respect to such Participant shall, in accordance with regulations promulgated by the Secretary of the Treasury, be treated as satisfied to the extent of the Actuarial Equivalent of such benefit payments. 4.03 EARLY RETIREMENT PENSION. (a) The Early Retirement Pension for a Participant entitled to such a Pension shall be determined in the same manner as a Normal Retirement Pension but based on the Participant's Benefit Service, Covered Compensation and Final Average Monthly Pay as of his Early Retirement Date. (b) The Early Retirement Pension described in Subsection (a) of this Section shall commence on the first day of the month coincident with or following the Participant's Normal Retirement Date, unless the Participant elects within the 90-day period ending on his Pension Commencement Date (with, if he is married and if he elects a benefit option other than the VOL402CL Doc: 154112.1 35 35 Automatic 50% Spouse Option or a Joint Pensioner Option under Section 4.10(a)(1) with his Spouse as the Joint Pensioner, the consent of his Spouse), that the Early Retirement Pension commence in a reduced amount on the first day of any earlier month designated by him, which day is subsequent to his Qualifying Termination. Such reduced Early Retirement Pension shall be equal to the amount determined under Subsection (a) of this Section, reduced by 0.33333% for each month that his Early Retirement Pension commences before his Normal Retirement Date. 4.04 DEFERRED VESTED PENSION. (a) The Deferred Vested Pension for a Participant entitled to such a Pension shall be determined in the same manner as the Normal Retirement Pension but based on the Participant's Benefit Service, Covered Compensation and Final Average Monthly Earnings at the time of his Qualifying Termination. (b) A Participant's Deferred Vested Pension shall commence on the first day of the month coincident with or following his Normal Retirement Date; provided, however, that a Participant who had at least 10 years of Vesting Service as a salaried Employee on his Qualifying Termination may elect, within the 90-day period ending on his Pension Commencement Date (with, if he is married and if he elects a benefit option other than the Automatic 50% Spouse Option or a Joint Pensioner Option under Section 4.10(a)(1) with his Spouse as the Joint Pensioner, the consent of his Spouse), to have his Deferred Vested Pension commence in a reduced amount on the first day of any earlier month designated by him which day is within the ten-year period VOL402CL Doc: 154112.1 36 36 prior to his Normal Retirement Date and is subsequent to his Qualifying Termination. Such reduced Deferred Vested Pension shall be the Actuarial Equivalent of the Normal Retirement Pension determined using the actuarial factors specified in Exhibit A, ignoring the death benefit specified in section 4.06. (c) The Accrued Benefit of a Participant who terminates his employment with the Controlled Group at a time when he does not have a nonforfeitable right to any Pension hereunder shall be deemed to have been distributed to the Participant immediately upon such termination of employment, and the Participant's entire Accrued Benefit shall thereupon be forfeited. Such forfeitures shall not be applied to increase the benefits any Employee would otherwise receive under the Plan, but shall be used to reduce the future contributions of the Employers. If the Participant is subsequently re-employed, the deemed distribution described in the first sentence of this Subsection shall be deemed to have been repaid to the Plan upon such re-employment if there were fewer than five consecutive 1-year Periods of Severance during the period between the Participant's original termination of employment with the Controlled Group and his subsequent re-employment with the Controlled Group. 4.04A Am 5 4.05 REDUCTIONS FOR OTHER PRIVATE AND PUBLIC BENEFITS. (a) If a Pensioner is (or would upon application be) entitled to an Other Pension under any Other Pension Plan and if (in a case where the Other Pension Plan is an Other Group Plan) he was VOL402CL Doc: 154112.1 37 37 a Covered Employee under the Plan after the last date on which he was a Covered Employee under the Other Group Plan, his monthly Pension hereunder (determined after reductions for early commencement but before adjustments for any optional form of benefit) shall be reduced by the monthly amount, beginning when his Pension hereunder is to begin and payable monthly for his then remaining lifetime and no longer, that is the Actuarial Equivalent of such Other Pension. However, his monthly Pension hereunder shall not be reduced by any portion of such Other Pension that was paid for by his own contributions to such Other Pension Plan and any portion thereof that was not attributable to employment with the Controlled Group. The amount of such Other Pension shall be determined after reductions for early commencement but before adjustments for any optional form of benefit and without regard for any optional election of a contingent annuitant, joint and survivor or period certain option or any similar option. Where all or a part of an Other Pension is or has been discharged or settled by a lump sum payment or a similar payment, the provisions hereof shall be applied to such Other Pension the same as if it had not been so discharged or settled. The Pension Committee may, after consultation with an Actuary, equitably adjust a Pensioner's monthly Pension hereunder if the Pensioner's Pension hereunder is suspended in accordance with Section 4.02(b) or 5.02 and the Pensioner's benefit (if any) under the Other Group Plan is not suspended. (b) The term "Public Pension" shall mean any benefit for disability, old age or retirement (including workers' VOL402CL Doc: 154112.1 38 38 compensation benefits and black lung benefits, but excluding benefits under the federal Social Security Act or any successor thereto) which is paid from a governmental fund or is provided for or required by statutory law; provided that (1) such benefit is paid (i) by one or more Controlled Group Members, or (ii) pursuant to an insurance policy under which a Controlled Group Member pays or has paid premiums and such benefits are in fact paid from such policy, or (iii) from a fund to which a Controlled Group Member contributes or has contributed by the payment of premiums, taxes or otherwise (other than taxes for the general purposes of a government) and (2) the term "Public Pension" shall not include payment of or reimbursement for medical expenses. Notwithstanding the foregoing, in the event that a Pensioner's black lung benefits are attributable (in whole or in part) to employment with a non-Controlled Group Member, the Pensioner's Pension hereunder shall be offset only by the portion of such benefits attributable to employment with the Controlled Group. The applicable offset will be calculated by multiplying each benefit payment by a fraction, the numerator of which is the Pensioner's years of service with the Controlled Group and the denominator of which is the Pensioner's years of total employment in the coal industry. (c) A Pensioner's Pension hereunder shall be reduced by any Public Pension to which he is (or would upon application be) entitled. This reduction shall be accomplished by reducing the Pensioner's Pension hereunder for each month by the amount of such Public Pension that is payable with respect to such month VOL402CL Doc: 154112.1 39 39 for the Pensioner, and his Spouse, or dependents if any. No reduction shall be made pursuant to this Subsection (c) with respect to (1) any portion of a Public Pension for a Pensioner that is payable for any period of time that precedes the date his Pension hereunder is to begin, or (2) any Public Pension from which the Pensioner's Pension hereunder is deducted. In the event a Pensioner receives a Public Pension that includes any retroactive payment for any prior month during which he received a Pension hereunder, the Committee shall adjust future payments or distributions to such Pensioner or his Beneficiaries to recover any excess payments theretofore made from the Trust Fund to such Pensioner. (d) The Committee shall have full authority to determine under the foregoing provisions of this Section the amount of reductions provided for in this Section and may adopt rules, applying uniformly to all Participants similarly situated, as it may deem advisable to carry out the purpose and provisions of this Section. 4.06 POST-RETIREMENT DEATH BENEFIT. If a Pensioner, other than one entitled to a Deferred Vested Pension, dies while receiving his Pension hereunder (or while he would have been receiving such Pension except for Section 5.06(a)), there shall be payable to his Beneficiary the difference (if any) between (a) $5,000 and (b) the value (as of the date of the Pensioner's death) of any death benefit payable (or payable upon application) with respect to such Pensioner under any group life insurance which had been paid for in whole or in part by a Controlled Group VOL402CL Doc: 154112.1 40 40 Member; provided, however, that the death benefit provided for in this Section shall not be payable if the Pensioner qualifies for a substantially similar benefit provided by an Other Group Plan (or under the terms of the annuity contracts issued to such person upon the termination of The NACCO Industries, Inc. Pension Plan for Salaried Employees as of November 30, 1986 or upon the termination of The North American Coal Corporation Pension Plan for Salaried Employees on December 31, 1989) and if the Pensioner was a Participant in such Other Group Plan after the last date on which he was a Covered Employee hereunder. 4.07 SURVIVING SPOUSE PENSIONS. (a) The Surviving Spouse Pension for the surviving Spouse of a deceased Participant which Spouse is entitled to such benefit (1) shall be (for Spouses of Participants who die prior to their Normal Retirement Date) a monthly benefit equal to 50% of what would have been such Participant's Normal Retirement Pension (payable in the form of a single life annuity with no reduction for early commencement) if he had reached his Normal Retirement Date on the date he died and if (instead of dying) he had continued to live or (in the case of Spouses of Participants who die on or after their Normal Retirement Date) a monthly benefit equal to 50% of what would have been such Participant's Normal or Late Retirement Pension, as applicable, (payable in the form of a single life annuity with no reduction for early commencement) if he would have retired on the date of his death, (2) shall begin on the first day of the month after the Participant's death if such Spouse is living on such day, (3) shall, except as otherwise provided herein, be VOL402CL Doc: 154112.1 41 41 payable monthly thereafter (on the first of each month) during such Spouse's remaining lifetime and (4) shall cease with the payment due on the first day of the last month in which such Spouse is living. If the surviving Spouse is eligible for a survivorship pension, annuity, or similar benefit under an Other Group Plan because of the death of the Participant prior to the date on which such Participant's pension was due to begin under such Other Group Plan and if the deceased Participant was a Covered Employee under the Plan after the last date on which he was a Covered Employee under the Other Group Plan, the surviving Spouse's monthly benefit hereunder shall be reduced, beginning when such Spouse's benefit under such Other Group Plan is to begin, by the monthly amount of the survivorship benefit to which the Spouse is entitled under such Other Group Plan. Where all or part of such survivorship benefit under such Other Group Plan is or has been discharged or settled by a lump sum payment or a similar payment, the provisions hereof shall be applied to such survivorship benefit the same as if it had not been so discharged or settled. (b) Any death, survivor or similar benefit under a plan or program that provides for a Public Pension, which is (or would upon application be) payable on account of the death of the Participant and because of a disease that is designated by law or governmental regulation as an occupational disease of an industry that includes the coal mining industry or businesses, shall be deducted from the Surviving Spouse Pension under this Section until the amount deducted equals the amount of such death, VOL402CL Doc: 154112.1 42 42 survivor or similar benefit. Such deduction shall be accomplished by reducing the Surviving Spouse Pension determined under Subsection (a) of this Section for each month by the amount of such death, survivor or similar benefit that is payable with respect to such month for the surviving Spouse. The monthly offset provided under the preceding sentence shall be calculated at the time the Surviving Spouse Pension begins or, if later, the date the death, survivor or similar benefit under the plan or program providing for a Public Pension begins, and shall not thereafter be changed or adjusted notwithstanding any change in the amount of the Public Pension. No reduction shall be made pursuant to the preceding three sentences of this Subsection with respect to (1) any portion of a Public Pension for a surviving Spouse that is payable for any period of time that precedes the date his Pension hereunder is to begin, or (2) any Public Pension from which the Surviving Spouse Pension hereunder is deducted. In the event a surviving Spouse receives a Public Pension that includes any retroactive payment for any prior month during which he received a Pension hereunder, the Committee shall adjust future pension payments with respect to such Spouse to recover any excess payments theretofore made from the Trust Fund to such Spouse. 4.08 PRE-RETIREMENT SPOUSE PENSION. (a) The monthly amount of the Pre-Retirement Spouse Pension for the Spouse of a deceased Participant entitled to such benefit shall be the Actuarial Equivalent (as of the date such benefit commences) of that amount which the surviving Spouse would have been entitled VOL402CL Doc: 154112.1 43 43 to receive (determined by counting only the Participant's Benefit Service as of the date of his death) if: (1) in the case of a Participant who dies after his Earliest Retirement Date, the Participant had retired or otherwise terminated employment with the Controlled Group during the month before his death with his Pension payable under the Automatic 50% Spouse Option (or, in the case of a Participant who (i) elected a Joint Pensioner option under Section 4.10(a)(1) with his Spouse as the Joint Pensioner to receive payments after the death of the Participant of 66-2/3%, 75% or 100% of the reduced Pension payable to the Participant under such option and (ii) dies before the Pension Commencement Date, under the option elected by the Participant) commencing on the first day of the month following the month in which he died; or (2) in the case of a Participant who dies on or before his Earliest Retirement Date, (i) the Participant's (in the case only of a Participant who dies while he is an Employee) employment with the Controlled Group had terminated on the date of his death, (ii) the Participant had survived to his Earliest Retirement Date, (iii) the Participant had retired at his Earliest Retirement Date, with a Pension payable immediately under the Automatic 50% Spouse Option (or, in the case of a Participant who (A) elected a Joint Pensioner option under Section 4.10(a)(1) with his Spouse as the Joint Pensioner to receive payments after the death of the Participant of 66-2/3%, 75% or 100% of the VOL402CL Doc: 154112.1 44 44 reduced Pension payable to the Participant under such option and (B) dies before the Pension Commencement Date, under the option elected by the Participant), and (iv) the Participant died on the day after his Earliest Retirement Date. (b) The Pre-Retirement Spouse Pension described in this Section shall begin on the first day of the month following the month in which occurs the Participant's Earliest Retirement Date or, if the Participant dies after his Earliest Retirement Date, on the first day of the month following the month in which the Participant dies, unless, in the case of a Pre-Retirement Spouse Pension first payable in a month prior to the month following the month in which the Participant would have attained his Normal Retirement Age had he not died, the surviving Spouse elects later commencement on the first day of any subsequent month up to the month following the month in which the Participant would have attained his Normal Retirement Age had he not died, but in any case only if the Spouse is living on such date. If the Spouse elects to defer commencement of the Pre-Retirement Spouse Pension, the benefit such Spouse shall receive shall be the Actuarial Equivalent of the benefit such Spouse would have received had there been no deferral. 4.09 NORMAL FORMS OF BENEFITS. (a) Notwithstanding any other provision of the Plan, a Pension payable to a Participant shall be paid in the applicable form described in Subsection (b) or (c) of this Section unless payment in such form VOL402CL Doc: 154112.1 45 45 is effectively waived pursuant to Subsection (b) or (c) of this Section. (b)(1) A Participant who is married on his Pension Commencement Date shall have his Pension paid in the form of an "Automatic 50% Spouse Option" unless the Participant elects to waive such Option during the 90-day period ending on his Pension Commencement Date, provided that any election to waive such Option shall not take effect unless (i) the Participant's Spouse consents in writing to such election, and the Spouse's consent acknowledges the effect of such election and is witnessed by a Plan representative or a notary public, or (ii) it is established to the satisfaction of a Plan representative that the consent required under (i) cannot be obtained because there is no Spouse, because the Spouse cannot be located, or because of such other circumstances as the Secretary of the Treasury may prescribe by regulations. Effective January 1, 1987, the election to waive the Automatic 50% Spouse Option must designate a Beneficiary (or a form of benefits) that may not be changed without the written consent of the electing Participant's Spouse, unless the written consent of the Spouse expressly permits designations by the Participant without any requirement of further consent by the Spouse. The Automatic 50% Spouse Option shall provide payments as if the Participant had elected a Joint Pensioner Option under Section 4.10(a)(1) with his Spouse as his Joint Pensioner and 50% as the percentage of the reduced Pension payable to VOL402CL Doc: 154112.1 46 46 the Participant to be continued to the Spouse after the death of the Participant, if the Spouse survives the Participant. Any election by the Participant to waive the Automatic 50% Spouse Option may be revoked by the Participant during the 90-day period ending on the Participant's Pension Commencement Date. A Participant's election to waive the Automatic 50% Spouse Option and any revocation of such election may be made solely by an instrument (in form acceptable to the Committee) signed by the Participant and filed with the Secretary of the Committee during such election period. (2) The Committee in accordance with applicable law and regulations shall provide to each Participant, within a reasonable period of time before the Participant's Pension Commencement Date, a written explanation of (i) the terms and conditions of the Automatic 50% Spouse Option, (ii) the Participant's right to make, and the effect of, an election to waive the Automatic 50% Spouse Option, (iii) the rights of the Participant's Spouse hereunder, (iv) the right to make, and the effect of, revocation of an election to waive the Automatic 50% Spouse Option, and (v) a general description of the eligibility features and relative values of a single life annuity and the other optional forms of benefit described in Section 4.10. (3) Pension payments for the Spouse shall commence on the first day of the month following the month in which the VOL402CL Doc: 154112.1 47 47 Participant dies, provided the Spouse is living on such day and is otherwise eligible to receive such payments under this Section, and shall continue during the Spouse's remaining lifetime, the last monthly payment being payable on the first day of the month in which the Spouse dies. If a Participant's Spouse predeceases the Participant before the Participant's Pension Commencement Date, the Participant shall be treated as though he had elected to waive the Automatic 50% Spouse Option. If a Participant's Spouse dies on or after the Participant's Pension Commencement Date, the Participant's reduced Pension will not be increased thereby. (c) A Participant who is not married on his Pension Commencement Date shall have his Pension paid in the form of a single life annuity, as provided in Section 4.01 hereof, unless such Participant elects, within the 90-day period ending on his Pension Commencement Date, to waive the payment of his benefits in such form. 4.10 OPTIONAL FORMS OF BENEFITS. (a) A Participant who has waived the payment of his Pension in the form provided in Section 4.09 may elect (subject to the provisions of this Section and to such rules as may be adopted by the Committee) any one, or a compatible combination, of the optional forms of benefits specified in the following paragraphs or to have his Pension paid in the form of a single life annuity as specified in Section 4.01 (which form shall be considered an optional form of benefit for purposes of this Section.) Any such optional form of benefit or combination of optional forms of benefits shall be the Actuarial VOL402CL Doc: 154112.1 48 48 Equivalent of the Pension otherwise payable from the Trust Fund. In determining such Actuarial Equivalent, the death benefit specified in Section 4.06 shall be ignored. (1) (JOINT PENSIONER OPTIONS) A Participant may elect to receive a reduced Pension payable for him during his lifetime on and after his Pension Commencement Date, and after his death to have a Pension payable during the surviving lifetime of and for a natural person (herein called his "Joint Pensioner") designated by the Participant for such purpose at the rate of 50%, 66-2/3%, 75% or 100% of the reduced Pension payable for the Participant. Pension payments for the Joint Pensioner shall begin with the first day of the month after the month in which the Participant dies, provided his death does not void this Option as provided in Subsection (c) of this Section, and provided his Joint Pensioner is living on such day, and the last monthly payment for the Joint Pensioner shall be payable on the first day of the last month in which the Joint Pensioner is living. If a Participant's Joint Pensioner dies before the Participant's Pension hereunder is to begin, the election shall be of no effect and the Participant shall be treated the same as though he had not elected a Joint Pensioner Option. If a Participant's Joint Pensioner dies on or after the date the Participant's Pension hereunder is to begin and while the Participant is living, the Joint Pensioner Option elected shall continue in force and the Participant's reduced Pension will not be increased thereby. VOL402CL Doc: 154112.1 49 49 (2) (10 YEAR CERTAIN) A Participant may elect to receive a reduced Pension payable for him during his lifetime on and after his Pension Commencement Date with the provision that, in the event of his death on or after such date and before 120 monthly Pension payments have been paid for him, monthly Pension payments will be continued (at the same reduced rate) to his Beneficiary until the number of monthly Pension payments made for his Beneficiary, when added to the number of monthly Pension payments made for the Participant, equals a total of 120 (referred to herein as the "10 Year Certain"). (3) (SOCIAL SECURITY OPTION) A Participant whose Pension commences prior to his Social Security Retirement Age may elect to have the amount of monthly pension payable for him increased before his Social Security Retirement Age (or, if requested by the Participant, before an earlier date on which he may elect to have his old age benefits under the Social Security Act begin) and decreased thereafter, to the end that his Pension hereunder, when combined with the old age benefits payable under the Social Security Act (as estimated as of the date his Pension hereunder is to begin), will provide a level amount of retirement income insofar as practicable. (b) (ELECTION OF OPTIONS) An election of an Option or Options under this Section may be made (and may be rescinded), and the Participant's Joint Pensioner and the percentage of the Participant's reduced Pension to be paid after his death to his Joint Pensioner may be designated (and such designations may be VOL402CL Doc: 154112.1 50 50 changed), solely by an instrument (in form acceptable to the Committee) signed by the Participant and filed with the Secretary of the Committee while the Participant is living and within the 90-day period ending on his Pension Commencement Date. A Participant whose Pension has commenced under the Plan may not change the terms of any Option he has elected, may not change his designated Joint Pensioner and may not rescind any Option he has elected. Except for spousal consent required under any other Section hereof, the consent of a Participant's Beneficiary to any rescission or change in an Option or the terms thereof or to a change in the Participant's Joint Pensioner, in any case before the Participant's Pension commences, shall not be required. The Committee shall require proof satisfactory to it of the Participant's good health at the time he makes an election of an Option, before such election is allowed, unless such election is made at least 60 days before his Pension Commencement Date. (c) (OTHER TERMS OF THESE OPTIONS) The time for the commencement of Pension payments for the Participant shall not be affected by the election of a Joint Pensioner Option (which term includes the Automatic 50% Spouse Option) or the 10 Year Certain. If a Participant elects an Option under Subsection (a) of this Section and dies before his Pension Commencement Date, the election shall be void. However, if a Pensioner dies after his Pension Commencement Date, but on or before the date his Pension actually commences, and if no Surviving Spouse Pension or Pre-Retirement Spouse Pension is payable for his surviving Spouse, his Pension shall, for purposes of the Joint Pensioner VOL402CL Doc: 154112.1 51 51 and 10 Year Certain Options, be deemed to have begun on the first day of the month in which he died. (d) (LIMITATION ON OPTIONS) Notwithstanding any other provision of this Section, a Participant's election of an Option provided for in this Section shall not become effective unless the present value of the payments expected to be made to him under such Option is more than 50% of the present value of the total of the payments expected to be made under such Option to him and his Beneficiaries, but this limitation shall not apply to the Joint Pensioner Options (which term includes the Automatic 50% Spouse Option) if the Participant's Spouse is the Participant's Joint Pensioner. Such present values shall be determined as of the date the Participant's Pension hereunder begins (or, if earlier, the date which is one month before the Participant's death), using the actuarial assumptions specified in Exhibit A to the Plan. (e) If a Participant elects an Option under this Section and his Pension is to be reduced in the manner provided by Section 4.05(c) on account of a Public Pension, the monthly amount payable under such Option shall be the Actuarial Equivalent of the amount determined by reducing his Pension by the Public Pension as specified in Section 4.05(c). (f) The Committee rules with respect to optional forms of benefits may be changed by the Committee from time to time, but they shall be uniform in their application to all Participants who are similarly situated. However, except as otherwise permitted by the Code, no such rule or change herein VOL402CL Doc: 154112.1 52 52 shall result in the elimination or reduction of an "optional form of benefit" (as defined in Treasury Regulation Section 1.411(d)-4; Q&A-1). VOL402CL Doc: 154112.1 53 53 ARTICLE V - VARIOUS PROVISIONS CONCERNING PENSIONS -------------------------------------------------- 5.01 APPLICATION FOR PENSIONS. (a) A Participant eligible to receive a Pension hereunder and wishing to Retire, and any Pensioner who is eligible for but is not receiving a Pension hereunder, shall obtain a form of application for that purpose from the Company and shall sign and file with the Secretary of the Committee his application on such form, furnishing such information as the Committee may reasonably require, including satisfactory proof of his Age and that of his Spouse (if any) and any authority in writing that the Company may request authorizing it to obtain pertinent information, certificates, transcripts and/or other records from any public office. An application for a Pension may not be filed more than 90 days before such Pension is to begin. (b) Except as provided in Sections 4.02(b), 5.03(b) and 11.12, no Pension shall be payable hereunder for a Participant if he dies before his Pension Commencement Date and before he files an application pursuant to Subsection (a) of this Section and a Pensioner's Pension hereunder shall not begin until the Participant (or surviving Spouse) files an application for such Pension pursuant to Subsection (a) of this Section. Notwithstanding the foregoing, if a proper application is filed by a Participant after his Normal Retirement Date and after his Pension otherwise would have begun pursuant to the Plan, or by his surviving Spouse after the benefit otherwise would have begun pursuant to Sections 4.07 or 4.08, then, subject to Section 5.03(a), a lump-sum retroactive payment shall be made (without VOL402CL Doc: 154112.1 54 54 interest) on account of the months for which such Pension or benefit would otherwise have been paid pursuant to this Plan. 5.02 DURATION OF PENSIONS. After a Pensioner's Normal Retirement Pension, Late Retirement Pension, Early Retirement Pension or Deferred Vested Pension has begun, it shall, except as otherwise provided in the Plan with respect to optional forms of benefits, continue during his remaining lifetime, the last monthly payment of such Pension being payable on the first day of the month in which he dies, except that no Pension shall be payable for any Pensioner for any month on the first day of which he is an Employee and is receiving Compensation for work currently being performed and during which he completes 40 or more Hours of Service (as defined in Section 4.02(b)) provided his Employer has given him notice in accordance with applicable law that his Pension payments are being withheld pursuant to the foregoing provisions. 5.03 PAYMENT OF BENEFITS. (a) Except as otherwise provided in the Plan, any benefit hereunder shall be paid monthly on the first day of each month for which such benefit is payable, but no benefit shall be payable for a Pensioner unless he is living on the Pension Commencement Date and no benefit shall be payable for a Beneficiary unless he is living on the date such benefit becomes payable. (b) If the amount of benefit is less than $30 a month, the benefit shall be paid quarterly, half yearly or yearly in advance as the Participant or Beneficiary directs; provided, however, that if the present value of such benefit, at any time VOL402CL Doc: 154112.1 55 55 after the Participant's termination of employment or death and prior to the Pension Commencement Date, is $3,500 or less, such benefit shall be paid as soon as administratively practicable following such termination or death in a lump sum that is the Actuarial Equivalent of such benefit. Such $3,500 amount shall be calculated by using an interest rate equal to the Applicable Interest Rate in effect on January 1 of the Plan Year in which the distribution is made. (c) No interest shall be due on any benefit payment by reason of the fact that it is not paid on or before the date it is payable. (d) Am 2 5.04 REHIRE OF PENSIONERS. If after the Qualifying Termination of a Participant he again becomes an Employee, such re-employment shall not have any effect on benefits under the Plan with respect to him which are payable on account of such Qualifying Termination, except as provided in Sections 4.02(b) and 5.02. If on or after such re-employment he again becomes a Participant in the Plan or in any Other Group Plan and later again incurs a Qualifying Termination, any benefits hereunder which become payable with respect to him on account of such subsequent Qualifying Termination (a) shall be calculated (1) in accordance with other Sections hereof after adding to the length of his Benefit Service after his previous Qualifying Termination his length of Benefit Service at the time of his previous Qualifying Termination and taking into account Compensation earned both before and after his previous Qualifying Termination VOL402CL Doc: 154112.1 56 56 and (2) without regard to the benefits that have been paid and that are or may become payable with respect to him on account of his previous Qualifying Termination and (b) shall be reduced, in accordance with regulations promulgated by the Secretary of the Treasury, by the Actuarial Equivalent of all benefits with respect to him that have been paid and that are or may become payable under the Plan on account of his previous Qualifying Termination (including his election of any optional form of benefit). 5.05 SPENDTHRIFT PROVISIONS. To the extent permitted by law and except as otherwise provided under a qualified domestic relations order pursuant to Section 414(p) of the Code, no right or interest of any kind in the Trust Fund shall be transferable, alienable or assignable by any Participant or Beneficiary, nor, except as otherwise provided or permitted by the Plan, shall any such right or interest be subject to anticipation, encumbrance, garnishment, attachment, execution or levy of any kind, voluntary or involuntary. 5.06 FACILITY OF PAYMENT. (a) If the Committee finds that any Participant or Beneficiary to whom a benefit is payable hereunder is unable to care for his affairs because of physical, mental or legal incompetence, the Committee shall cause any payment due to him hereunder for which prior claim has not been made by a duly qualified guardian or other legal representative to be paid to the person deemed by the Committee to be maintaining or responsible for the maintenance of such Participant or Beneficiary; and any such payment shall be deemed VOL402CL Doc: 154112.1 57 57 a payment for the account of such Participant or Beneficiary and shall constitute a complete discharge of any liability therefor under the Plan. (b) If an individual dies before receiving all the payments to be made to him hereunder or before cashing any or all of the checks representing such payment or payments, such payment(s) shall be made to one of the following persons with preference being given to classes in the order named: (1) his Spouse, (2) his children who are of legal age and/or the guardian of his minor children, (3) his father or mother, or both, (4) his other relatives by blood or marriage, or (5) his estate; and the receipt of such payment(s) shall be a valid and complete discharge for the payment of such benefit. However, if such deceased individual was a Participant and (i) a Joint Pensioner Option (including an Automatic 50% Spouse Option) was in effect for him on his death, such payment(s) so payable (but not paid) to him shall be paid to his Joint Pensioner, if living, or (ii) if a Joint Pensioner Option was not so in effect and the Participant had designated a then living Beneficiary, such payment(s) so payable (but not paid) to him shall be paid to his Beneficiary. 5.07 DISTRIBUTIONS PURSUANT TO A QDRO. Notwithstanding any provision of the Plan to the contrary, if a qualified domestic relations order (as defined in Section 414(p) of the Code) so provides, the portion of the Participant's Accrued Benefit payable to the alternate payee(s) may be distributed to the alternate payee(s) prior to the date on which VOL402CL Doc: 154112.1 58 58 the Participant reaches his "earliest retirement age" (as defined in Section 414(p)(4)(B) of the Code) in the form of a lump sum payment which is the Actuarial Equivalent of the benefit the alternate payee would otherwise be entitled to receive at the Participant's earliest retirement age. VOL402CL Doc: 154112.1 59 59 ARTICLE VI - FINANCING THE PLAN ------------------------------- 6.01 EMPLOYER CONTRIBUTIONS. (a) The Plan shall be funded through the Trust Fund. Employees shall not be required or permitted to make any contributions hereunder. (b) The Employers shall contribute and pay into the Trust Fund, in cash or in property of any kind (to be administered and disposed of as provided herein and in the Trust Agreement), such amounts and at such times as may be required by applicable law and such additional amounts and at such times as the Board of Directors of the Company may from time to time determine. The value of any property so contributed shall be its fair market value at the time it is so contributed. 6.02 TRUST AGREEMENT. The Company has executed the Trust Agreement to create the Trust Fund. The Trustee in its relation to the Plan shall be entitled to all the rights, privileges, immunities and benefits conferred upon it, and shall be subject to all the duties and responsibilities imposed upon it, under the Plan and Trust Agreement. The Trust Agreement is hereby incorporated into the Plan by reference. Each Employer, by adopting the Plan, approves the Trust Agreement and each amendment or supplement thereto which may be adopted in accordance with the terms of the Trust Agreement. 6.03 TRUST FUND. The Trust Fund shall be held in trust by the Trustee and shall be administered in accordance with the provisions of the Trust Agreement. Neither the Trustee, nor the Actuary, nor the Employers, nor the Pension or Investment VOL402CL Doc: 154112.1 60 60 Committees nor any member of either of such Committees in any manner guarantees the Trust Fund against loss or depreciation. 6.04 PAYMENT OF BENEFITS. Except as otherwise provided by applicable law, (a) all benefits provided for in the Plan (less deductions provided for in the Plan) shall be paid solely out of the Trust Fund, (b) neither the Actuary, nor any Employer, nor the Trustee (in its individual capacity), nor the Pension or Investment Committees nor their members shall be in any manner liable for benefits payable under the Plan and (c) such benefits shall be only such as can be provided by the assets in the Trust Fund. 6.05 EXPENSES OF THE PLAN. The reasonable expenses incident to the management and operation of the Plan, including the compensation of the Actuary, the Trustee, attorneys, auditors, accountants, or investment managers or advisors for the Plan, if any, and such other technical and clerical assistance as may be required, shall be payable out of the Trust Fund; provided, however, that the Employers, in their absolute discretion, may elect at any time to pay part or all thereof directly, but any such election shall not bind the Employers as to their right to elect with respect to the same or other expenses at any other time to have such expenses paid from the Trust Fund. 6.06 FUNDING POLICY. The Company shall (a) determine, establish and carry out a funding policy and method consistent with the objectives of the Plan and the requirements of Title I of ERISA and (b) subject to the right to amend and/or terminate VOL402CL Doc: 154112.1 61 61 the Plan, contribute (or cause the Employers to contribute) under the Plan from time to time any minimum amounts that may be required by applicable law or by any other Section of the Plan. 6.07 RETURN OF CONTRIBUTIONS. (a) In the case of a contribution which is made to the Trust Fund by a mistake of fact, such a contribution shall be returned to the contributing Employer to the extent that it shall exceed the amount which would have been contributed had there not occurred a mistake of fact within one year following the date of the payment of the contribution. (b) If a contribution to the Trust Fund is conditioned upon the deductibility of the contribution under Section 404 of the Code, then, to the extent the deduction is disallowed, the contribution shall be returned to the extent disallowed to the contributing Employer within after one year following the disallowance of the deduction. (c) If the Internal Revenue Service shall determine that the Plan as applied to an Employer who has adopted the Plan pursuant to Article XIII hereof is not qualified under Section 401(a) of the Code for the initial Plan Year in which such adoption is effective, all contributions made by or on behalf of such Employer shall be returned to such Employer within one year after the denial of qualification; provided that the application for determination was filed within the time prescribed by law for filing the Employer's return for the taxable year in which the Plan was adopted. VOL402CL Doc: 154112.1 62 62 (d) Earnings attributable to excess contributions made under Subsections (a) or (b) of this Section may not be returned, but losses attributable thereto must reduce the amounts to be so returned. (e) After satisfaction of all liabilities of the Plan as set forth in Section 15.02, any excess assets remaining in the Trust Fund shall revert to the Company. VOL402CL Doc: 154112.1 63 63 ARTICLE VII - PENSION COMMITTEE ------------------------------- 7.01 MEMBERSHIP. The Pension Committee shall consist of three or more members who may be, but are not required to be, Participants, Employees or directors of an Employer. The President of the Company shall be an ex officio member and the Chairman of the Committee and shall appoint the other members. The number of members of the Committee (not less than three) shall be fixed by the Chairman of the Committee, who may at any time increase, or decrease to not less than three, the number of members. Any member may be removed by the Chairman of the Committee at any time or may resign at any time by delivering his written resignation to the Chairman of the Committee. Upon the existence of any vacancy in the membership of the Committee, a successor shall be appointed by the Chairman of the Committee, unless the number of members is decreased as above provided. 7.02 CERTIFICATION OF MEMBERSHIP. The President of the Company shall certify the number and names of the Committee members to the Trustee. The Trustee may rely on any such certification until it receives written notice from the President of the Company as to a change in the membership of the Committee. 7.03 DUTIES. The members of the Committee shall serve without remuneration for such services unless the Board of Directors of the Company shall provide for remuneration for such services. The Committee shall have such functions and duties with respect to the Plan and only such functions and duties with respect to the Plan as are specifically conferred upon it by the Plan or the Trust Agreement or as may be delegated to it pursuant VOL402CL Doc: 154112.1 64 64 to Section 10.03. The Committee may also have functions and duties with respect to any Other Group Plan to the extent that such functions and duties are given to the Committee by the President of NACCO Industries, Inc. A Committee member shall not be disqualified from acting because of any interest, benefit or advantage, inasmuch as members of the Committee may be directors of an Employer, Participants or Employees, but no such member shall vote or act in connection with the Committee's action relating solely to himself. Except as may be required by law, no bond or other security need be required of any Committee member in such capacity in any jurisdiction. 7.04 REVOCABILITY OF COMMITTEE ACTION. Any action taken by the Committee with respect to the rights or benefits under the Plan of any Participant or Beneficiary shall be revocable by the Committee as to payments or distributions not theretofore made from the Trust Fund pursuant to such action; and appropriate adjustments may be made in future payments or distributions to a Participant or his Beneficiaries to offset any excess payment or underpayment theretofore made from the Trust Fund to such Participant or his Beneficiaries. 7.05 COMMITTEE PROCEDURES. The Committee may adopt and amend, from time to time, such rules for its government and the conduct of its business as it deems advisable, including a rule authorizing one or more of its members or officers to execute instruments in its behalf evidencing its action and, to the extent not prohibited by applicable law, the Trustee and other persons may rely on any instrument signed by such person or VOL402CL Doc: 154112.1 65 65 persons so authorized as properly evidencing the action of the Committee. The Committee may from time to time, by resolution adopted by it, delegate to one or more of its members or officers, to an employee or employees, to a subcommittee or subcommittees or to an agent or agents of the Committee, such of the Committee's functions and duties as the Committee deems advisable. The Committee may elect such officers in addition to a Chairman as it deems advisable and such officers need not be members of the Committee. Except as may otherwise be provided by rules or procedures adopted by the Committee, the Committee may act by majority action either at a meeting or in writing without a meeting and an action which purports to be an action of the Committee and which is evidenced by the signatures of a majority of the Committee members shall be deemed to be the action of the Committee. 7.06 COMMITTEE RULES. The Committee may from time to time adopt rules for the administration of the Plan. Such rules may be amended by the Committee from time to time, but such rules, as the same may be amended, (a) insofar as they apply to the rights of Participants, shall be uniform in their application to all Participants who are similarly situated and (b) shall not be inconsistent with the terms of the Plan or the Trust Agreement. 7.07 PLAN INTERPRETATION AND FINDINGS OF FACT. The Committee shall have sole and absolute discretion to interpret the provisions of the Plan (including, without limitation, by supplying omissions from, correcting deficiencies in, or VOL402CL Doc: 154112.1 66 66 resolving inconsistencies or ambiguities in, the language of the Plan), to determine the rights and status under the Plan of Participants and other Persons, to decide disputes arising under the Plan and to make any determinations and findings with respect to the benefits payable thereunder and the Persons entitled thereto as may be required for the purposes of the Plan. In furtherance of, but without limiting, the foregoing, the Committee is hereby granted the following specific authorities, which it shall discharge in its sole and absolute discretion in accordance with the terms of the Plan (as interpreted, to the extent necessary, by the Committee): (a) To resolve all questions arising under the provisions of the Plan as to any individual's entitlement to become a Participant; (b) To determine the amount of benefits, if any, payable to any Person under the Plan; and (c) To conduct the review procedure specified in Section 9.03. All decisions of the Committee as to the facts of any case, as to the interpretation of any provision of the Plan or its application to any case, and as to any other interpretative matter or other determination or question under the Plan shall be final and binding on all parties affected thereby, subject to the provisions of Section 7.04 and Article IX. The Committee shall direct the Trustee relative to benefits to be paid under the Plan and shall furnish the Trustee with any information VOL402CL Doc: 154112.1 67 67 reasonably required by it for the purpose of paying benefits under the Plan. 7.08 ACTUARIAL FACTORS. The Committee may adopt, and amend from time to time, such actuarial factors, assumptions and procedures to be used for actuarial valuations and determinations of the normal costs and actuarial requirements of the Plan as may be recommended by the Actuary and as the Committee deems necessary or desirable. 7.09 ASSISTANCE; EXPENSES. The Committee may employ such clerical, legal, actuarial, accounting or other assistance or services as it deems necessary or advisable in connection with the performance of its functions or duties. The reasonable expenses of the Committee shall be paid out of the Trust Fund, unless paid directly by the Employers. 7.10 ABSENCE OF COMMITTEE. If the Committee ceases to exist or if and while, for any other reason, there is no Pension Committee, the Investment Committee, Company or Trustee, in that order, may exercise any or all of the powers and perform any or all of the functions of the Committee. VOL402CL Doc: 154112.1 68 68 ARTICLE VIII - INVESTMENT COMMITTEE ----------------------------------- 8.01 MEMBERSHIP. The Investment Committee shall consist of three or more members who may be, but are not required to be, Participants, Employees or directors of an Employer. Such members and their successors shall be appointed by the Board of Directors of the Company to serve for such terms as said Board may fix, and future appointees shall signify their acceptance thereof to the President or Secretary of the Company. Any member of the Investment Committee may be removed at any time by the Board of Directors of the Company, which may also increase or decrease the number of members of such Committee. Any member of the Investment Committee may resign at any time by delivering his written resignation to the President or Secretary of the Company. Upon the existence of any vacancy in the membership of such Committee, the President of the Company may appoint a successor to serve until the next meeting of the Board of Directors of the Company. 8.02 ASSISTANCE. The Investment Committee may employ such investment advice, services or assistance and such legal, clerical or other assistance as it deems necessary or advisable to assist it in the performance of its functions and duties. The expenses incurred by such Committee in securing such advice, services or assistance shall be paid from the Trust Fund and be treated as an expense thereof unless the Trustee is directed otherwise by the Committee. Any other reasonable expenses of such Committee shall be paid out of the Trust Fund, unless paid directly by the Employers. VOL402CL Doc: 154112.1 69 69 8.03 DUTIES AND PROCEDURES. Sections 7.02, 7.03 and 7.05 shall apply to the Investment Committee and its members the same as they apply to the Pension Committee and its members, except that the Investment Committee shall elect its Chairman. The Investment Committee may have functions and duties with respect to any Other Group Plan to the extent that such functions and duties are given to the Investment Committee by the Board of Directors of NACCO Industries, Inc. VOL402CL Doc: 154112.1 70 70 ARTICLE IX - CLAIMS AND REVIEW PROCEDURES ----------------------------------------- 9.01 METHOD OF FILING CLAIM. Any Participant or Beneficiary who believes that he is entitled to have received a benefit under the Plan which he has not received may file with the Secretary of the Pension Committee a written claim specifying the basis for his claim and the facts upon which he relies in making such claim. Such a claim must be signed by the claimant or his authorized representative and shall be deemed filed when delivered to such agent for service of process who shall promptly transmit such written claim to the Pension Committee. 9.02 NOTIFICATION TO CLAIMANT. Unless such claim is allowed in full by the Committee, the Committee shall (within 90 days after such claim was filed, plus an additional period of 90 days if required for processing and if notice of the additional 90 day extension of time indicating the specific circumstances requiring the extension and the date by which a decision shall be rendered is given to the claimant with the first 90-day period) cause written notice to be mailed or delivered to the claimant of the total or partial denial of such claim. Such notice shall be written in a manner calculated to be understood by the claimant and shall include (a) one or more specific reasons for the denial of the claim, (b) specific reference(s) to provisions of the Plan and/or Trust Agreement on which the denial of the claim is based, (c) a description of any additional material or information necessary for the claimant to perfect the claim, (d) an explanation of why such material or information is necessary, VOL402CL Doc: 154112.1 71 71 and (e) an explanation of the review procedure specified in Section 9.03. 9.03 REVIEW PROCEDURE. Within three months after the mailing or delivery of a notice of denial of a claim, the claimant or his duly authorized representative may appeal such denial by filing with such agent for service of process his written request for a review of said claim. If the claimant does not file such request within such three-month period, the claimant shall be conclusively presumed to have accepted as final and binding the initial decision of the Committee on his claim. If such an appeal is so filed within such three months, the Committee, or a Named Fiduciary designated by the Committee, shall conduct a full and fair review of such claim. During such full review, the claimant (or his duly authorized representative) shall be given an opportunity to review documents that are pertinent to his claim and to submit issues and comments in writing and (if he requests a hearing on his claim and the Committee or such Named Fiduciary concludes such a hearing is advisable and schedules such a hearing) to present his case in person or by an authorized representative at such hearing. After the completion of such full review, the reviewer shall mail or deliver to the claimant a written decision on the matter based on the facts and pertinent provisions of the Plan, Trust Agreement and/or applicable law. Such decision shall be mailed or delivered within a period of 60 days after the receipt of the request for review unless special circumstances require an extension of time, in which case such decision shall be rendered VOL402CL Doc: 154112.1 72 72 not later than 120 days after receipt of such request. If an extension of time for review is required, written notice of the extension shall be furnished to the claimant prior to the commencement of the extension. Such decision (a) shall be written in a manner calculated to be understood by the claimant, (b) shall state one or more specific reasons for the decision, including specific reference(s) to provisions of the Plan and/or Trust Agreement on which the decision is based, and (c) shall, to the extent not prohibited by applicable law, be final and binding on all interested persons. VOL402CL Doc: 154112.1 73 73 ARTICLE X - ADMINISTRATION OF THE PLAN AND FIDUCIARY RESPONSIBILITY ------------------------------------------------------------------- 10.01 RESPONSIBILITY FOR ADMINISTRATION. Except to the extent that particular responsibilities are assigned or delegated to other Fiduciaries pursuant to the Trust Agreement or some other Section hereof, the Company (as the Plan Administrator) shall be responsible for the administration of the Plan. Each other Fiduciary shall have only such powers, duties, responsibilities and authorities as are specifically conferred upon him or delegated to him pursuant to provisions of the Plan or Trust Agreement. Any person may serve in more than one fiduciary capacity with respect to the Plan or Trust Fund if, pursuant to the Plan and/or Trust Agreement, he is assigned or delegated any multiple fiduciary capacities. 10.02 NAMED FIDUCIARIES. For purposes of the Plan, the Named Fiduciaries shall be the Company, NACCO Industries, Inc., the Pension Committee, the Investment Committee, the President of the Company and the Trustee. The Company may, by an instrument authorized and signed by the President of the Company and delivered to the Committee, designate any other person as a Named Fiduciary to perform functions specified in such instrument (or in a delegation pursuant to Section 10.03) which relate to the administration of the Plan or the Trust Fund, provided such designee accepts such designation. Such a designation may be terminated at any time by written notice from the President of the Company to the designee or by written notice from the designee to the President. VOL402CL Doc: 154112.1 74 74 10.03 DELEGATION OF FIDUCIARY RESPONSIBILITIES. (a) The President of the Company may delegate to any person any one or more powers, functions, duties and/or responsibilities with respect to the Plan or the Trust Fund, other than (1) those assigned to the Investment Committee pursuant to the Trust Agreement or some other Section hereof and (2) trustee responsibilities (as defined in Section 405(c) of ERISA) assigned to the Trustee by the Trust Agreement or some other Section hereof. However, no such power, function, duty or responsibility which is assigned to a Fiduciary (other than to the Company) pursuant to the Trust Agreement or some other Section hereof shall be so delegated without the written consent of such Fiduciary. (b) Any delegation pursuant to Subsection (a) of this Section: (1) shall be signed by the President of the Company, be delivered to and accepted in writing by the delegatee and be delivered to the Secretary of the Committee, (2) shall contain such provisions and conditions relating to such delegation as the President deems appropriate, (3) shall specify the powers, functions, duties and/or responsibilities therein delegated, (4) may be amended from time to time by written agreement signed by the President of the Company and by the delegatee and delivered to the Secretary of the Committee and (5) may be revoked (in whole or in part) at any time by written notice (i) from the President of the Company delivered to the delegatee and the Secretary of the Committee or (ii) from the delegatee delivered to the President of the Company and the Secretary of the Committee. VOL402CL Doc: 154112.1 75 75 10.04 IMMUNITIES. Except as otherwise provided in Section 10.05 or by applicable law, (a) no Fiduciary shall have the obligation to discharge any duty, function or responsibility which is specifically assigned to another Fiduciary by the terms of the Plan or Trust Agreement or is delegated to another Fiduciary pursuant to procedures for such delegation provided for herein or in the Trust Agreement; (b) no Fiduciary shall be liable for any action taken or not taken with respect to the Plan or Trust Fund except for his own negligence, bad faith or willful misconduct; (c) no Fiduciary shall be personally liable upon any contract or other instrument made or executed by him or in his behalf in the administration of the Plan or Trust Fund; (d) no Fiduciary shall be liable for the neglect, omission or wrongdoing of another Fiduciary; (e) the Company and each Employer and each officer or director thereof, Employees, the Pension Committee and each member thereof, the Investment Committee and each member thereof, and any other person to whom the President of the Company delegates (or any provision hereof or of the Trust Agreement assigns) any duty with respect to the Plan or Trust Fund, may rely and shall be fully protected in acting in good faith (1) upon the advice of counsel acceptable to the Company (who may be counsel for an Employer or another Fiduciary), (2) upon the records of a Controlled Group Member, (3) upon the opinion, certificate, valuation, report, recommendation or determination of the Actuary or the Trustee or of any person acceptable to the Company that is employed by such Fiduciary to render advice with regard to any responsibility such Fiduciary VOL402CL Doc: 154112.1 76 76 has under the Plan or Trust Agreement and (4) upon any certificate, statement or other representation made by or any information furnished by the Actuary, an Employee, a Participant, a Beneficiary or the Trustee; and (f) the Committee and its members shall not be required to make inquiry into the propriety of any action by the Company, an Employer, the Actuary or the Trustee. 10.05 LIMITATION ON EXCULPATORY PROVISIONS. Notwithstanding any other provision of the Plan or the Trust Agreement, no provision of the Plan or the Trust Agreement shall be construed to relieve (or have the effect of relieving) any Fiduciary from any responsibility or liability for any obligation, responsibility or duty imposed on such Fiduciary by Part 4 of Title I of ERISA. VOL402CL Doc: 154112.1 77 77 ARTICLE XI - MISCELLANEOUS PROVISIONS REQUIRED BY THE CODE ---------------------------------------------------------- 11.01 GENERAL. Subsequent Sections of this Article are included in the Plan pursuant to requirements of the Code, and shall prevail over any provision of the Plan or the Trust Agreement which is inconsistent therewith. 11.02 PROVISION PURSUANT TO CODE SECTION 401(A)(2). Except as specifically provided in the Plan, it shall be impossible, at any time prior to the satisfaction of all liabilities with respect to Employees and their Beneficiaries under the Trust, for any part of the corpus or income of the Trust Fund to be (within the taxable year or thereafter) used for, or diverted to, purposes other than for the exclusive benefit of the Employees or their Beneficiaries. 11.03 PROVISION PURSUANT TO CODE SECTION 401(A)(8). Forfeitures shall not be applied to increase the benefits any Employee would otherwise receive under the Plan. 11.04 PROVISION PURSUANT TO CODE SECTIONS 401(A)(12) AND 414(1). There shall not be any merger or consolidation of this Plan with, or transfer of assets or liabilities of this Plan to, any other plan, unless each Participant in the merged, consolidated or transferee plan would (if that plan then terminated) receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation or transfer (if this Plan had then terminated). The Company reserves the right to merge or consolidate this Plan with, and to transfer the assets of the VOL402CL Doc: 154112.1 78 78 Plan to, any other plan, without the consent of any other Employer. 11.05 PROVISION PURSUANT TO CODE SECTION 401(A)(14). Unless the Participant otherwise elects, the payment of benefits under the Plan to the Participant will begin not later than the 60th day after the latest of the close of the Plan Year in which (a) occurs the date on which the Participant attains the earlier of age 65 or his Normal Retirement Age, (b) occurs the 10th anniversary of the year in which the Participant commenced participation in the Plan, or (c) the Participant terminates his service with the Controlled Group. 11.06 PROVISION PURSUANT TO CODE SECTION 401(A)(15). In the case of a Participant or Beneficiary who is receiving benefits under the Plan, or in the case of a Participant who has terminated his employment with the Controlled Group and who has nonforfeitable rights to benefits, such benefits shall not be decreased by reason of any increase in the benefit levels payable under Title II of the Social Security Act or any increase in the wage base under such Title II, if such increase takes place after the earlier of the date of first receipt of such benefits or the date of such termination, as the case may be. 11.07 PROVISION PURSUANT TO CODE SECTION 411(A)(10)(B). If any Plan amendment changes any vesting schedule under the Plan, each Participant having not less than three years of Vesting Service whose nonforfeitable percentage under the Plan, VOL402CL Doc: 154112.1 79 79 as amended, would be less than such percentage determined without regard to such amendment shall be permitted to elect, within a reasonable period after the adoption of such amendment, to have his nonforfeitable percentage computed under the Plan without regard to such amendment. 11.08 PROVISION PURSUANT TO CODE SECTION 411(D)(3). Upon the termination or partial termination of the Plan, the rights of all affected Employees to benefits accrued to the date of such termination or partial termination, to the extent funded as of such date, shall be nonforfeitable to the extent they do not exceed any limitations on such benefits in Article XVI hereof. 11.09 PROVISION PURSUANT TO CODE SECTION 415(B). (a) As used in this Section, (1) the term "annual benefit" means a benefit payable annually in the form (in this Section called "life annuity form") of a straight life annuity (with no ancillary benefits) under a plan to which Employees do not contribute and under which no rollover contributions are made and (2) the term "Compensation" means Compensation as defined in Section 1.14 but excluding amounts, if any, which were not paid to an Employee because he signed a Compensation deferral agreement in connection with The NACCO Industries, Inc. Savings Plan. (b) Except as otherwise provided in this Section, the benefits under the Plan with respect to a Participant for any Plan Year (which shall be the limitation year) shall not exceed, when expressed as an annual benefit, the lesser of: VOL402CL Doc: 154112.1 80 80 (1) the dollar limitation in effect for such year under Section 415(b)(1)(A) of the Code, or (2) 100 percent of the Participant's average Compensation for the period of three consecutive calendar years during which the Participant both was an active Participant in the Plan and had the greatest aggregate Compensation from the Controlled Group. (c) Notwithstanding the foregoing: (1) if the benefit under the Plan is payable in any form other than the life annuity form, or if the Employees contribute to the Plan or make rollover contributions or plan to plan transfers, for purposes of determining whether the limitations described in Subsection (b) of this Section have been satisfied, such benefit shall be adjusted, in accordance with regulations prescribed by the Secretary of the Treasury or his delegate, so that such benefit is equivalent to an annual benefit, provided that for purposes of this paragraph any ancillary benefit which is not directly related to retirement income benefits shall not be taken into account, and that portion of any joint and survivor annuity which constitutes a qualified joint and survivor annuity (as defined in Section 417(b) of the Code) shall not be taken into account, and (2) if the benefit under the Plan begins before the Social Security Retirement Age, for purposes of determining whether the limitation set forth in paragraph (1) of Subsection (b) has been satisfied, such benefit shall be reduced, in accordance with regulations prescribed by the Secretary of the VOL402CL Doc: 154112.1 81 81 Treasury, so that such limitation (as so reduced) equals an annual benefit (beginning when such benefit under the Plan begins) which is equivalent to an annual benefit equal to the limitation beginning at the Social Security Retirement Age, provided that the reduction under this part shall be made in such manner as the Secretary of the Treasury may prescribe which is consistent with the reduction under the Social Security Act for old age insurance benefits commencing before the Social Security Retirement Age; and (3) if the benefit begins after the Social Security Retirement Age, for purposes of determining whether the limitation set forth in paragraph (1) of Subsection (b) has been satisfied, such limitation shall be increased, in accordance with regulations prescribed by the Secretary of the Treasury, so that such limitation (as so increased) equals an annual benefit (beginning when such benefit begins under the Plan) which is equivalent to an annual benefit equal to the limitation set forth in such paragraph (1) beginning at the Social Security Retirement Age; and (d) Except as provided in Subsection (e) of this Section, the benefits payable with respect to a Participant under any defined benefit plan shall be deemed not to exceed the limitations set forth in Subsection (b) of this Section if: (1) the retirement benefits payable with respect to such Participant under such plan and under all other defined benefit plans of the Controlled Group do not exceed $10,000 for the Plan Year, or for any prior Plan Year, and VOL402CL Doc: 154112.1 82 82 (2) the Controlled Group has not at any time maintained a defined contribution plan in which the Participant participated. (e) In the case of an Employee who has less than ten years of participation in the Plan, the limitation set forth in paragraph (1) of Subsection (b) of this Section shall be the limitation determined under such paragraph (without regard to this Subsection), multiplied by a fraction, the numerator of which is the number of years (or parts thereof) of the Employee's participation in the Plan and the denominator of which is ten, and in the case of an Employee who has less than 10 years of Vesting Service with the Controlled Group, the limitations set forth in paragraph (2) of Subsection (b), and in Subsection (d) of this Section shall be such limitations (determined without regard to this Subsection) multiplied by a fraction, the numerator of which is the number of years (or parts thereof) of Vesting Service which the Employee has with the Controlled Group and the denominator of which is 10. Notwithstanding the foregoing provisions of this Subsection, in no event shall the limitations in Subsections (b) and (d) of this Section be reduced to an amount less than 1/10 of such limitations (determined without regard to this Subsection). To the extent provided in regulations prescribed by the Secretary of the Treasury, this Subsection shall be applied separately with respect to each change in the benefit structure of the Plan. (f) Notwithstanding anything in this Section to the contrary, if the annual benefit of a Participant who has VOL402CL Doc: 154112.1 83 83 terminated employment with the Controlled Group is limited pursuant to the limitations set forth in paragraphs (1) or (2) of Subsection (b) of this Section, such annual benefit shall be increased in accordance with the cost-of-living adjustments of Section 415(d) of the Code. 11.10 PROVISION PURSUANT TO CODE SECTION 415(E). (a) In any case in which an individual is a Participant in both a defined benefit plan and a defined contribution plan maintained by the Controlled Group, the sum of the defined benefit plan fraction and the defined contribution plan fraction for any Plan Year shall not exceed 1.0. For purposes of the preceding sentence: (1) The defined benefit plan fraction for any year is a fraction, (i) the numerator of which is the projected annual benefit of the Participant under the Plan (determined as of the close of the Plan Year), and (ii) the denominator of which is the lesser of (A) the product of 1.25, multiplied by the dollar limitation in effect under Section 415(b)(1)(A) of the Code for the Plan Year or (B) the product of 1.4, multiplied by the amount which may be taken into account under Section 415(b)(1)(B) of the Code with respect to such Participant under the Plan for the Plan Year; and (2) The defined contribution plan fraction for any year is a fraction, (i) the numerator of which is the sum of the annual additions to the Participant's account as of the close of the Plan Year and for all prior Plan Years, and VOL402CL Doc: 154112.1 84 84 (ii) the denominator of which is the sum of the lesser of the following amounts determined for the Plan Year and for each prior year of service with the Controlled Group: (A) The product of 1.25, multiplied by the dollar limitation in effect under Section 415(c)(1)(A) of the Code for the Plan Year, or (B) The product of 1.4, multiplied by the amount which may be taken into account under Section 415(c)(1)(B) of the Code with respect to such Participant under the Plan for the Plan Year. (b) Except as may otherwise be provided in any defined contribution plan which is material to the limitations stated in this Section, such reductions shall be made in benefits hereunder with respect to a Participant in this Plan as is necessary to comply with the limitations of this Section. 11.11 OTHER CODE SECTION 415 PROVISIONS. (a) For purposes of applying the limitations set forth in Sections 11.09 and 11.10, (1) all defined benefit plans (whether or not terminated) of the Controlled Group shall be treated as one defined benefit plan, and (2) all defined contribution plans (whether or not terminated) of the Controlled Group shall be treated as one defined contribution plan. (b) If the Controlled Group has more than one defined benefit plan (1) Section 11.09(b)(2) shall be applied separately to each such plan, but (2) in applying Section 11.09(b)(2) to the aggregate of such defined benefit plans for purposes of this Section, the high three years of Compensation taken into account VOL402CL Doc: 154112.1 85 85 shall be the period of three consecutive calendar years during which the individual had the greatest compensation from the Controlled Group. (c) As used in Sections 11.09, 11.10 and this Section, the phrase "Controlled Group" shall be construed in the light of Sections 414(b) and 414(c) of the Code, as modified by Sections 415(h), 414(m) and 414(n) of the Code; the word "plan" shall include any plan or program required pursuant to Section 415 of the Code to be taken into account in applying to this Plan the limitations of Section 415 of the Code; and the terms "defined contribution plan" and "defined benefit plan" shall have the respective meanings specified in Section 415(k) of the Code. (d) Where a Spouse's benefit hereunder is based on the Pension to which a Participant is otherwise entitled, such Pension shall be calculated without regard to the limitations set forth in Sections 11.09 and 11.10. Such limitations shall then be applied to the Spouse's benefit as so calculated. 11.12 PROVISION PURSUANT TO CODE SECTION 401(A)(9). (a) Notwithstanding any other provision of the Plan, the Accrued Benefit of any Participant who, as of April 1 of the calendar year following the calendar year in which he attains Age 70-1/2 has not commenced to receive distribution of such Accrued Benefit, will commence to be distributed to him as of such date, based on the amount of such Participant's Accrued Benefit as of such date. (b) The Accrued Benefit of a Participant described in Subsection (a) of this Section shall be distributed in the manner VOL402CL Doc: 154112.1 86 86 described in Article IV hereof, treating the date described in Subsection (a) of this Section as the Participant's Pension Commencement Date. Without limiting the generality of the foregoing, a Participant required to commence receiving his Pension pursuant to Subsection (a) of this Section shall be permitted to elect to receive such Pension in any optional form of benefit available hereunder, provided that any applicable spousal consent requirements are satisfied with respect to such election. (c) If a Participant accrues any additional benefits under the Plan after the date described in Subsection (a) of this Section, such additional benefits shall commence to be distributed, in the same form as the Pension then currently being paid to such Participant, beginning with the first monthly payment made in the calendar year following the calendar year in which such additional benefit accrues. Notwithstanding the foregoing, such additional benefit accruals shall be offset (in whole or in part), in accordance with the regulations promulgated by the Secretary of the Treasury, by any benefit payments then being made to the Participant hereunder. (d) Distributions under the Plan shall be made in accordance with Section 401(a)(9) of the Code and Treasury Regulations issued thereunder, including Treas. Reg. Section 1.401(a)(9)-2, provided that such provisions shall override the other distribution provisions of the Plan only to the extent that they are inconsistent with such other Plan provisions. VOL402CL Doc: 154112.1 87 87 ARTICLE XII - MISCELLANEOUS PROVISIONS -------------------------------------- 12.01 EMPLOYMENT RIGHTS. Nothing herein contained shall constitute or be construed as a contract of employment between any Employer and any Employee or Participant and all Employees shall remain subject to discipline, discharge and layoff to the same extent as if the Plan had never gone into effect. An Employer by adopting the Plan, making payments into the Trust Fund or taking any other action with respect to the Plan does not obligate itself to continue the employment of any Employee or Participant for any period or, except as provided in Sections 6.01 and 13.02, to make any payments into the Trust Fund. 12.02 RIGHTS IN TRUST FUND. No person shall have any rights in or to the Trust Fund or any part thereof except as and to the extent expressly provided in the Plan or the Trust Agreement. 12.03 SEVERABILITY PROVISION. If any provision of the Plan or Trust Agreement or the application thereof to any circumstance or person is declared invalid by a court of competent jurisdiction, the remainder of the Plan or Trust Agreement and the application of such provision to other circumstances or persons shall not be affected thereby. VOL402CL Doc: 154112.1 88 88 ARTICLE XIII - EMPLOYERS ------------------------ 13.01 EMPLOYERS. As of January 1, 1989, the Employers under the Plan are The North American Coal Corporation (a Delaware corporation), Falkirk Mining Company, The Coteau Properties Company, The Sabine Mining Company, Bellaire Corporation, North American Coal Royalty Company and North American Consultants, Inc. Any other person who is a Controlled Group Member may, with the consent of the Board of Directors of the Company, adopt the Plan and thereby become an Employer hereunder by (a) executing an instrument evidencing such adoption which shall have been approved by its governing body (if any) and (b) filing a copy of such instrument with the Trustee. Such adoption may be subject to such terms and conditions as the Board of Directors of the Company requires or approves. 13.02 COSTS TO BE SHARED. The costs of the Plan (including Employer contributions pursuant to the Plan and expenses incurred in connection with the Plan or the Trust Fund which are to be paid by the Employers) shall be shared by the Employers on such basis as may be agreeable to the Company and the other Employers and as will permit, to the extent possible, the deduction (for purposes of federal taxes on income) by each Employer of its payments toward such costs. VOL402CL Doc: 154112.1 89 89 ARTICLE XIV - AMENDMENT ----------------------- 14.01 RIGHT TO AMEND. The Company has reserved, and does hereby reserve, the right to amend at any time and from time to time, by action of its Board of Directors, any or all of the provisions of the Plan without the consent of any Employee, Participant or Beneficiary or other person and without the consent of any other Employer. By adopting the Plan and thereby becoming an Employer hereunder, each Employer shall be deemed to have authorized the Company at any time and from time to time to adopt amendments to the Plan that will be effective with respect to such Employer. The Trust Agreement may be amended in the manner and to the extent provided therein. 14.02 PROCEDURE. Any amendment of the Plan (a) shall be expressed in an instrument executed by the Company on the order of its Board of Directors and filed with the Trustee, (b) shall become part of the Plan and (c) shall become effective as of the date designated in such instrument. If no such effective date is so designated, such amendment shall become effective on the date of the execution of such amendment. VOL402CL Doc: 154112.1 90 90 ARTICLE XV - TERMINATION ------------------------ 15.01 RIGHT TO TERMINATE OR WITHDRAW. (a) The Company has reserved, and does hereby reserve, the right (by action of its Board of Directors) to terminate the Plan at any time (without the consent of any other Employer or of any Employee, Participant, Beneficiary or other person) either in whole or in part or as to any or all of the Employers or as to any designated group of Employees (including former Employees) and their Beneficiaries. Any such termination (1) shall be expressed in an instrument executed by the Company on the order of its Board of Directors and filed with the Trustee and (2) shall (except as may otherwise be required by applicable law) become effective as of the date designated in such instrument or, if no such effective date is so designated, on the date of the execution of such instrument. (b) Any Employer (other than the Company) may elect separately to withdraw from the Plan, without the consent of any other Employer or of any Employee, Participant, Beneficiary or other person, and such withdrawal shall constitute a termination of the Plan solely as to such Employer. Any such withdrawal and termination (1) shall be expressed in an instrument executed by the terminating Employer on the order of its Board of Directors or other governing body (if any) and filed with the Company and the Trustee and (2) shall (except as may otherwise be required by applicable law) become effective when so filed unless some other effective date is designated in such instrument and approved by the Company. VOL402CL Doc: 154112.1 91 91 15.02 APPLICATION OF ASSETS UPON TERMINATION. If the Plan is terminated pursuant to Section 15.01 as to all Employees, Participants and Beneficiaries, the assets remaining in the Trust Fund (available to provide benefits) shall be allocated in accordance with applicable law for the purpose of paying benefits provided for in the Plan. Any assets remaining in the Trust Fund after the satisfaction of all liabilities under the Plan to Participants and Beneficiaries shall be distributed to the Company. VOL402CL Doc: 154112.1 92 92 ARTICLE XVI - LIMITATION ON BENEFITS OF CERTAIN PARTICIPANTS ------------------------------------------------------------ 16.01 RESTRICTION OF BENEFITS ON PLAN TERMINATION. Notwithstanding any other provision of the Plan to the contrary, in the event of a termination of the Plan, the benefit of any highly compensated Employee (and highly compensated former Employee) shall be limited to a benefit that is nondiscriminatory under Section 401(a)(4) of the Code. 16.02 RESTRICTION ON PLAN DISTRIBUTIONS. (a) Notwithstanding any other provision of the Plan or Trust Agreement, the annual payments provided by the Plan with respect to any Participant who is a highly compensated Employee or highly compensated former Employee and who is one of the 25 highest paid Employees of the Controlled Group (a "Restricted Participant") shall be restricted to an amount equal to the payments that would be made on behalf of the Restricted Participant under a single life annuity that is the Actuarial Equivalent of the sum of (1) the Restricted Participant's Accrued Benefit, and (2) the Restricted Participant's other benefits under the Plan. (b) The limitations described in Subsection (a) of this Section shall not apply if (1) after payment to a Restricted Participant of all of his benefits under the Plan, the value of Plan assets equals or exceeds 110 percent of the value of current liabilities, or (2) prior to payment to a Restricted Participant of all of his benefits under the Plan, the value of the Restricted Participant's benefits is less than one (1) percent of the value of the Plan's current liabilities. VOL402CL Doc: 154112.1 93 93 16.03 MISCELLANEOUS PROVISIONS. (a) For purposes of this Article, the term "highly compensated employee" shall mean an Employee described in Section 414(q) of the Code; the term "highly compensated former Employee" shall mean a former Employee described in Section 414(q)(9) of the Code; the term "current liabilities" shall mean those liabilities described in Section 412(l)(7) of the Code; and the term "benefit" shall mean the Accrued Benefit of a Restricted Participant, loans in excess of the amount specified in Section 72(p)(2)(A) of the Code, any periodic income, any withdrawal values payable to a living Employee, and any death benefits not provided for by insurance on the Employee's life. (b) The provisions of this Article are meant to comply with the requirements of Proposed Treasury Regulation Section 1.401(a)(4)-5(c) and shall be interpreted accordingly. VOL402CL Doc: 154112.1 94 94 ARTICLE XVII - TOP-HEAVY PLAN REQUIREMENTS ------------------------------------------ 17.01 DEFINITIONS. For the purposes of this Article, the following terms, when used with initial capital letters, shall have the following respective meanings: (a) AGGREGATION GROUP: Permissive Aggregation Group or Required Aggregation Group as the context shall require. (b) ANNUAL RETIREMENT BENEFIT: A benefit payable annually in the form of a single life annuity (with no ancillary benefits) beginning at a Participant's Normal Retirement Date. (c) COMPENSATION: Except as specifically provided elsewhere in this Article, "compensation" as defined in Section 11.09(a)(2), subject to the limitations described in Section 1.14(b). (d) DETERMINATION DATE: For any Plan Year, the last day of the immediately preceding Plan Year. (e) EXTRA TOP-HEAVY GROUP: An Aggregation Group if, as of a Determination Date, the aggregate present value of accrued benefits for Key Employees in all plans in the Aggregation Group is more than ninety percent (90%) of the aggregate present value of all accrued benefits for all Employees in such plans. (f) EXTRA TOP-HEAVY PLAN: See Section 17.03. (g) FORMER KEY EMPLOYEE: A Non-Key Employee with respect to a Plan Year who was a Key Employee in a prior Plan Year, and his Beneficiary in the event of his death. (h) KEY EMPLOYEE: An Employee or former Employee who, at any time during the current Plan Year or any of the four VOL402CL Doc: 154112.1 95 95 preceding Plan Years, is (1) an officer of a Controlled Group Member (as the term "officer" is limited in Section 416(i)(1)(A) of the Code) having an annual Compensation, effective as of January 1, 1987, greater than 50 percent of the amount in effect under Section 415(b)(1)(A) of the Code for any such Plan Year, (2) one of the 10 Employees having annual Compensation from the Controlled Group of more than the limitation in effect under Section 415(c)(1)(A) of the Code and owning (or considered as owning within the meaning of Section 318 of the Code) the largest interests in a Controlled Group Member, (3) a 5-percent owner (as such term is defined in Section 416(i)(1)(B)(i) of the Code) of a Controlled Group Member, or (4) a 1-percent owner (as such term is defined in Section 416(i)(1)(B)(ii) of the Code) of a Controlled Group Member having an annual Compensation from the Controlled Group of more than $150,000. For purposes of paragraph (2) of this Subsection, if two Employees have the same interest in a Controlled Group Member, the Employee having greater annual Compensation therefrom shall be treated as having a larger interest. The term "Key Employee" shall also include such Employee's Beneficiary in the event of his death. For purposes of this Subsection, "Compensation" has the meaning given such term by Section 414(q)(7) of the Code. (i) NON-KEY EMPLOYEE: An Employee or former Employee who is not a Key Employee, and his Beneficiary in the event of his death. (j) PERMISSIVE AGGREGATION GROUP: The group of qualified plans of the Controlled Group consisting of: VOL402CL Doc: 154112.1 96 96 (1) the plans in the Required Aggregation Group; plus (2) one or more plans designated from time to time by the Pension Committee that are not part of the Required Aggregation Group but that satisfy the requirements of Sections 401(a)(4) and 410 of the Code when considered with the Required Aggregation Group. (k) REQUIRED AGGREGATION GROUP: The group of qualified plans of the Controlled Group consisting of, (1) each plan in which a Key Employee participates; and (2) each other plan which enables a plan in which a Key Employee participates to meet the requirements of Section 401(a)(4) or 410 of the Code. (l) TOP-HEAVY ACCRUED BENEFIT: A Participant's (including a Participant who has received a total distribution from the Plan) or a Beneficiary's Accrued Benefit under the Plan as of the valuation date coinciding with or immediately preceding the Determination Date, provided, however, that (1) such Accrued Benefit shall include the aggregate distributions made to such Participant or Beneficiary during the five consecutive Plan Years ending with the Plan Year that includes the Determination Date (including distributions under a terminated plan which if it had not been terminated would have been included in a Required Aggregation Group) and (2) if an Employee or former Employee has not performed services for any Employer maintaining the Plan at any time during the five-year period ending on the Determination Date, any Accrued Benefit for such Employee or former Employee VOL402CL Doc: 154112.1 97 97 (or the Accrued Benefit of his Beneficiary) shall not be taken into account. Effective January 1, 1987, a Participant's Accrued Benefit under this paragraph shall be determined (i) under the method which is used for accrual purposes for all plans of the Employer, or (ii) if there is no such method, as if such benefit accrued not more rapidly than the lowest accrual rate permitted under Section 411(b)(1)(C) of the Code. (m) TOP-HEAVY GROUP: An Aggregation Group if, as of a Determination Date, the aggregate present value of accrued benefits for Key Employees in all plans in the Aggregation Group is more than sixty percent (60%) of the aggregate present value of accrued benefits for all Employees in such plans. (n) TOP-HEAVY PLAN: See Section 17.02. 17.02 DETERMINATION OF TOP-HEAVY STATUS. The Plan shall be a Top-Heavy Plan if, as of a Determination Date, the Plan is not included in a Permissive Aggregation Group which is not a Top-Heavy Group, and: (a) the aggregate present value of Top-Heavy Accrued Benefits for Key Employees is more than sixty percent (60%) of the aggregate present value of Top-Heavy Accrued Benefits of all Employees, excluding for this purpose the aggregate Top-Heavy Accrued Benefits of Former Key Employees; or (b) the Plan is included in a Required Aggregation Group which is a Top-Heavy Group. 17.03 DETERMINATION OF EXTRA TOP-HEAVY STATUS. The Plan shall be an Extra Top-Heavy Plan if, as of the Determination VOL402CL Doc: 154112.1 98 98 Date, the Plan is not included in a Permissive Aggregation Group which is not an Extra Top-Heavy Group, and: (a) the aggregate present value of Top-Heavy Accrued Benefits for Key Employees is more than ninety percent (90%) of the aggregate present value of all Top-Heavy Accrued Benefits of all Employees, excluding for this purpose the aggregate present value of Top-Heavy Accrued Benefits of Former Key Employees; or (b) the Plan is included in a Required Aggregation Group which is an Extra Top-Heavy Group. 17.04 TOP-HEAVY PLAN REQUIREMENTS. Notwithstanding any other provisions of the Plan to the contrary, if the Plan is a Top-Heavy Plan for any Plan Year, the Plan shall then satisfy the following requirements for such Plan Year: (a) MINIMUM VESTING REQUIREMENT. An Employee who has completed at least two years of Vesting Service shall have a nonforfeitable right to a percentage of his Accrued Benefit derived from Employer contributions determined under the following table:
Years of Vesting Nonforfeitable SERVICE PERCENTAGE ----------------------------------- less than 2............... 0 2......................... 20 3......................... 40 4......................... 60 5......................... 100
(b) MINIMUM BENEFIT REQUIREMENT. Except as otherwise provided in Subsection (d) of this Section, the Accrued Benefit derived from Employer contributions of each Participant who is a Non-Key Employee, when expressed as an Annual Retirement Benefit, shall be not less than the lesser of: VOL402CL Doc: 154112.1 99 99 (1) two percent (2.0%) of the Participant's average Compensation for years in the testing period times his years of Benefit Service; or (2) twenty percent (20%) of the Participant's average Compensation for years in the testing period. For purposes of this Subsection, years of Benefit Service completed in a Plan Year of the Prior Plan beginning before January 1, 1984 and years of Benefit Service during which a Plan Year ended for which the Plan was not a Top-Heavy Plan shall not be taken into account. The testing period under this Subsection shall be the period of consecutive years (not exceeding five) during which the Participant had the greatest aggregate Compensation from the Controlled Group, provided that years shall not be included (i) which are not included in years of Benefit Service under this Subsection; (ii) which end in a Plan Year of the Prior Plan beginning before January 1, 1984; and (iii) which begin after the close of the last year in which the Plan was a Top-Heavy Plan or an Extra Top-Heavy Plan. (c) ADJUSTMENT TO MAXIMUM BENEFITS AND ALLOCATIONS. If the Plan is a Top-Heavy Plan for any Plan Year, and if the Controlled Group maintains a defined contribution plan which could or does provide benefits to Participants in this Plan: (1) If the Plan is not an Extra Top-Heavy Plan (but is a Top-Heavy Plan), then "three percent (3%)" shall be substituted for "two percent (2%)" in paragraph (1) of VOL402CL Doc: 154112.1 100 100 Subsection (b) of this Section and "20 percent" in paragraph (2) of Subsection (b) of this Section shall be increased by one percentage point for each year for which such Plan was taken into account under this Subsection. (2) If the Plan is an Extra Top-Heavy Plan, then the limitation of Section 11.10 shall be calculated by substituting "1.0" for "1.25" each place such "1.25" figure appears therein. 17.05 COORDINATION WITH OTHER PLANS. (a) In applying this Article, an Employer and all Controlled Group Members shall be treated as a single employer, and the qualified plans maintained by such single employer shall be taken into account. (b) In the event that another defined contribution plan or defined benefit plan maintained by the Controlled Group provides contributions or benefits on behalf of Participants in this Plan, such other plan shall be taken into account in determining whether this Plan satisfies Section 17.04, and the minimum benefit required for a Non-Key Employee in this Plan under Section 17.04(b) will be eliminated if the Controlled Group maintains another qualified plan under which such minimums are required to be provided. 17.06 CONSTRUCTION. The term "present value of accrued benefits" as used in this Article shall in all appropriate cases include account balances of affected Employees. VOL402CL Doc: 154112.1 101 101 Dated as of January 1, 1989, but actually executed on this 28th day of December, 1991. THE NORTH AMERICAN COAL CORPORATION By /s/ THOMAS A. KOZA ----------------------------- Title: Vice President -- Law Administration VOL402CL Doc: 154112.1 102 The North American Coal Corporation Exhibit A Basis for Determining Actuarial Equivalence 1. Interest rate: 8% 2. Mortality rates *:
Age Rate Age Rate Age Rate 16 0.000451 50 0.004936 84 0.111961 17 0.000463 51 0.005493 85 0.120611 18 0.000476 52 0.006086 86 0.129574 19 0.000491 53 0.006716 87 0.138741 20 0.000507 54 0.007379 88 0.148254 21 0.000525 55 0.008079 89 0.158204 22 0.000545 56 0.008762 90 0.168612 23 0.000566 57 0.009472 91 0.179291 24 0.000590 58 0.010239 92 0.190140 25 0.000616 59 0.011156 93 0.201894 26 0.000646 60 0.012198 94 0.215629 27 0.000678 61 0.013335 95 0.230437 28 0.000714 62 0.014534 96 0.245797 29 0.000753 63 0.015824 97 0.262348 30 0.000797 64 0.017371 98 0.280217 31 0.000845 65 0.019204 99 0.299501 32 0.000898 66 0.021423 100 0.320857 33 0.000957 67 0.023920 101 0.344235 34 0.001021 68 0.026620 102 0.369698 35 0.001093 69 0.029516 103 0.399202 36 0.001171 70 0.032814 104 0.434608 37 0.001257 71 0.036360 105 0.477745 38 0.001354 72 0.039929 106 0.530596 39 0.001460 73 0.043436 107 0.595125 40 0.001578 74 0.047046 108 0.670666 41 0.001723 75 0.050972 109 0.761543 42 0.001916 76 0.055548 110 0.893672 43 0.002151 77 0.061040 111 0.903405 44 0.002430 78 0.067171 112 0.915467 45 0.002747 79 0.073613 113 0.930337 46 0.003102 80 0.080584 114 0.947837 47 0.003498 81 0.087846 115 0.968937 48 0.003936 82 0.095434 116 1.000000 49 0.004417 83 0.103535 * Mortality rates based on the 1971 TPF&C Mortality Table using 80% male rates and 20% female rates.
VOL402CL Doc: 154112.1 103 EXHIBIT B --------- This Exhibit B contains the pension benefit formula from the Plan prior to its amendment and restatement on January 1, 1989. Words used in this Exhibit B with initial capital letters are used herein as defined in the Plan prior to its amendment and restatement on January 1, 1989. The "Regular Pension" under the Plan shall be a monthly amount equal to the difference between (a) the sum of: (1) 1.7% of the Participant's Final Average Monthly Pay times 1/12th of the number of his months of Benefit Service (not in excess of 360 months) at the time of his Qualifying Termination plus (2) 0.5% of his Final Average Monthly Pay times 1/12th of the number of months (if any) by which his months of Benefit Service at the time of his Qualifying Termination exceeds 360 months and (b) 1.7% of his Social Security Benefit times 1/12th of the number of his months of Benefit Service (not in excess of 360 months) at the time of his Qualifying Termination. However, (c) in the case of a Participant whose Qualifying Termination occurs before his Normal Retirement Date, the amount specified in Subsection (b) of this Section 4.01 shall not exceed 83-1/3% of his Social Security Benefit times the Service to Potential Service Ratio and (d) a Participant's Normal Retirement, Early Retirement or Deferred Vested Pension is subject to the limitations in Article XI hereof pursuant to Code Section 415 and in Article XVI hereof. VOL402CL Doc: 154112.1 EX-10.LXXII 19 NACCO EXHIBIT 10.LXXII 1 Exhibit (lxxii) AMENDMENT NO. 1 TO THE NORTH AMERICAN COAL CORPORATION SALARIED EMPLOYEES PENSION PLAN (As Amended and Restated as of January 1, 1989) ----------------------------------------------- The North American Coal Corporation hereby adopts this Amendment No. 1 to The North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989) (the "Plan"). The provisions of this Amendment shall be effective as of January 1, 1989. Words and phrases used herein with initial capital letters which are defined in the Plan are used herein as so defined. SECTION 1 --------- Section 5.07 of the Plan is hereby deleted from the Plan. EXECUTED this 6th day of August, 1993, to be effective as stated herein. THE NORTH AMERICAN COAL CORPORATION By: Thomas A. Koza ----------------------------- Title: Vice President- Law and Administration and Secretary VOL402CL Doc: 154123.1 EX-10.LXXIII 20 NACCO EXHIBIT 10.LXXIII 1 Exhibit (lxxiii) AMENDMENT NO. 2 TO THE NORTH AMERICAN COAL CORPORATION SALARIED EMPLOYEES PENSION PLAN (As Amended and Restated as of January 1, 1989 --------------------------------------------- The North American Coal Corporation hereby adopts this Amendment No. 2 to The North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989) (the "Plan"). The provisions of this Amendment shall be effective as of the dates indicated herein and, pursuant to Internal Revenue Service Notice 92-36, shall be combined with the provisions of all other amendments to the Plan which are effective on or after January 1, 1989 and treated as a single amendment for purposes of the nondiscrimination requirements of the Internal Revenue Code. Words and phrases used herein with initial capital letters which are defined in the Plan are used herein as so defined. SECTION 1 --------- Effective December 31, 1993, the following new sentence is hereby added to the end of the Preamble to the Plan: "Effective December 31, 1993, the NACCO Industries, Inc. Pension Plan for Salaried Employees was merged into the Plan." SECTION 2 --------- Effective December 31, 1993, Section 1.10(d) (ii) of the Plan is hereby amended by adding the phrase "or the Merged Plan" after the phrase "an Other Group Plan" each tide it appears therein. SECTION 3 --------- Effective as of January 1, 1989, a new Section 1.10A is hereby added to the Plan, immediately following Section 1.10, to read as follows: "1.10A CAPPED PARTICIPANT: A Participant whose Accrued Benefit on December 31, 1988 or December 31, 1993 is based upon Compensation in excess of the limit contained in Section 401(a) (17) of the Code as in effect on or after such date(s)." VOL402CL Doc: 154124.1 2 2 SECTION 4 --------- Effective as of January 1, 1989, the following sentence is hereby added after the first sentence of Section 1.14(b) of the Plan to read as follows: "In applying the Code Section 401(a) (17) limit for the 1989 through (and including) 1993 Plan Years, the Code Section 401(a) (17) limit in effect during the Year of calculation shall be applied for all purposes when calculating a Capped Participant's Accrued Benefit." SECTION 5 --------- Effective as of January 1, 1989, the second sentence of Section 1.14(b) of the Plan is hereby amended by deleting the phrase "For purposes of the preceding sentence" and replacing it with the phrase "For purposes of calculating the limit contained in Section 401(a) (17) of the Code." SECTION 6 --------- Effective January 1, 1994, Section 1.18 of the Plan is hereby amended in its entirety to read as follows: "1.18 COVERED EMPLOYEE: A salaried Employee of The Falkirk Mining Company, The Coteau Properties Company, The Sabine Mining Company, Bellaire Corporation, North American Coal Royalty CoMpany, or The North American Coal Corporation (including, effective January 1, 1994, a salaried Employee associated with the Dallas Accounting Division) or a salaried Employee of any other Employer. Notwithstanding the foregoing, no Employee who is employed in an Excluded Bargaining Unit or who is a leased employee (as defined in Section 1.24) shall be a Covered Employee." SECTION 7 --------- Effective January 1, 1994, Section 1.25 of the Plan is hereby amended in its entirety to read as follows: "1.25 EMPLOYER: Any person which adopts the Plan pursuant to Article XIII hereof. As of January 1, 1994, the Employers under the Plan are The Falkirk Mining Company, The Coteau Properties Company, The Sabine Mining Company, Bellaire Corporation, North American Coal Royalty Company, and The North American Coal Corporation. In the case of any person which adopts the Plan and which (a) ceases to exist, (b) ceases to be a member of the Controlled Group or (c) withdraws or is eliminated from the Plan, it shall not thereafter be an Employer." VOL402CL Doc: 154124.1 3 3 SECTION 8 --------- Effective as of January 1, 1989, Section 1.30(a) of the Plan is hereby amended by deleting the phrase "For a particular Plan Year" in the first line thereof and replacing it with the phrase "For a particular Plan Year, unless an Employer elects one of the simplified methods contained in Code Section 414(q) (12) or Revenue Procedure 93-42,". SECTION 9 --------- Effective December 31, 1993, a new Section 1.35A is hereby added to the Plan, immediately following Section 1.35, to read as follows: "1.35A MERGED PLAN: The NACCO Industries, Inc. Pension Plan for Salaried Employees, as it existed from December 1, 1986 through December 31, 1993. Effective December 31, 1993, the Merged Plan was merged into this Plan." SECTION 10 ---------- Effective December 31, 1993, Section 1.36 of the Plan is hereby amended in its entirety to read as follows: "1.36 MINIMUM BENEFIT: For a Participant who was a Participant in the Plan on December 31, 1988, the Participant's Accrued Benefit as of December 31, 1988 determined in accordance with the benefit formula contained in Exhibit B attached hereto. For a Participant who was a participant in the Merged Plan, the Participant's accrued benefit under such plan. In the event that a Participant is described in both of the preceding sentences, the Participant's Minimum Benefit shall be the greater of the amounts determined under such sentences." SECTION 11 ---------- Effective December 31, 1993, Section 1.41 of the Plan is hereby amended in its entirety to read as follows: "1.41 OTHER GROUP PLAN: The NACCO Industries, Inc. Pension Plan for Salaried Employees that was terminated effective November 30, 1986 and The North American Coal Corporation Pension Plan for Salaried Employees that was terminated effective December 31, 1989." VOL402CL Doc: 154124.1 4 4 SECTION 12 ---------- Effective December 31, 1993, Section 1.49 of the Plan is hereby amended by adding the following sentence at the end thereof: "Effective December 31, 1993, the Merged Plan was merged into the Plan." SECTION 13 ---------- Effective January 1, 1994, Section 1.58 of the Plan is hereby amended in its entirety to read as follows: "1.58 TRUST: The trust created by the Trust Agreement." SECTION 14 ---------- Effective January 1, 1994, Section 1.59 of the Plan is hereby amended in its entirety to read as follows: "1.59 TRUST AGREEMENT: The Trust Agreement between the Company and the Trustee, as such Trust Agreement may be amended or restated from time to time, or any trust agreement superseding the same. The Trust Agreement is hereby incorporated in the Plan by reference." SECTION 15 ---------- Effective January 1, 1994, Section 1.60 of the Plan is hereby amended in its entirety to read as follows: "1.60 TRUST FUND: The assets held in trust under the provisions of the Trust Agreement, without distinction as to principal or income." SECTION 16 ---------- Effective January 1, 1994, Section 1.61 of the Plan is hereby amended in its entirety to read as follows: "1.61 TRUSTEE: The trustee or trustees under the Trust Agreement or its or their successor or successors in trust under such Trust Agreement. SECTION 17 ---------- Effective December 31, 1993, Section 3.01 of the Plan is hereby amended by adding the following sentence to the end thereof: VOL402CL Doc: 154124.1 5 5 "Notwithstanding the foregoing, the benefit payable as of December 31, 1993 with respect to an Employee who was a participant in the Merged Plan on December 31, 1993 (which Plan was frozen as of such date) shall be determined by and paid in accordance with the terms and provisions of the Merged Plan as in effect on such date." SECTION 18 ---------- Effective December 31, 1993, Section 4.01 of the Plan is hereby amended (1) by adding the letter "(a)" to the beginning of the first sentence thereof, and (2) by adding the following new Subsection (b) to the end thereof: "(b) Notwithstanding the foregoing,the provisions of this Subsection (b) shall apply to the calculation of a Participant's Normal Retirement Pension in the event that the amount determined hereunder exceeds the amount determined under the provisions of Section (a) of this Section. The Normal Retirement Pension of a Participant under this Subsection (b) shall be a monthly amount equal to the sum of A plus B, where: A = the amount determined under Subsection (a) of this Section, taking into account only the Participant's years of Benefit Service earned on or after January 1, 1994; and B = the greater of (i) the SUM OF the Participant's Accrued Benefit under the Plan (or the Merged Plan) as of December 31, 1988, taking into account only the Participant's years of Benefit Service earned prior to January 1, 1989,PLUS the sum of the Participants' Accrued Benefits earned under the Plan (or the Merged Plan) during the 1989 through (and including) 1993 Plan Years, OR (ii) the Participant's Accrued Benefit as of December 31, 1993 under the Plan (or the Merged Plan), taking into account only years of Benefit Service earned prior to December 31, 1993. The total years of Benefit Service taken into account under this Subsection (b) may not exceed 30. In the event that a Participant has been credited with years of Benefit Service in excess of 30, such excess years of Benefit Service shall be subtracted from the portion of the benefit formula described in Paragraph (A) of this Subsection (b)." VOL402CL Doc: 154124.1 6 6 SECTION 19 ---------- Effective as of January 1, 1989, Section 4.07 of the Plan is hereby amended (1) by adding the letter "(b)" before the second sentence of Subsection (a) thereof and (2) by re-lettering Subsection (b) thereof as Subsection (c) thereof. SECTION 20 ---------- Effective as of January 1, 1989, Section 4.08(a) of the Plan is hereby amended by adding the phrase "Subject to the provisions of Sections 4.07(b) and 4.07(c)," at the beginning of the first sentence thereof. SECTION 21 ---------- Effective as of January 1, 1989, Section 4.09((b)(2) of the Plan is hereby amended by deleting the phrase "within a reasonable period of time before the Participant's Pension Commencement Date" and replacing it with the phrase "not more than 90 days nor less than 30 days before the Participant's Pension Commencement Date." SECTION 22 ---------- Effective as of January 1, 1993, a new Section 5.03(d) is hereby added to the Plan, immediately following Section 5.03(c), to read as follows: "(d) Notwithstanding any provision of the Plan to the contrary, to the extent required under Section 401(a) (31) of the Code, if a Participant or Beneficiary (provided such Beneficiary is a Spouse) is eligible to receive a distribution from the Plan that constitutes an "eligible rollover distribution" (as defined in Section 402(c) (4) of the Code), the Participant or Beneficiary may elect to directly transfer all or a portion of such distribution from the Plan to an eligible retirement plan (as defined in Section 402(c) (8) (B) of the Code). The Committee shall prescribe reasonable procedures for the elections to be made pursuant to this Subsection and shall provide written notice to the Participant or Spouse (within the time period prescribed by treasury regulations or rulings) describing the rights under this Subsection and such other information required to be provided under Section 402(f) of the Code."' VOL402CL Doc: 154124.1 7 7 SECTION 23 ---------- Effective January 1, 1994, Section 6.06 of the Plan is hereby amended in its entirety to read as' follows: "6.06 FUNDING POLICY. The Investment Committee shall determine, establish and carry out a funding policy and method consistent with the objectives of the Plan and the requirements of Title I of ERISA. Subject to the right to amend' and/or terminate the Plan, the Company shall contribute (or cause the Employers to contribute) to the Plan from time to time any amounts that may be required by applicable law or by any other Section of the Plan." SECTION 24 ---------- Effective January 1, 1994, Article VIII of the Plan is hereby amended in its entirety to read as follows: "ARTICLE VIII - INVESTMENT COMMITTEE ----------------------------------- 8.01 INVESTMENT COMMITTEE: NACCO Industries, Inc. has established a "Retirement Funds Investment Committee" (the "Investment Committee") pursuant to the terms of an Instrument of Creation and Delegation dated October 28, 1992, as such Instrument may be amended from time to time. In addition to the responsibilities specifically given to the Investment Committee under the Plan and Trust Agreement, the Investment Committee shall have such other responsibilities with respect to the Plan (and other defined benefit plans and defined contribution plans of the Controlled Group) as are granted to such Investment Committee in the Instrument. In the absence of an Investment Committee, NACCO Industries, Inc. shall perform the duties allocated to such Committee under the Plan and Trust Agreement." SECTION 25 ---------- Effective January 1, 1994, Sections 13.01, 14.01, 14.02 and 15.01 of the Plan are hereby amended by deleting the phrase "Board of Directors" and replacing it with the phrase "the Nominating, Organization and Compensation Committee of its Board of Directors" each time it appears therein. SECTION 26 ---------- Effective as of January 1, 1989, Section 16.03(b) of the Plan is hereby amended by deleting the phrase "Proposed Treasury Regulation Section 1.401(a)(4)-5(c)" and replacing it with the phrase "Treasury Regulation Section 1.401(a)(4)-5(b)." VOL402CL Doc: 154124.1 8 8 EXECUTED this 29th day of December, 1993, to be effective as stated herein. THE NORTH AMERICAN COAL CORPORATION By Thomas A. Koza ------------------------------- Title: Vice President- Law and Administration and Secretary VOL402CL Doc: 154124.1 EX-10.LXXXIX 21 EXHIBIT 10(LXXXIX) 1 Exhibit 10(lxxxix) NACCO INDUSTRIES, INC. 1995 ANNUAL INCENTIVE COMPENSATION PLAN -------------------------------------------------------------------------------- GENERAL ------- NACCO Industries, Inc. (the "Company") has established an Annual Incentive Compensation Plan ("Plan") as part of a competitive compensation program for officers and key management employees of the Company. PLAN OBJECTIVE -------------- The Company desires to attract and retain talented employees to enable the Company to meet its financial and business objectives. The objective of the Plan is to provide an opportunity to eam amual incentive compensation to those employees whose performance has a significant impact on the Company's short-term and long-term profitability. ADMINISTRATION AND PARTICIPATION -------------------------------- The Plan is administered by the Nominating, Organization and Compensation Committee of the Board of Directors of the Company (the "Committee"). The Committee: a. May amend, modify, or discontinue the Plan. b. Will approve participation in the Plan. Participants will include all executive officers and certain key employees. However, the Committee may select any employee who has contributed significantly to the Company's profitability to participate in the Plan and receive an annual incentive compensation award. c. Will determine the annual performance criteria which generate the incentive compensation pool. d. Will determine the total amount of both the target and actual annual incentive compensation pool. e. Will approve individual incentive compensation awards to officers and key employees. f. May delegate to the Chief Executive Officer of the Company the approval of incentive compensation awards to employees below the officer level. 2 g. May consider at the end of each year the award of a discretionary bonus amount to non-participants as an addition to the regular incentive compensation pool on a special one-time basis to motivate individuals not eligible to participate in the Plan. h. May approve a pro rata incentive compensation award for participants in the Plan whose employment is terminated (1) due to death, disability, retirement or facility closure, such award to be determined pursuant to the provisions of subparagraphs e. and f. above or (2) under other circumstances at the recommendation of the Chief Executive Officer of the Company. DETERMINATION OF CORPORATE INCENTIVE COMPENSATION POOL ------------------------------------------------------ Each participant in the Plan will have an individual target incentive compensation percentage which is determined by the participant's salary level. This percentage is multiplied by the mid-point of the participant's salary range to determine his individual target incentive compensation award. The total of the target incentive compensation awards of all participants equals the target corporate incentive compensation pool ("Target Pool"). The Target Pool is approved each year by the Committee. The actual corporate incentive compensation pool ("Actual Pool") is determined at the end of each year based on the Company's actual performance against specific criteria established in the beginning of the year by the Committee. The Target Pool is adjusted upwards or downwards by corporate performance adjustment factors to determine the Actual Pool. In no event will the Actual Pool exceed 150% of the Target Pool, except to the extent that the Committee elects to increase the total of all individual incentive compensation awards to not more than 110% of the Actual Pool, as described below. It is the intent of the Plan that the Actual Pool, as determined above, will be the final total corporate incentive compensation pool. However, the Committee, in its sole discretion, may increase or decrease by up to 10% the Actual Pool or may approve an incentive compensation pool where there would normally be no pool due to Company performance which is below the criteria established for the year. DETERMINATION OF INDIVIDUAL INCENTIVE COMPENSATION AWARDS --------------------------------------------------------- Salary grades and the corresponding target incentive percentages for each participant in the plan will be established at the beginning of each year and approved by the Committee. Individual target incentive compensation will then be adjusted by the appropriate pool factor. Such adjusted individual incentive compensation will then be further modified based on a Participant's performance as compared to his individual goals for the year. -2- 3 The total of all individual incentive compensation awards must not exceed 110% of the Actual Pool for the year. a. Example of Calculation for Determination of Actual Pool
Target Actual Achievement Payout Sub Pool Criteria Weighting Performance Performance Percentage* Percentage ----------------- --------- ----------- ----------- ----------- ---------- Intentionally Omitted ------------- * Achievement % is determined by applying a different formula to the Actual Performance for each Sub Pool Criteria
b. Example of Calculation for Determination of lndividual lncentive Compensation Awards John Doe Base Pay $100,000 Annual Incentive Compensation Percentage 20% 1. Total Payout Percentage: 107.16% of Target 2. Individual Performance factor: 95.0% 3. 107.16% x 95.0% = 101.80% 4. 101.80% x 20% = 20.36% Adjusted Percentage 5. 20.36% x $100,000 = $20,360 Individual Incentive Compensation Award 1995 PERFORMANCE TARGETS ------------------------ See Plan Sumary. -3- EX-10.XC 22 NACCO EXHIBIT 10.XC 1 Exhibit (xc) AMENDMENT NO. 3 TO THE NORTH AMERICAN COAL CORPORATION SALARIED EMPLOYEES PENSION PLAN (As Amended and Restated as of January 1, 1989) --------------------------------------------- The North American Coal Corporation hereby adopts this Amendment No. 3 to The North American Coal Corporation Salaried Employees Pension Plan (As Amended and Restated as of January 1, 1989) (the "Plan"). The provisions of this Amendment shall be effective as of March 15, 1994. Words and phrases used herein with initial capital letters which are defined in the Plan are used herein as so defined. SECTION 1 --------- Subsection 1.10(d) of the Plan is hereby amended by adding the following new paragraph (iii) to the end thereof: "(iii) The provisions of this Subsection shall not apply to any Participant who first becomes a Covered Employee on or after March 15, 1994." SECTION 2 --------- Subsection 4.05(a) of the Plan is hereby amended by adding the following sentence to the end thereof: "Notwithstanding the foregoing, the provisions of this Subsection (a) shall not apply to any Participant who first becomes a Covered Employee on or after March 15, 1994." SECTION 3 --------- Sections 13.01, 14.01, 14.02 and 15.01 of the Plan are hereby amended by deleting the phrase "the Nominating, Organization and Compensation Committee of its Board of Directors" and replacing it with the phrase "its Board of Directors or the Nominating, Organization and Compensation Committee of the Board of Directors" each time it appears therein. EXECUTED this 11th day of March, 1994, to be effective as stated herein. THE NORTH AMERICAN COAL CORPORATION By Thomas A. Koza --------------------------------- Title: Vice President- Law and Administration VOL402CL Doc: 154127.1 EX-10.XCIX 23 EXHIBIT 10(XCIX) 1 Exhibit 10 (xcix) AMENDMENT NO. 1 TO THE NORTH AMERICAN COAL CORPORATION VALUE APPRECIATION PLAN (AS AMENDED AND RESTATED AS OF MARCH 11, 1992) ---------------------------------------------- The North American Coal Corporation hereby adopts this Amendment No. 1 to The North American Coal Corporation Value Appreciation Plan (As Amended and Restated as of March 11, 1992) (the "Plan"). The provisions of this Amendment shall be effective as of December 7, 1994. Words and phrases used herein with initial capital letter which are defined in the Plan are used herein as so defined. SECTION 1 --------- Section 5.2(a) of the Plan hereby is amended by adding the following sentence at the end thereof: "Notwithstanding the foregoing, the Committee may vest a Participant who retires or whose employment otherwise terminates in such amounts, up to 100 percent of his VAP Account, as the Committee may in its sole discretion determine". SECTION 2 --------- Section 9 of the Plan hereby is amended to read in its entirety as follows: 9. Amendment and Termination ------------------------- The Committee or the Board of Directors of the Company may alter, amend or terminate this Plan from time to time; provided, however, that no modification, or amendment of this Plan shall, without the consent of a Participant, affect the 2 Participant's rights in an outstanding Award under this Plan; and further provided, however, that upon termination of this Plan, all outstanding Awards shall vest 100 percent immediately thereupon, and shall be paid in accordance with Section 5.2. EXECUTED this 14th day of December, 1994, to be effective as stated herein. Title: Thomas A. Koza ------------------------------- By: Vice President ------------------------------- EX-10.XXII 24 EXHIBIT 10(XXII) 1 Exhibit 10(xxii) NACCO MATERIALS HANDLING GROUP, INC. UNFUNDED BENEFIT PLAN (As Amended and Restated Effective October 1, 1994) INSTRUMENT OF ADOPTION AND MERGER --------------------------------- WHEREAS, NACCO Industries, Inc. ("NACCO") employees became covered under the profit sharing portion of the NACCO Materials Handling Group, Inc. Profit Sharing Plan (the "Qualified Plan") and the NACCO Materials Handling Group, Inc. Unfunded Benefit Plan (the "Plan"), effective December 31, 1993; WHEREAS, NACCO adopted the Before Tax Contributions and Matching Employer Contributions portions of the Qualified Plan effective December 1, 1994; and WHEREAS, NACCO employees are covered under The North American Coal Corporation Deferred Compensation Plan for Management Employees (the "North American Coal Plan") with respect to their excess Before Tax Contributions and excess Matching Employer Contributions and NACCO desires to cover such employees under the Plan effective January 1, 1995; NOW THEREFORE: NACCO hereby adopts the Plan for the benefit of its employees who satisfy the requirements of a "Participant" (as defined in Section 2.14 of the Plan, as amended by Amendment No. 2), effective January 1, 1995. As a result, effective January 1, 1995, NACCO shall provide excess Before Tax Contributions and excess Matching Employer Contributions to NACCO 401(k) Employees through the Plan and the liabilities of NACCO to NACCO 401(k) Employees shall continue after January 1, 1995 under the Plan. Any such liabilities of NACCO existing as of December 31, 1994 under the North American Coal Plan shall be transferred from the North American Coal Plan to the Plan effective January 1, 1995. Date: 12/30/94 NACCO INDUSTRIES, INC. By: Steven M. Billick ------------------ Title: Vice President & Controller ---------------------------- CL Doc: 137632.1 NYMAIN Doc: 93993.1 504810-145-019 2 This Instrument of Adoption and Merger and the terms and provisions hereof are hereby consented to by NACCO Materials Handling Group, Inc., the sponsor of the Plan. NACCO MATERIALS HANDLING GROUP, INC. By: Charles A. Bittenbender ------------------------ Title: Assistant Secretary --------------------- CL Doc: 137632.1 NYMAIN Doc: 93993.1 504810-145-019 EX-10.CVI 25 NACCO EXHIBIT 10.CVI 1 10(cvi) AMENDMENT NO. 1 TO THE MASTER TRUST AGREEMENT BETWEEN NACCO INDUSTRIES, INC. AND STATE STREET BANK AND TRUST COMPANY ----------------------------------- NACCO Industries, Inc. (the "Company") hereby adopts this Amendment No. 1 to the Master Trust Agreement (the "Agreement") dated as of October 1, 1992 between the Company and State Street Bank and Trust Company (the "Trustee"). The provisions of this Amendment shall be effective as of January 1, 1993. Words and phrases used herein with initial capital letters which are defined in the Agreement are used herein as so defined. Section 1 --------- The preamble to the Agreement is hereby amended by deleting the seventh "WHEREAS" clause therefrom and replacing it with the following: "WHEREAS, the Company and the Subsidiaries have appointed the Trustee as successor trustee to the trustees under such trust agreements and the Company and the Subsidiaries and the Trustee desire to amend and restate such trust agreements in their entirety." Section 2 --------- Schedule A to the Agreement is hereby amended in its entirety to read as follows: "1. The Hyster-Yale Profit Sharing Retirement Plan; 2. The North American Coal Corporation Retirement Savings Plan (formerly known as The NACCO Industries, Inc. Savings Plan); and 3. The Hamilton Beach/Proctor-Silex, Inc. Employees' Retirement Savings Plan." VOL402CL Doc: 154252.1 2 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers on the dates shown below. NACCO INDUSTRIES, INC. Date: 12/15/92 By: Charles Bittenbender ------------------ --------------------------- Title: Vice President STATE STREET BANK AND TRUST COMPANY Date: 1/7/93 By: --------------------------- Title: Vice President VOL402CL Doc: 154252.1 2 EX-10.CXXXIX 26 NACCO EXHIBIT 10.CXXXIX 1 10 (cxxxix) AMENDMENT NO. 1 TO THE MASTER TRUST AGREEMENT BETWEEN NACCO INDUSTRIES, INC. AND STATE STREET BANK AND TRUST COMPANY FOR DEFINED BENEFIT PENSION PLANS NACCO Industries, Inc. (the "Company") hereby adopts this Amendment No. 1 to the Master Trust Agreement (the "Agreement") dated January 1, 1994 between the Company and State Street Bank and Trust Company (the "Trustee"). The provisions of this Amendment shall be effective as of January 1, 1995. Words and phrases used herein with initial capital letters which are defined in the Agreement are used herein as so defined. Section 1 --------- The preamble to the Agreement is hereby amended by adding the following "WHEREAS" clause following the third "WHEREAS" clause thereof: "WHEREAS, effective as of the close of business on December 31, 1994, five of the defined benefit plans of the Company and its Subsidiaries were merged to form a single plan;" Section 2 --------- The preamble to the Agreement is hereby amended by deleting the fourth "WHEREAS" clause therefrom and replacing it with the following: "WHEREAS, the authority to conduct the general operation and administration of each of the Plans (or each portion of a Plan, as applicable) is vested in the Administrative Committee or Committees appointed under each such Plan, who shall have the authorities and shall be subject to the duties with respect to the VOL402CL Doc: 7966.1 2 2 trust specified in the applicable Plan (or applicable portion thereof) and in this Trust Agreement." Section 3 --------- Schedule A to the Agreement is hereby amended in its entirety to read as follows: "1. The NACCO Materials Handling Group, Inc. Danville Shop Employees Pension Plan; 2. The NACCO Materials Handling Group, Inc. Kewanne Shop Employees Pension Plan; 3. The NACCO Materials Handling Group, Inc. Portland and Branch Store Shop Employees Pension Plan; 4. The Combined Defined Benefit Plan for NACCO Industries, Inc. and its Subsidiaries (which is a single Plan consisting of the following Parts: Part I of the Plan contains the provisions relating to The North American Coal Corporation Salaried Employees Pension Plan; Part II of the Plan contains the provisions relating to the Hamilton Beach/Proctor-Silex, Inc. Profit Sharing Retirement Plan, and Part III of the Plan contains the provisions relating to the combined NACCO Materials Handling Group, Inc. Cash Balance Plan). IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers on the dates shown below. NACCO INDUSTRIES, INC. Date: 3/ /95 By: Charles Bittenbender ------------------ ------------------------------ Title: Vice President STATE STREET BANK AND TRUST COMPANY Date: 3/30/95 By: ------------------ ------------------------------ Title: Vice President VOL402CL Doc: 7966.1 EX-11 27 NACCO EXHIBIT 11 1 EXHIBIT 11 NACCO INDUSTRIES, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
Year Ended December 31 ------------------------------------------------ 1994 1993 1992 ---- ---- ---- (Amounts in thousands except per share data) Income (loss): ------------- Income before extraordinary charge $ 45,272 $ 11,593 $ 22,868 Extraordinary charge, net-of-tax (3,218) (3,292) (110,000) ------------ ------------ ----------- Net income (loss) $ 42,054 $ 8,301 $ (87,132) ============ ============ =========== Per share amounts reported to stockholders - Note 1 ----------------------- Income before extraordinary charge $ 5.06 $ 1.30 $ 2.57 Extraordinary charge, net-of-tax (.36) (.37) (12.37) ------------ ----------- ---------- Net income (loss) $ 4.70 $ .93 $ (9.80) ============ =========== ========== Primary: ------- Weighted average shares outstanding 8,948 8,938 8,891 Dilutive stock options - Note 2 12 15 33 ------------ ------------ ----------- Totals 8,960 8,953 8,924 ============ ============ =========== Per share amounts Income before extraordinary charge $ 5.05 $ 1.30 $ 2.56 Extraordinary charge, net-of-tax (.35) (.37) (12.32) ------------ ----------- ---------- Net income (loss) $ 4.70 $ .93 $ (9.76) ============ =========== ========== Fully diluted: ------------- Weighted average shares outstanding 8,948 8,938 8,891 Dilutive stock options - Note 2 9 17 37 ------------ ------------ ----------- Totals 8,957 8,955 8,928 ============ ============ =========== Per share amounts Income before extraordinary charge $ 5.05 $ 1.30 $ 2.56 Extraordinary charge, net-of-tax (.35) (.37) (12.32) ------------ ------------ ----------- Net income (loss) $ 4.70 $ .93 $ (9.76) ============ ============ =========== 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 year-end market price, if higher than the average market price, is used.
EX-21 28 EXHIBIT 21 1 Exhibit 21 ---------- SUBSIDIARIES OF NACCO INDUSTRIES, INC. As of the date of the Annual Report on Form 10-K to which this is an Exhibit, the subsidiaries of NACCO Industries, Inc. were as follows:
Name Incorporation ---- ------------- Bellaire Corporation Ohio The Coteau Properties Company Ohio The Falkirk Mining Company Ohio Hamilton Beach/Proctor-Silex, Inc. Delaware(1) HBPS Foreign Sales Corp. Virgin Islands HB-PS Holding Company, Inc. Delaware(1) Housewares Holding Company Delaware NACCO Materials Handling Group, Pty. Ltd. Australia NACCO Materials Handling B.V. Netherlands Hyster Europe Limited United Kingdom NACCO Materials Handling Scotland Ltd. United Kingdom NACCO Materials Handling (N.I.) Ltd. Northern Ireland NACCO Materials Handling Group Ltd. United Kingdom Hyster-Yale Materials Handling, Inc. Delaware(2) The Kitchen Collection, Inc. Delaware NACCO Materials Handling Group, Inc. Delaware The North American Coal Corporation Delaware North American Coal Royalty Company Delaware Powhatan Corporation Delaware Proctor-Silex Canada Inc. Ontario (Canada) Proctor Silex, S.A. de C.V. Mexico The Sabine Mining Company Texas Yale Europe Materials Handling Ltd. United Kingdom The Company has omitted the names of its subsidiaries which, considered in the aggregate as a single subsidiary, would not constitute a "significant subsidiary" within the meaning of Rule 1-02 contained in Regulation S-X. ---------------- 1. NACCO owns 100% of the voting securities of Housewares Holding Company, Housewares Holding Company owns 80% of the voting securities of HB-PS Holding Company, Inc., HB-PS Holding Company, Inc. owns 100% of Hamilton Beach/Proctor-Silex, Inc., and Hamilton Beach/Proctor-Silex Inc. owns 100% of Proctor-Silex Canada Inc. and Proctor Silex, S.A. de C.V. (except for directors' qualifying shares). 2. NACCO Industries, Inc. owns 97% of the voting securities of Hyster-Yale Materials Handling, Inc.
EX-23.I 29 EXHIBIT 23(I) 1 Exhibit 23(i) CONSENT OF ARTHUR ANDERSEN LLP To the Board of Directors of NACCO Industries, Inc.: As independent public accountants, we hereby consent to the incorporation of our report included in this Form 10-K, into the Company's previously filed Registration Statement (No. 33-3422) on Form S-4 and Registration Statement (No. 33-52660) on Form S-8. ARTHUR ANDERSEN LLP Cleveland, Ohio, March 31, 1995. EX-24.I 30 EXHIBIT 24(I) 1 Exhibit 24(i) POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A. Bittenbender, and Steven M. Billick, and each of them, as the true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for the undersigned and in the name, place, and stead of the undersigned, to sign on behalf of the undersigned as Director of NACCO Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994, and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. /s/ Owsley Brown, II ---------------------------- Owsley Brown, II Date: 2-8-95 ---------- EX-24.II 31 EXHIBIT 24(II) 1 Exhibit 24(ii) POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A. Bittenbender, and Steven M. Billick, and each of them, as the true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for the undersigned and in the name, place, and stead of the undersigned, to sign on behalf of the undersigned as Director of NACCO Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994, and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ John J. Dwyer ---------------------------- John J. Dwyer Date: Feb. 8, 1995 ---------------- EX-24.III 32 EXHIBIT 24(III) 1 Exhibit 24(iii) POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A. Bittenbender, and Steven M. Billick, and each of them, as the true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for the undersigned and in the name, place, and stead of the undersigned, to sign on behalf of the undersigned as Director of NACCO Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994, and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. /s/ Robert M. Gates ---------------------------- Robert M. Gates Date: 2-8-95 ---------- EX-24.IV 33 EXHIBIT 24(IV) 1 Exhibit 24(iv) POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A. Bittenbender, and Steven M. Billick, and each of them, as the true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for the undersigned and in the name, place, and stead of the undersigned, to sign on behalf of the undersigned as Director of NACCO Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994, and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. /s/ E. Bradley Jones ---------------------------- E. Bradley Jones Date: 2/16/95 ---------- EX-24.V 34 EXHIBIT 24(V) 1 Exhibit 24(v) POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A. Bittenbender, and Steven M. Billick, and each of them, as the true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for the undersigned and in the name, place, and stead of the undersigned, to sign on behalf of the undersigned as Director of NACCO Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994, and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. /s/ Dennis W. LaBarre ---------------------------- Dennis W. LaBarre Date: 2/8/95 ---------- EX-24.VI 35 EXHIBIT 24(VI) 1 Exhibit 24(vi) POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned Chairman, President and Chief Executive Officer and Director NACCO Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A. Bittenbender and Steven M. Billick, and each of them, as the true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for the behalf of the undersigned as Chairman, President and Chief Executive Officer and Director or NACCO Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994, and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Date March 24, 1995 /s/ Alfred M. Rankin, Jr. -------------- --------------------- Alfred M. Rankin, Jr. EX-24.VII 36 EXHIBIT 24(VII) 1 Exhibit 24(vii) POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A. Bittenbender, and Steven M. Billick, and each of them, as the true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for the undersigned and in the name, place, and stead of the undersigned, to sign on behalf of the undersigned as Director of NACCO Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994, and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. /s/ John C. Sawhill ---------------------------- John C. Sawhill Date: 2/8/95 ---------- EX-24.VIII 37 EXHIBIT 24(VIII) 1 Exhibit 24(viii) POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO Industries, lnc. hereby constitutes and appoints Frank B. O'Brien, Charles A. Bittenbender, and Steven M. Billick, and each of them, as the true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for the undersigned and in the name, place, and stead of the undersigned, to sign on behalf of the undersigned as Director of NACCO Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994, and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. /s/ Britton T. Taplin ---------------------------- Britton T. Taplin Date: 2-14-95 ----------- EX-24.IX 38 EXHIBIT 24(IX) 1 Exhibit 24(ix) POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of NACCO Industries, Inc. hereby constitutes and appoints Frank B. O'Brien, Charles A. Bittenbender, and Steven M. Billick, and each of them, as the true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for the undersigned and in the name, place, and stead of the undersigned, to sign on behalf of the undersigned as Director of NACCO Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1994, and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. /s/ Frank E. Taplin, Jr. ---------------------------- Frank E. Taplin, Jr. Date: 3/10/95 ----------- EX-24.X 39 EXHIBIT 24(X) 1 Exhibit 24(x) POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned Vice President and Controller of NACCO Industries, Inc. hereby constitutes and appoints Frank B. O'Brien and Charles A. Bittenbender, and each of them, as the true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for the undersigned and in the name, place and stead of the undersigned, to sign on behalf of the undersigned as Vice President and Controller of NACCO Industries, Inc., a Delaware corporation, an Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934 on Form 10-K fur the fiscal year ended December 31, 1994, and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. /s/ Steven M. Billick Date: March 24, 1995 ---------------------------- Steven M. Billick EX-27 40 EXHIBIT 27
5 1,000 U.S.DOLLARS YEAR DEC-31-1994 JAN-01-1994 DEC-31-1994 1 19,541 0 246,855 10,640 298,987 586,636 825,121 339,807 1,694,322 481,438 78,524 8,952 0 0 270,439 1,694,322 1,853,479 1,864,887 1,487,447 1,729,791 0 0 60,400 78,496 30,730 45,272 0 (3,218) 0 42,054 4.70 0
EX-99.I 41 EXHIBIT 99(I) 1 EXHIBIT 99 (i) Audited Consolidated Financial Statements THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES As of December 31, 1994 and 1993 Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . 1 Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . 2 Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . 4 Consolidated Statements of Stockholder's Equity . . . . . . . . . . . . . . . 5 Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . 6 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . 7 2 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of The North American Coal Corporation: We have audited the accompanying consolidated balance sheets of The North American Coal Corporation and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, stockholder's equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The North American Coal Corporation and subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. Arthur Andersen LLP Dallas, Texas, February 9, 1995 3 THIS PAGE INTENTIONALLY LEFT BLANK 4 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of December 31, 1994 and 1993 (Amounts in Thousands)
1994 1993 -------- -------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,562 $ 6,157 Note receivable from parent Company 22,709 36,459 Accounts receivable 23,801 21,281 Inventories 27,211 23,813 Other current assets 2,052 3,144 -------- -------- 81,335 90,854 OTHER ASSETS: Notes receivable 3,790 4,343 Costs recoverable under sales contracts 6,945 8,435 Other investments and receivables 13,715 12,225 -------- -------- 24,450 25,003 Coal lands and real estate 68,527 67,889 Plant and equipment 422,061 414,305 Construction in progress 2,737 3,972 -------- -------- 493,325 486,166 Less allowance for depreciation, depletion and amortization (192,307) (168,827) -------- -------- 301,018 317,339 DEFERRED CHARGES: Deferred financing costs 6,672 7,325 Prepaid royalties 5,943 5,521 Deferred lease costs 33,154 31,198 Deferred leasehold costs 6,812 3,255 Other 1,913 - -------- -------- 54,494 47,299 -------- -------- $461,297 $480,495 ======== ========
The accompanying notes are an integral part of these statements. -2- 5
1994 1993 LIABILITIES AND STOCKHOLDER'S EQUITY -------- -------- CURRENT LIABILITIES: Accounts payable $ 10,461 $ 9,673 Payable to affiliated companies 3,887 1,576 Accrued liabilities 21,580 22,874 Revolving credit agreements 15,000 16,000 Current maturities of long-term obligations 17,841 16,060 -------- -------- 68,769 66,183 NON-CURRENT LIABILITIES: Advances from customers 135,973 133,347 Deferred income taxes 17,896 18,092 Pension compensation and other accrued liabilities 22,140 17,455 -------- -------- 176,009 168,894 LONG-TERM OBLIGATIONS: Subsidiaries' liabilities--(not guaranteed by the Company or the parent Company): Notes payable 55,967 60,430 Notes payable to affiliated company 145 406 Capitalized lease obligations 140,091 145,126 -------- -------- 196,203 205,962 MINORITY INTEREST 5,191 5,694 STOCKHOLDER'S EQUITY: Common Stock, par value $1 a share: Authorized 750 shares; issued and outstanding 500 shares 1 1 Capital in excess of par value 15,124 32,390 Retained income - 1,371 -------- -------- 15,125 33,762 -------- -------- $461,297 $480,495 ======== ========
-3- 6 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME As of December 31, 1994 and 1993 (Amounts in Thousands)
1994 1993 -------- -------- TONS OF COAL SOLD 27,183 26,538 ======== ======== INCOME: Net sales $239,391 $225,770 Royalties, rental and other operating income 10,788 6,532 Interest, gain on sale of assets and miscellaneous income 4,312 2,325 -------- -------- 254,491 234,627 COSTS AND EXPENSES: Cost of sales 161,814 150,416 Depreciation, depletion and amortization 30,856 29,397 Selling, administrative and general expenses 9,560 8,837 Interest expense of subsidiaries 19,321 18,761 -------- -------- 221,551 207,411 -------- -------- Income before income taxes and minority interest 32,940 27,216 INCOME TAXES: Current 9,690 7,495 Deferred (209) 2,363 -------- -------- 9,481 9,858 Minority interest in income of consolidated subsidiary 2,484 1,326 -------- -------- Net Income $ 20,975 $ 16,032 ======== ========
The accompanying notes are an integral part of these statements. -4- 7 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY For the Years Ended December 31, 1994 and 1993 (Amounts in Thousands)
Capital In Retained Common Excess of Income Stock Par Value (Deficit) Total -------- ---------- --------- --------- Balance at January 1, 1993 $ 1 $ 32,390 $ 6,910 $ 39,301 Net income - - 16,032 16,032 Cash dividends - - (21,571) (21,571) -------- ---------- --------- --------- Balance at December 31, 1993 $ 1 $ 32,390 $ 1,371 $ 33,762 Net Income - - 20,975 20,975 Cash dividends - (20,654) (22,346) (43,000) Contribution from affiliate - 3,388 - 3,388 -------- ---------- --------- --------- Balance at December 31, 1994 $ 1 $ 15,124 $ - $ 15,125 ======== ========== ========= =========
The accompanying notes are an integral part of these statements. -5- 8 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1994 and 1993 (Amounts in Thousands)
OPERATING ACTIVITIES: 1994 1993 -------- -------- Net income $ 20,975 $ 16,032 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 30,856 29,397 Gain on sale of assets (136) (133) Costs recovered under sales contracts 1,490 1,507 Deferred lease costs (1,956) (2,830) Deferred leasehold costs (3,557) (3,255) Development revenue receivable 549 567 Deferred income taxes (209) 2,363 Pensions and other accruals 3,918 1,885 Prepaid royalties (539) (371) Deferred financing costs 657 607 -------- -------- 52,048 45,769 Working capital changes: Increase in accounts receivable and other assets (3,567) (1,632) Increase in inventories (3,398) (2,927) Increase (decrease) in accounts payable and other liabilities 1,809 (2,747) -------- -------- (5,156) (7,306) -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 46,892 38,463 INVESTING ACTIVITIES: Expenditures for property, plant and equipment (12,136) (24,011) Proceeds from property disposals 2,804 21,640 Additions to (repayment of) note receivable from parent Company, net 17,138 (18,466) Reduction in notes receivable 1,412 4,664 Other - net (2,385) 21 -------- -------- NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES 6,833 (16,152) FINANCING ACTIVITIES: Additions to lines of credit, net 305 7,482 Additions to (repayment of) advances from customers, net 2,626 (7,208) Additions to long-term obligations 53,768 51,517 Repayment of long-term obligations (68,019) (60,283) Cash dividends (43,000) (21,571) -------- -------- NET CASH USED BY FINANCING ACTIVITIES (54,320) (30,063) -------- -------- DECREASE IN CASH AND CASH EQUIVALENTS (595) (7,752) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 6,157 13,909 -------- -------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,562 $ 6,157 ======== ========
The accompanying notes are an integral part of these statements. -6- 9 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1994 and 1993 NOTE A--ORGANIZATION The North American Coal Corporation ("Company") is a wholly-owned subsidiary of NACCO Industries, Inc. ("parent Company"). The Company is the owner of The Coteau Properties Company ("Coteau"), The Falkirk Mining Company ("Falkirk"), The Sabine Mining Company ("Sabine"), Red River Mining Company, its joint venture, ("Red River Mining"), and North American Coal Royalty Company. Three of the Company's consolidated coal mining subsidiaries (surface mines) were organized to assume sales agreements with public utilities. All of the coal of these subsidiaries is sold to these public utilities pursuant to long-term contracts that extend up to 20 years with extensions at the buyer's option. The sales prices provided by such contracts are based on cost plus a profit per ton. In December 1994, the Company recorded a contribution from a subsidiary of the parent Company. This contribution represented royalty revenue received in prior years by the subsidiary on a mine previously held by the Company. The contribution was funded by a note receivable from the parent Company. NOTE B--ACCOUNTING POLICIES Principles of Consolidation: The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and its joint venture. Intercompany accounts have been eliminated. Cash and Cash Equivalents: Cash equivalents are investments purchased with an original maturity of three months or less. Inventories: Inventories are stated at the lower of cost or market. Costs Recoverable Under Sales Contracts: The coal sales agreements ("Agreements") of three subsidiaries provided for selling prices which allowed a profit during the defined development period of the mines. Production costs incurred during the development period in excess of the established selling price, as set forth in the Agreements, were deferred and are being recovered as a cost of coal tonnage sold after the development period. Recoveries of these costs amounted to approximately $1,490,000 and $1,507,000 in 1994 and 1993, respectively, and are included in net sales in the accompanying consolidated statements of income. Depreciation, Depletion and Amortization: Depreciation, depletion and amortization are provided in amounts sufficient to amortize the cost of related assets (including assets recorded under capitalized lease obligations) over their estimated range of useful lives and are calculated by the following methods: equipment and certain mine plant--straight-line method; remaining mine plant, coal lands and related leaseholds--units-of-production method based on estimated recoverable tonnage. -7- 10 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued December 31, 1994 and 1993 NOTE B--ACCOUNTING POLICIES--continued Reclamation Costs: Under certain federal and state regulations, the Company's subsidiaries are required to reclaim land disturbed as a result of mining. Reclamation of disturbed land is a continuous process throughout the term of the related Agreements. Current reclamation costs are being recovered as a cost of coal tonnage sold. Costs to complete reclamation after mining has been completed are reimbursed under the Agreements. Prior Year Financial Statements: Certain reclassifications have been made to the 1993 financial statements to conform to the 1994 presentation. Financial Instruments and Derivative Financial Instruments: The fair values of financial instruments have been determined through information obtained from quoted market sources and management estimates. The Company does not hold or issue financial instruments or derivative financial instruments for trading purposes. The Company enters into interest rate swap agreements and interest rate cap agreements with terms ranging from two to four years. The differential between the floating interest rate and the fixed interest rate which is to be paid or received is recognized in interest expense as the floating interest rate changes over the life of the agreement. NOTE C--ACCOUNTS RECEIVABLE Accounts receivable are summarized as follows (in thousands):
December 31, -------------------- 1994 1993 -------- -------- Accounts receivable $ 17,799 $ 15,568 Accounts receivable from affiliated companies 5,520 5,617 Refundable income taxes 482 96 -------- -------- $ 23,801 $ 21,281 ======== ========
NOTE D--INVENTORIES Inventories are summarized as follows (in thousands):
December 31, -------------------- 1994 1993 -------- -------- Coal $ 8,404 $ 7,619 Mining supplies 18,807 16,194 -------- -------- $ 27,211 $ 23,813 ======== ========
-8- 11 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued December 31, 1994 and 1993 NOTE E--ADVANCES FROM CUSTOMERS Advances from customers represent amounts advanced to Coteau and Falkirk from public utilities to develop, operate and provide working capital for the mines. These advances are without recourse to the Company and the parent Company. These advances are non-interest bearing and are secured by all owned assets and assignment of all rights under the Agreements of Coteau and Falkirk. No repayment schedules for these advances have been established due to the funding agreements with the customers of Coteau and Falkirk. Payments estimated to be made in 1995 of $8,535,000 are included in accrued liabilities in the accompanying balance sheets. NOTE F--NOTES PAYABLE The promissory notes represent borrowings which the public utility arranged for Sabine. The note payable at Coteau represents financing for leaseholds on coal lands received from an affiliate of Coteau's buyer. Neither the Company nor the parent Company have guaranteed these borrowings. Notes payable, less current maturities, consist of the following (in thousands):
December 31, -------------------- 1994 1993 THE SABINE MINING COMPANY -------- -------- Promissory notes with an average interest rate of 4.385% in 1994, guaranteed by a $9.25 million irrevocable letter of credit issued by a bank pursuant to a credit agreement with banks which expires February 15, 1997. Under the terms of such agreement, substantially all assets of Sabine are pledged and all rights under a mining agreement are assigned. $ 1,250 $ 4,550 Promissory note payable to a bank under an agreement providing for borrowings up to $20 million. Interest is based on the bank's daily cost of funds plus .45% (average interest rate of 4.7216% for 1994). 11,610 10,365
-9- 12 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued December 31, 1994 and 1993 NOTE F--NOTES PAYABLE--continued
December 31, ------------------ 1994 1993 -------- -------- Secured note payable due June 1, 2001, with a fixed interest rate of 8.65% per annum on the unpaid balance. Under the terms of such agreement, substantially all assets of Sabine are pledged and all rights under a mining agreement are assigned. 5,500 6,500 THE COTEAU PROPERTIES COMPANY Mortgage note to an affiliate of Coteau's customer with an interest rate of 10.94%. The note requires a minimum payment of $19,700,000 before 1998 and other minimum payments due in various years up to 2013 with final payment by 2019. Payments are based upon coal mined from the lands covered by the mortgage note. 37,297 38,466 Other 310 549 -------- -------- $ 55,967 $ 60,430 ======== ========
Note maturities for the next five years, including current maturities, are as follows (in thousands): 1995 $ 8,288 1996 4,393 1997 1,915 1998 3,205 1999 3,148 Thereafter 43,306 ---------- $ 64,255 ==========
Commitment fees paid to banks were approximately $55,000 and $82,000 in 1994 and 1993, respectively and are included in interest expense in the accompanying consolidated statements of income. -10- 13 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued December 31, 1994 and 1993 NOTE G--REVOLVING CREDIT AGREEMENT
During 1994, the Company had a revolving credit agreement which is summarized as follows: Amount of revolving credit agreement $50,000,000 Amount available at December 31, 1994 $35,000,000 Stated interest rate LIBOR +.4375% Average interest rate during 1994 4.819% Commitment and facility fee .25% per annum Expiration date (with annual renewal option) September 27, 1997
The Company enters into interest rate swap agreements which allows the Company to enter into long-term credit arrangements that have performance based, floating rates of interest and then swap them into fixed rates as opposed to entering into higher cost fixed-rate credit arrangements. These agreements are with major commercial banks; therefore, the risk of credit loss from nonperformance by the banks is minimal. The Company evaluates its exposure to floating rate debt on an ongoing basis. The following table summarizes the notional amounts and related rates on interest rate swap agreements and interest rate cap agreements outstanding at December 31, 1994:
Notional Variable Amount Rate Fixed Rate ---------- -------- ---------- Swaps 14,000,000 6.017% 6.642% Cap 3,000,000 6.125% 4.000%
NOTE H--POSTRETIREMENT PLANS The Company and its affiliates, representing the mining operations of the parent Company, sponsor defined benefit pension plans which cover substantially all salaried employees of the Company and its subsidiaries. Benefits under the plans are based on years of service and average compensation during certain periods. The Company's funding policy is to contribute within the range allowed by the applicable regulations. Plan assets are primarily listed stocks and U.S. bonds. -11- 14 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued December 31, 1994 and 1993 NOTE H--POSTRETIREMENT PLANS--continued The following is a detail of net periodic pension expense for all mining operations of the parent Company (in thousands):
December 31, ------------------- 1994 1993 -------- -------- Service cost $ 2,440 $ 2,132 Interest cost on projected benefit obligation 2,528 2,182 Actual return on plan assets 638 (1,792) Net amortization and deferral (2,886) (312) -------- -------- Net periodic pension expense $ 2,720 $ 2,210 ======== ========
The following sets forth the funded status of the plans (in thousands): Actuarial present value of benefit obligation:
December 31, ------------------- 1994 1993 -------- -------- Vested accumulated benefit obligation $ 12,816 $ 12,460 Nonvested accumulated benefit obligation 1,509 1,464 -------- -------- Total accumulated benefit obligation 14,325 13,924 Value of future salary projections 13,306 16,937 -------- -------- Total projected benefit obligation 27,631 30,861 Fair value of plan assets 22,915 23,320 -------- -------- Projected benefit obligation in excess of plan assets (4,716) (7,541) Amounts not recognized: Unrecognized net transition asset (1,005) (1,173) Unrecognized net gain (10,430) (4,350) Prior service cost 762 822 -------- -------- Pension obligation recognized $(15,389) $(12,242) ======== ========
-12- 15 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued December 31, 1994 and 1993 NOTE H--POSTRETIREMENT PLANS--continue Assumptions used in accounting for the defined benefit plans:
December 31, -------------------- 1994 1993 -------- -------- Weighted average discount rates 8.50% 7.50% Rate of increase in compensation levels 5.50% 6.00% Expected long-term rate of return on assets 9.00% 9.00%
The Company and its subsidiaries participate in a defined contribution plan sponsored by the Company which covers substantially all salaried employees. The plan provides for employee contributions to be matched, by the respective company, up to a limit of 5% of the employee's salary. Company contributions to the plan were approximately $2,387,000 and $2,345,000 in 1994 and 1993, respectively. NOTE I--OTHER RETIREMENT BENEFIT PLANS The Company has adopted Statement of Financial Accounting Standards No. 106 (SFAS 106) "Accounting for Postretirement Benefits Other Than Pensions". In accordance with SFAS 106, the expected cost of retirement benefits other than pensions is charged to expense during the years that the employees render service. Under the provisions of the Agreements of three subsidiaries, costs will be recovered as a cost of coal tonnage sold. These amounts have no material effect on net income. Because SFAS 106 is not material to the Company's results of operations and financial condition, the detailed disclosures required by SFAS 106 have not been presented. Coteau and Sabine established Voluntary Employees' Beneficiary Association (VEBA) trusts in 1993 to provide for such future retirement benefits. Coteau and Sabine made cash contributions of $496,000 to the VEBA trusts during 1994. Coteau and Sabine have requested, but have not yet received, a determination letter from the Internal Revenue Service (IRS) regarding recognition of the tax-exempt status of each of the VEBA trusts. Contributions made to an IRS approved VEBA trust are irrevocable and must be used for employee benefits. NOTE J--COMMITMENTS Certain mining equipment leased by Coteau, Falkirk, and Sabine and certain office and other equipment leased by the Company are capitalized for financial statement purposes. The parent Company is not obligated under capital or operating lease agreements of the Company. Under the provisions of the Agreements, the customer is required to pay, as part of the cost of coal purchased, an amount equal to the annual lease payments. For mining equipment, interest expense and amortization in excess of annual lease payments are deferred and are recognized in years when annual lease payments exceed interest expense and amortization. -13- 16 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued December 31, 1994 and 1993 NOTE J--COMMITMENTS--continued Interest paid on notes and capitalized lease obligations amounted to approximately $18,949,000 and $18,480,000 in 1994 and 1993, respectively. Assets recorded under capitalized lease obligations are included with property, plant and equipment and consist of the following (in thousands):
December 31, ------------------- 1994 1993 -------- -------- Plant and equipment $188,149 $187,006 Accumulated amortization (71,655) (63,711) -------- -------- $116,494 $123,295 ======== ========
Capitalized lease obligations are renewable for additional periods at terms based upon fair market value of the leased items at the renewal dates. During 1994 and 1993, subsidiaries of the Company incurred capitalized lease obligations of approximately $5,157,000 and $22,429,000, respectively, in connection with lease agreements to acquire plant and equipment. Future minimum lease payments as of December 31, 1994 for all capitalized lease obligations are as follows (in thousands):
1995 $ 20,666 1996 19,619 1997 18,765 1998 18,042 1999 17,706 Thereafter 150,312 --------- Total minimum lease payments 245,110 Amounts representing interest (95,466) --------- Present value of net minimum lease payments 149,644 Current maturities (9,553) --------- $ 140,091 =========
-14- 17 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued December 31, 1994 and 1993 NOTE J--COMMITMENTS--continued The Company is committed under non-cancelable operating leases, with minimum lease payments as of December 31, 1994 as follows (in thousands):
1995 $ 989 1996 794 1997 790 1998 672 1999 138 Thereafter - ------------ $ 3,383 ============
Rental expenses for all operating leases amounted to approximately $1,168,000 and $1,133,000 during 1994 and 1993, respectively. At December 31, 1994, the unexpended portion of capital expenditures authorized by the respective boards of directors, and customers where required, of the Company and its subsidiaries approximated $49,052,000 of which $46,741,000 is being financed under the arrangements with public utilities served by the subsidiaries. NOTE K--INCOME TAXES The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires, among other things, the measurement of deferred tax assets or liabilities based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. Deferred income tax expense or benefit is based on the changes in the assets or liabilities from period to period. The Company and its subsidiaries are included in the consolidated federal income tax return filed by the parent Company. The Company and each of its subsidiaries entered into a tax-sharing agreement with the parent Company under which federal income taxes are computed by the Company and each of its subsidiaries on a separate return basis. The current portion of such tax is paid to the parent Company. During 1994 and 1993, the federal and state income taxes paid by the Company were approximately $7,099,000 and $7,555,000, respectively. The Company's effective tax rate differs from the federal statutory rate primarily due to state income taxes and percentage depletion. -15- 18 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued December 31, 1994 and 1993 NOTE K--INCOME TAXES--continued For state income tax purposes (computed on a separate return basis), a certain subsidiary has operating loss carryforward of approximately $1,142,000 which expires in 2006 through 2007. Provision (benefit) for income taxes consists of the following (in thousands):
Year Ended December 31, ----------------------- 1994 1993 ---------- ---------- Federal $ 9,609 $ 6,609 State 81 886 ---------- ---------- Total current tax expense $ 9,690 7,495 ========== ========== Federal $ (237) $ 1,758 State 28 605 ---------- ---------- Total deferred tax expense $ (209) $ 2,363 ========== ==========
A summary of components of the net deferred tax asset (liability) included in the accompanying consolidated balance sheets resulting from differences in the book and tax bases of assets and liabilities are as follows (in thousands):
December 31, --------------------- 1994 1993 -------- -------- Current portion: Accrued expenses and reserves $ 470 $ 457 Inventory (37) (37) -------- -------- Total current $ 433 $ 420 ======== ======== Long-term portion: Depreciation, depletion and amortization $(20,395) $(16,379) Pensions 5,476 3,037 Installment sales (1,404) (3,986) Partnership investment (1,818) (1,330) Deferred compensation 814 602 Other - Net (569) (36) -------- -------- $(17,896) $(18,092) ======== ========
The current portion of deferred income taxes shown above, a net deferred tax asset, is included in other current assets in the accompanying consolidated balance sheets. -16- 19 THE NORTH AMERICAN COAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued December 31, 1994 and 1993 NOTE L--DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments", requires disclosure about the fair value of financial instruments. Carrying amounts for cash and cash equivalents and revolving credit approximate fair value. The fair value of notes receivable and payable is estimated based on the discounted value of the future cash flows using borrowing rates currently available to the Company for bank loans with similar terms and average maturities. The estimated fair value of the Company's notes receivable was approximately $5,322,000 and $6,112,000 in 1994 and 1993, respectively, while the estimated fair value of notes payable was approximately $62,468,000 and $68,866,000 in 1994 and 1993, respectively. NOTE M--TRANSACTIONS WITH AFFILIATED COMPANIES Costs and expenses include net receipts from the parent Company and other subsidiaries of the parent Company. These receipts approximated $1,384,000 in 1994 and $2,136,000 in 1993 for administrative and other services. The note receivable from parent Company of $22,709,000 in 1994 and $36,459,000 in 1993 is a demand note, with interest of 5.87% at December 31, 1994 and 3.64% at December 31, 1993. NOTE N--POSTEMPLOYMENT BENEFIT PLANS In 1994 the Company adopted, Statement of Financial Accounting Standards No. 112 (SFAS 112) "Employers' Accounting for Postemployment Benefits". SFAS No. 112 requires, among other things, that the expected cost of benefits paid to former or inactive employees after employment but before retirement be recognized when they are earned or become payable when certain conditions are met. The adoption of this standard did not have a material effect on the Company's financial condition or its results of operations. -17- EX-99.II 42 EXHIBIT 99(II) 1 EXHIBIT 99 (ii) HAMILTON BEACH/PROCTOR-SILEX, INC., AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994 AND 1993, TOGETHER WITH AUDITORS' REPORT 2 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Hamilton Beach/Proctor-Silex, Inc.: We have audited the accompanying consolidated balance sheets of Hamilton Beach/Proctor-Silex, Inc. (a Delaware Corporation), and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of operations, changes in stockholder's equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hamilton Beach/Proctor-Silex, Inc., and subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. Arthur Andersen LLP Richmond, Virginia, January 27, 1995 3 THIS PAGE LEFT BLANK INTENTIONALLY 4 HAMILTON BEACH/PROCTOR-SILEX, INC., AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1994 AND 1993 (Dollars in Thousands) ASSETS
1994 1993 -------- -------- CURRENT ASSETS: Cash and cash equivalents $ 3,039 $ 2,673 Accounts receivable, net 76,279 79,247 Inventories, net 48,557 51,781 Deferred income taxes 1,492 1,578 Prepaid expenses and other 6,013 6,545 -------- -------- Total current assets 135,380 141,824 PROPERTY, PLANT AND EQUIPMENT, net 54,258 52,781 DEFERRED CHARGES AND INTANGIBLE ASSETS, net 96,244 102,599 DEFERRED INCOME TAXES 3,646 3,051 OTHER ASSETS 29 36 -------- -------- Total assets $289,557 $300,291 ======== ========
5 LIABILITIES AND STOCKHOLDER'S EQUITY
1994 1993 -------- -------- CURRENT LIABILITIES: Revolving credit agreements $ 12,640 $ 11,325 Current maturities of other long-term obligations 90 10,068 Accounts payable 32,447 35,117 Other current liabilities 30,417 27,272 -------- -------- Total current liabilities 75,594 83,782 -------- -------- OTHER LIABILITIES 12,998 12,179 -------- -------- LONG-TERM OBLIGATIONS: Revolving credit agreements 70,000 37,000 Notes payable - 28,145 Capital leases 596 625 -------- -------- Total long-term obligations 70,596 65,770 -------- -------- STOCKHOLDER'S EQUITY: Common stock and paid-in capital, 100 shares authorized, issued and outstanding at $0.01 par value 149,268 149,268 Retained deficit (14,568) (7,085) Minimum pension liability (2,357) (2,265) Cumulative translation adjustment (1,974) (1,358) -------- -------- Total stockholder's equity 130,369 138,560 -------- -------- Total liabilities and stockholder's equity $289,557 $300,291 ======== ========
The accompanying notes are an integral part of these consolidated balance sheets. 6 HAMILTON BEACH/PROCTOR-SILEX, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993 (Dollars in Thousands)
1994 1993 -------- -------- Net sales $377,517 $356,332 Cost of sales 317,509 311,736 -------- -------- Gross profit 60,008 44,596 Selling, administrative and general expenses 31,491 29,495 -------- -------- Operating profit 28,517 15,101 Other expense: Interest 6,681 6,570 Amortization 4,018 4,408 Other, net 328 4,102 -------- -------- Total other expense 11,027 15,080 -------- -------- Income before income taxes 17,490 21 Provision for income taxes 7,293 993 -------- -------- Net income (loss) $ 10,197 $ (972) ======== ========
The accompanying notes are an integral part of these consolidated statements. 7 HAMILTON BEACH/PROCTOR-SILEX, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993 (Dollars in Thousands, Other Than Par Value)
Common Common Stock Stock ------------------ and Minimum Cumulative Total Shares Par Paid-in Retained Pension Translation Stockholder's Outstanding Value Capital Deficit Liability Adjustment Equity ----------- ----- -------- -------- --------- ----------- ------------- BALANCES, December 31, 1992 100 $1 $149,268 $ (6,113) $ (437) $ (962) $141,756 Minimum pension liability - - - - (1,828) - (1,828) Net loss - - - (972) - - (972) Translation adjustment - - - - - (396) (396) --- -- -------- -------- ------- ------- -------- BALANCES, December 31, 1993 100 1 149,268 (7,085) (2,265) (1,358) 138,560 Minimum pension liability - - - - (92) - (92) Net income - - - 10,197 - - 10,197 Cash dividends - - - (15,000) - - (15,000) Translation adjustment - - - - - (616) (616) Indemnity settlement and other - - - (2,680) - - (2,680) --- -- -------- -------- ------- ------- -------- BALANCES, December 31, 1994 100 $1 $149,268 $(14,568) $(2,357) $(1,974) $130,369 === == ======== ======== ======= ======= ========
The accompanying notes are an integral part of these consolidated statements. 8 HAMILTON BEACH/PROCTOR-SILEX, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993 (Dollars in Thousands)
1994 1993 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $10,197 $ (972) Adjustments to reconcile net income (loss) to net cash provided by operating activities- Depreciation 11,494 10,857 Loss on disposal of fixed assets 187 274 Amortization 4,018 4,408 Deferred income taxes (509) (2,400) Changes in assets and liabilities- (Increase) decrease in: Accounts receivable, net 2,968 (9,803) Inventories, net 3,224 (337) Prepaid expenses and other 539 132 Increase (decrease) in: Accounts payable (2,670) 2,348 Other liabilities 3,891 (867) ------- ------- Net cash provided by operating activities 33,339 3,640 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (13,387) (12,240) Proceeds from sale of fixed assets 229 228 ------- ------- Net cash used in investing activities (13,158) (12,012) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Reduction of long-term obligations and revolving credit agreements (86,209) (39,842) Borrowings under long-term obligations and revolving credit agreements 82,372 43,404 Dividends paid (15,000) - Deferred financing costs paid (362) - ------- ------- Net cash (used in) provided by financing activities (19,199) 3,562 ------- ------- Effect of exchange rate changes on cash (616) (396) ------- ------- Net increase (decrease) in cash and cash equivalents 366 (5,206) CASH AND CASH EQUIVALENTS, beginning of year 2,673 7,879 ------- ------- CASH AND CASH EQUIVALENTS, end of year $ 3,039 $ 2,673 ======= =======
The accompanying notes are an integral part of these consolidated statements. 9 HAMILTON BEACH/PROCTOR-SILEX, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993 (Dollars in Thousands) 1. ORGANIZATION AND BUSINESS: Hamilton Beach/Proctor-Silex, Inc. (the "Company"), designs, manufactures and sells small consumer electric appliances. The Company is a wholly owned subsidiary of HB/PS Holdings, Inc. HB/PS Holdings, Inc. is owned 80 percent by NACCO Industries, Inc. ("NACCO"), and 20 percent by Glen Dimplex. 2. SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Cash and Cash Equivalents Cash and cash equivalents include cash in banks and highly liquid investments with initial maturities of three months or less. Inventories, net Inventories are stated at the lower of cost or market. Cost has been determined by the last-in, first-out ("LIFO") method for inventories accounted for in the United States and under the first-in, first-out method for all other inventories. Property, Plant and Equipment Property, plant and equipment is stated at cost. All property, plant and equipment is depreciated on a straight-line basis over estimated useful lives of 40 years for buildings and 4 to 6 years for machinery and equipment. Assets recorded under capital leases and leasehold improvements are amortized over the lesser of their estimated useful lives or remaining lease terms on a straight-line basis. 10 - 2 - Goodwill Goodwill is being amortized on a straight-line basis over 40 years. The Company continually evaluates whether events and circumstances have occurred subsequent to its acquisitions that indicate the remaining estimated useful life of goodwill may warrant revision or that the remaining balance of goodwill may not be recoverable. When factors indicate that goodwill should be evaluated for possible impairment, the Company uses an estimate of the Company's undiscounted net income over the remaining life of the goodwill in measuring whether the goodwill is recoverable. Product Development Costs Costs associated with the development of new products and changes to existing products are charged to operations as incurred. These costs amounted to $2,742 and $2,706 for 1994 and 1993, respectively. Foreign Currency Translation Assets and liabilities of the Company's foreign subsidiaries are translated at current exchange rates, while income and expense items are translated at average rates for the period. Translation gains and losses are reported as a component of stockholder's equity. Product Liability The Company is insured for product liability claims for amounts in excess of established self-insured retention limits. Costs estimated to be incurred with respect to product liability claims are accrued based on experience factors. Self-Insurance The Company maintains a self-insurance program for health claims and a high deductible insurance program for workers' compensation claims of all covered employees. The Company accrues estimated future costs that will be incurred for existing employee claims. Financial Instruments and Derivative Financial Instruments The fair value of financial instruments have been determined through information obtained from quoted market sources and management estimates. The Company does not hold or issue financial instruments or derivative financial instruments for trading purposes. The Company enters into forward foreign exchange contracts in order to hedge certain foreign currency commitments. Gains and losses from these contracts are deferred and recognized as part of the cost of the underlying transaction being hedged. 11 - 3 - The Company also enters into interest rate swap agreements with various terms and maturity dates. The differential between the floating interest rate and the fixed interest rate which is to be paid or received is recognized in interest expense on a current basis. Reclassifications Certain amounts in the 1993 financial statements have been reclassified to conform to the current year's presentation. 3. MERGER: In 1990, Hamilton Beach, Inc., and Proctor-Silex, Inc., merged to form Hamilton Beach/Proctor-Silex, Inc. Certain of the assets acquired and liabilities assumed were subject to indemnification under the merger agreement. In March 1994, all outstanding claims for indemnification under the merger agreement were resolved. The resolution of these matters resulted in a reduction of goodwill and retained earnings of $2,676. 4. ACCOUNTS RECEIVABLE, NET: At December 31, accounts receivable consist of the following.
1994 1993 ------- ------- Accounts receivable $83,642 $85,451 Less- Allowance for returns, discounts and adjustments (6,168) (5,397) Allowance for doubtful accounts (1,195) (807) ------- ------- Accounts receivable, net $76,279 $79,247 ======= =======
5. INVENTORIES, NET: At December 31, inventories consist of the following.
1994 1993 ------- ------- Raw materials $12,261 $11,850 Work in process 3,657 3,462 Finished goods 32,748 36,029 ------- ------- 48,666 51,341 LIFO allowance (109) 440 ------- ------- Inventories, net $48,557 $51,781 ======= =======
12 - 4 - As a result of changes in prices and liquidation of certain LIFO inventories, operating profit decreased $(549) for 1994 and increased $324 for 1993. The cost of inventories stated under the LIFO method was 92 and 90 percent of the value of total inventories at December 31, 1994 and 1993, respectively. 6. PROPERTY, PLANT AND EQUIPMENT, NET: At December 31, property, plant and equipment (including capital leases) includes the following.
1994 1993 ------- ------- Land, buildings and improvements $16,727 $16,071 Machinery and equipment 83,910 76,982 Construction work in process 5,652 1,756 ------- ------- 106,289 94,809 Less- Accumulated depreciation and amortization (52,031) (42,028) ------- ------- Property, plant and equipment, net $54,258 $52,781 ======= =======
7. DEFERRED CHARGES AND INTANGIBLE ASSETS, NET: Goodwill amounted to $94,651 at December 31, 1994, net of accumulated amortization, and is being amortized over 40 years on a straight-line basis. Goodwill amortization expense amounted to $2,756 and $2,827 for 1994 and 1993, respectively. Patents, trademarks, and other at December 31, 1994, amounted to $232, net of accumulated amortization, and are being amortized on a straight-line basis over their remaining lives. Total amortization for 1994 and 1993, amounted to $437 annually. Deferred financing costs at December 31, 1994, amounted to $1,361, net of accumulated amortization, and are being amortized on a straight- line basis over the life of the amended and restated credit agreement (see Note 8). Amortization expense related to deferred financing costs for 1994 and 1993, was $825 and $1,144, respectively. 8. REVOLVING CREDIT AGREEMENTS AND NOTES PAYABLE: The Company has a bank credit facility (the "Agreement"),which includes a revolving credit line and letter-of-credit facility of up to $135,000 through May 1997. In May 1994, the Company amended and restated the Agreement providing more favorable terms and conditions which included, among other things, an extension of the maturity date to May 1997 (and upon mutual consent, extending the maturity date annually for an additional year), elimination of the term note, elimination and modification of covenants, 13 - 5 - provision for the payment of dividends, and reduction in borrowing costs. As amended, the Agreement allows borrowings to be made at either, (i) lender's prime rate plus 0.25 percent or (ii) LIBOR plus 1.25 percent. Commitment fees are 0.50 percent of the unused portion of the revolving credit line. The borrowing margins and commitment fee rates are subject to reductions based upon the Company achieving certain predetermined interest coverage ratios. During 1994, the Company received an average reduction of 0.47 percent in the borrowing rate and 0.11 percent in the commitment fee rate. The Agreement includes certain covenants requiring, among other things, maintenance of certain levels of (i) net worth, (ii) debt to total capital, and (iii) interest coverage. The Agreement is secured by substantially all of the Company's assets. At December 31, 1994, the Company was in compliance with all financial covenants of the Agreement. The Company also has in place a master borrowing note, which is secured through and subject to the Agreement and which allows for borrowings of up to $5,000 on a daily basis. During 1994 and 1993, total average borrowings outstanding under the Agreement and master borrowing note were $93,220 and $56,620 at a weighted-average interest rate of 6.31 percent and 5.84 percent, respectively. In addition, at December 31, 1994 and 1993, outstanding obligations under letters of credit were $3,167 and $5,450, respectively. At the option of Housewares Holding Company ("Housewares"), a wholly owned subsidiary of NACCO, the Company may, subject to certain terms and conditions of the Agreement, borrow up to $35,000 from Housewares. No borrowings were outstanding during 1994 or 1993. 9. FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS: Interest Rate Derivatives The primary objective of interest rate risk management is to minimize the impact of interest rate fluctuations on the Company's cash flow and financial results. The Company has entered into certain interest rate swap agreements to swap floating rate for fixed rate interest payments. At December 31, 1994, the notional amount on interest rate swap agreements expiring in June 1997 and March 1999 was $10 million and $50 million, respectively; with the average variable rate received and the average fixed rate paid during 1994 being 6.5 percent and 5.9 percent, respectively. At December 31, 1994, the aggregate fair market value of the Company's interest rate swap agreements was $4,481, based on quoted market prices received from the Company's swap agreement counter parties. 14 - 6 - Foreign Currency Derivatives The Company enters into forward foreign exchange contracts for purposes of hedging its exposure to foreign currency exchange rate fluctuations. These contracts hedge primarily firm commitments, and relate to the Canadian dollar and the Mexican peso. At December 31, 1994, the Company had foreign currency contracts totaling $1,000. The amount of deferred loss associated with these contracts was not material. All interest rate and foreign currency derivative agreements are with major commercial banks; therefore, the risk of credit loss from nonperformance by the banks is minimal. The Company evaluates its exposure to credit loss on an ongoing basis. 10. LEASES: The Company leases certain facilities under noncancelable leases expiring at various dates through 2021. Plant and equipment under capital leases has been recorded as property, plant and equipment in the consolidated balance sheet, and the related amortization is included with depreciation expense. At December 31, property, plant and equipment includes the following amounts relating to capital leases.
1994 1993 ------ ------ Plant and equipment $9,261 $9,199 Less- Accumulated amortization (3,299) (2,787) ------ ------ $5,962 $6,412 ====== ======
Future minimum lease payments for capital leases as of December 31, 1994, are as follows: 1995 - $149; 1996 - $137; 1997 - $103; 1998 - $77; 1999 - $72; and thereafter - $832, and have a net present value of $686. Future minimum lease payments for operating leases are as follows: 1995 - $3,502; 1996 - $2,649; 1997 - $1,914; 1998 - $1,181; 1999 - $568; and thereafter - $1,377. Rental expenses for operating leases amounted to $4,891 and $4,526 for 1994 and 1993, respectively. 11. INCOME TAXES: The Company is included in the consolidated Federal income tax return filed by NACCO. The Company's tax sharing agreement with NACCO provides that Federal income taxes are computed by the Company on a separate return basis, except that net operating loss and tax credit carryovers which benefit the consolidated tax return are advanced to the Company and are repaid as utilized on a separate return basis. To the extent that these loss carryovers are not used on a separate return basis, the Company is required, under conditions pursuant to the tax sharing agreement, to refund to NACCO the balance of carryovers advanced and not used by the Company. 15 - 7 - The provision for income taxes consists of the following amounts.
1994 1993 ------ ------ Current: Federal $5,915 $ 793 State 348 67 Foreign 1,287 1,034 ------ ------ Total current provision 7,550 1,894 ------ ------ Deferred: Federal (840) (912) State 371 (27) Foreign 212 38 ------ ------ Total deferred benefit (257) (901) ------ ------ Total provision for income taxes $7,293 $ 993 ====== ======
A reconciliation of Federal statutory and effective income tax follows.
1994 1993 ------ ------ Statutory taxes at 35% $6,122 $ 8 Effect of: State taxes 467 34 Foreign taxes 368 322 Acquisition accounting adjustments 965 989 Change in statutory rates - (200) General business credits (240) (20) Other (389) (140) ------ ------ Provision for income taxes $7,293 $ 993 ====== ====== Effective rate 41.7% * ====== ======
* - not meaningful 16 - 8 - A summary of the deferred tax assets and (liabilities) which comprise the net deferred tax balances in the accompanying consolidated balance sheets resulting from differences in the book and tax bases of assets and liabilities are as follows.
1994 1993 ------- ------- Deferred tax liabilities: Advertising, sales, and inventory related reserves $(3,399) $(3,433) Accelerated depreciation (5,668) (6,763) ------- ------- Total deferred tax liabilities (9,067) (10,196) ------- ------- Deferred tax assets: Employee benefits 3,698 3,270 Plant restructuring reserve 530 530 Environmental reserve 2,441 2,467 Product liability reserve 1,495 1,488 Net operating loss and tax credit carryovers 4,639 5,840 Other 1,402 1,230 ------- ------- Total deferred tax assets 14,205 14,825 ------- ------- Net deferred tax assets $ 5,138 $ 4,629 ======= =======
The Company fully expects to realize its deferred tax assets. The Company has no valuation allowances as of December 31, 1994 and 1993. As of December 31, 1994, the Company had state net operating loss carryovers available for use on future returns of approximately $6,100. The Company also had Federal net operating loss carryovers of approximately $11,200 at December 31, 1994, related to Hamilton Beach, Inc. For Federal tax purposes, the utilization of acquired net operating loss carryovers is limited to $1,953 on an annual basis, with any unused limitation available for carryover to subsequent years. The Company utilized $1,953 of the Federal net operating loss carryovers related to Hamilton Beach, Inc., in 1994. Federal carryovers are scheduled to expire in the years 2000 to 2004, and state carryovers will expire in the years 1995 to 2004. No provision has been made for Federal income taxes on undistributed earnings of foreign subsidiaries of approximately $11,848 as of December 31 1994, as any future remittances are expected to be substantially tax free. 17 - 9 - 12. RETIREMENT BENEFIT PLANS: The Company sponsors a defined benefit plan, the Hamilton Beach/Proctor-Silex, Inc., Profit Sharing Retirement Plan (the "Plan"). All full-time hourly and salaried U.S. employees are eligible to participate in the Plan. The Plan provides that participants accrue benefits annually based on age and annual earnings. Upon retirement, participants will receive their account balance under the Plan plus all frozen accrued benefits earned under previous benefit plans. Benefits will be paid upon retirement at age 65 or at age 55 if the employee has at least ten years of service. Participants become fully vested after five years of service. The Company's funding policy is to contribute each year an amount which satisfies the minimum required contribution but does not exceed the maximum tax deductible contribution. Also, the Company may make additional contributions to the Plan, dependent upon the Company achieving certain profit and performance objectives. In 1994, the Company accrued $293, representing the estimated amount of profit sharing to be contributed to the Plan in 1995. The Company contributed $1,234 and $1,043 to the Plan for the plan years ended December 31, 1994 and 1993, respectively. Assets held by the Plan consist mainly of common stocks, corporate and government bonds, and cash and cash equivalents. The details of the components of net pension expense for the years ended December 31, 1994 and 1993, are as follows.
1994 1993 ------ ------ Service cost $1,249 $1,167 Interest cost on projected benefit obligation 2,366 2,208 Actual return on assets 340 (1,730) Net amortization and deferral (2,481) (500) ------ ------ Net pension expense $1,474 $1,145 ====== ======
Actuarial factors used in accounting for the Plan as of December 31, 1994 and 1993, are as follows.
1994 1993 ------ ------ Weighted-average discount rate 8.50% 7.50% Long-term rate of return on assets 9.00% 9.00% Rate of increase in compensation levels: Salaried 5.50% 4.75% Hourly 5.00% 4.00%
18 - 10 - The funded status of the Plan and amounts recognized in the Company's consolidated balance sheets as of December 31, 1994 and 1993, are as follows.
1994 1993 ------- ------- Actuarial present value of benefit obligation: Vested accumulated benefit obligation $27,768 $28,175 Nonvested accumulated benefit obligation 1,019 1,604 ------- ------- Total accumulated benefit obligation 28,787 29,779 Value of future salary projections 758 437 ------- ------- Total projected benefit obligation 29,545 30,216 Fair value of plan assets 24,162 25,570 ------- ------- Projected benefit obligation in excess of plan assets (5,383) (4,646) Unrecognized net transition asset (6) (8) Unrecognized net loss 4,383 3,916 Unrecognized prior service cost 39 66 Unrecognized basis change (20) (23) Additional minimum liability (3,846) (3,719) ------- ------- Pension liability recognized in balance sheet at December 31, 1994 and 1993 $(4,833) $(4,414) ======= =======
Statement of Financial Accounting Standards No. 87 "Employers' Accounting for Pensions" ("SFAS 87"), requires the Company to recognize a minimum pension liability equal to the unfunded accumulated benefit obligation ("ABO"). At December 31, 1994 and 1993, the cumulative unfunded ABO was $4,833 and $4,414, respectively. The Company recorded an adjustment which recognized an additional minimum liability equal to the unfunded ABO. In accordance with SFAS 87, the portion of the unfunded ABO in excess of unrecognized prior service cost was charged directly to stockholder's equity and is separately presented in the consolidated statements of changes in stockholder's equity. The Company also has a defined contribution retirement savings plan (401(k)) covering substantially all of its full-time, United States employees, which is limited to employee contributions only. The Company provides retirement health care for all retirees who retired prior to October 1, 1992. In addition, the Company provides life insurance benefits to all retirees who retired prior to October 1, 1992, assuming they reached certain age and service requirements while working for the Company. 19 - 11 - 13. POSTEMPLOYMENT BENEFIT PLANS: Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits," issued in November 1992, requires that benefits paid to former or inactive employees after employment but before retirement be recognized when they are earned or become payable when certain conditions are met rather than recognizing these costs when they are paid. Adoption of this standard in 1994 did not have a material impact on the Company's financial position or results of operations. 14. RELATED-PARTY TRANSACTIONS: The Company sells merchandise to The Kitchen Collection, Inc. ("Kitchen Collection"), a wholly owned subsidiary of Housewares. The Company's sales to Kitchen Collection were $5,907 and $5,223, respectively, for 1994 and 1993. Accounts receivable due from Kitchen Collection at December 31, 1994 and 1993, amounted to $1,151 and $1,014, respectively, and are included in accounts receivable. NACCO incurs certain administrative and other expenses directly related to the operation of the Company. These expenses are reimbursed to NACCO. The Company expensed and paid $494 and $763 of these administrative expenses to NACCO in 1994 and 1993, respectively. The related payable to NACCO was $61 and $82 at December 31, 1994 and 1993, respectively. 15. CONTINGENCIES: In 1992, a former distributor for the Company filed suit seeking to recover damages for alleged breach of contract by the Company. In the fourth quarter of 1994, a judgment was entered against the Company. The Company intends to vigorously defend itself in this action and is moving to either have the judgment disregarded, arranging for a new trial or appealing the judgment. The ultimate outcome of the litigation is unknown, accordingly, no provision for any liability that may result has been made in the accompanying financial statements. In July 1992, an action alleging patent infringement was commenced against the Company. In this action, the plaintiff alleged that the Company had infringed on a U.S. patent related to an automatic shut-off feature incorporated into certain irons manufactured by the Company. In August 1993, the Company reached an agreement settling this action. The settlement amount was accrued and recorded in 1993 and is reflected as other expense in the consolidated statements of operations. 20 - 12 - Various legal proceedings and claims have been or may be asserted against the Company relating to the conduct of its business, including product liability and environmental claims. These proceedings and claims are incidental to the Company's ordinary course of business. Management believes that it has meritorious defenses and will vigorously defend itself in these actions. Any costs that management estimates may be paid as a result of these proceedings or claims are accrued when the liability is considered probable and the amount can be reasonably estimated. Although the ultimate disposition of these proceedings and claims is not presently determinable, management believes, after consultation with its General Counsel, the likelihood that material costs will be incurred in excess of accruals already recognized is remote. 16. INDUSTRY SEGMENT AND FOREIGN OPERATIONS: The Company designs, manufactures and sells small consumer electric appliances. Net sales to one major customer totaled 18.1 percent in 1994 and 14.3 percent in 1993. The following table presents sales, operating profit and other financial information by geographic area for 1994 and 1993.
United States Canada Eliminations Consolidated -------- ------- ------------ ------------ 1994: Net sales $334,496 $43,021 $ - $377,517 Sales and transfers between geographic areas 35,006 - (35,006) - Operating profit 26,314 2,551 (348) 28,517 Depreciation 11,442 52 - 11,494 Identifiable assets 276,964 14,124 (1,531) 289,557 Capital expenditures 13,367 20 - 13,387 1993: Net sales $315,631 $40,701 $ - $356,332 Sales and transfers between geographic areas 36,228 - (36,228) - Operating profit 13,165 2,294 (358) 15,101 Depreciation 10,770 87 - 10,857 Identifiable assets 286,705 15,085 (1,499) 300,291 Capital expenditures 12,224 16 - 12,240
21 - 13 - The Company has operations in the United States, Mexico and Canada. Products are transferred between these geographic areas on a basis intended to reflect as nearly as possible the market value of the products. Identifiable assets are those assets identified with the operations in each geographic area at year-end. All deferred charges and intangible assets are attributed to the United States. Eliminations include amounts for intercompany sales, intercompany profits in inventory, and intercompany investments. 17. SUPPLEMENTAL CASH FLOW INFORMATION: Cash payments during 1994 and 1993, included interest of $6,523 and $6,865 and income taxes of $2,138 and $2,360, respectively. EX-99.III 43 EXHIBIT 99(III) 1 EXHIBIT 99 (iii) THE KITCHEN COLLECTION, INC. FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994 AND 1993 TOGETHER WITH AUDITORS' REPORT 2 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Stockholder of The Kitchen Collection, Inc.: We have audited the accompanying balance sheets of THE KITCHEN COLLECTION, INC. (a Delaware corporation) as of December 31, 1994 and 1993, and the related statements of income, changes in stockholder's equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Kitchen Collection, Inc. as of December 31, 1994 and 1993, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Arthur Andersen LLP Columbus, Ohio, January 26, 1995. 3 THE KITCHEN COLLECTION, INC. BALANCE SHEETS AS OF DECEMBER 31, 1994 AND 1993
ASSETS 1994 1993 ------ ----------- ----------- Current assets: Cash $ 170,305 $ 10,096 Miscellaneous receivables 227,706 78,176 Accounts receivable - affiliate 3,125,000 4,000,000 Inventories 14,389,205 11,358,350 Prepaid expenses and other 1,434,092 1,207,442 ----------- ----------- Total current assets 19,346,308 16,654,064 ----------- ----------- Property, plant and equipment: Land 61,300 61,300 Building and leasehold improvements 816,693 754,839 Furniture and fixtures 5,170,775 4,361,992 ----------- ----------- 6,048,768 5,178,131 Less: Accumulated depreciation and amortization (3,330,760) (2,660,450) ----------- ----------- Property, plant and equipment, net 2,718,008 2,517,681 Goodwill, net of accumulated amortization 3,846,648 3,961,760 ----------- ----------- Total assets $25,910,964 $23,133,505 =========== =========== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Current maturities of long-term debt $ - $ 500,000 Accounts payable and miscellaneous accrued liabilities 7,565,527 5,176,386 Accounts payable - affiliates 207,221 429,621 Income taxes payable to affiliate 1,077,360 871,540 Accrued salaries and benefits 1,148,298 918,334 Other accrued taxes 771,570 712,064 ----------- ----------- Total current liabilities 10,769,976 8,607,945 Long-term debt, less current maturities 5,000,000 1,900,000 ----------- ----------- Total liabilities 15,769,976 10,507,945 ----------- ----------- Stockholder's equity: Common stock; $.01 par value; 100,000 shares authorized; 10,500 shares issued and outstanding 105 105 Additional paid-in capital 4,999,890 4,999,890 Retained earnings 5,140,993 7,625,565 ----------- ----------- Total stockholder's equity 10,140,988 12,625,560 ----------- ----------- Total liabilities and stockholder's equity $25,910,964 $23,133,505 =========== ===========
The accompanying notes to financial statements are an integral part of these balance sheets. 4 THE KITCHEN COLLECTION, INC. STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
1994 1993 ----------- ----------- Net sales $63,870,305 $53,748,681 Cost of sales 36,253,909 30,618,244 ----------- ----------- Gross margin 27,616,396 23,130,437 Selling, general, administrative and other expenses 22,091,402 18,284,419 ----------- ----------- Operating income 5,524,994 4,846,018 Interest expense 204,623 102,979 Amortization expense 125,943 115,112 ----------- ----------- Income before provision for income taxes 5,194,428 4,627,927 Provision for income taxes 2,079,000 1,879,000 ----------- ----------- Net income $ 3,115,428 $ 2,748,927 =========== ===========
The accompanying notes to financial statements are an integral part of these statements. 5 THE KITCHEN COLLECTION, INC. STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
Additional Total Number of Common Paid-in Retained Stockholder's Shares Stock Capital Earnings Equity ------- ------ ----------- ---------- ------------- Balance, December 31, 1992, as restated 10,500 $ 105 $ 4,999,890 $6,626,638 $11,626,633 Net income - - - 2,748,927 2,748,927 Dividend to stockholder - - - (1,750,000) (1,750,000) ------ ----- ----------- ---------- ----------- Balance, December 31, 1993 10,500 105 4,999,890 7,625,565 12,625,560 Net income - - - 3,115,428 3,115,428 Dividend to stockholder - - - (5,600,000) (5,600,000) ------ ----- ----------- ---------- ----------- Balance, December 31, 1994 10,500 $ 105 $ 4,999,890 $5,140,993 $10,140,988 ====== ===== =========== ========== ===========
The accompanying notes to financial statements are an integral part of these statements. 6 THE KITCHEN COLLECTION, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
1994 1993 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $3,115,428 $2,748,927 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 899,510 835,356 Loss on the disposal of assets 12,249 8,063 Increase in miscellaneous receivables (149,530) (25,747) Increase in inventories (3,030,855) (2,887,225) Increase in prepaid expenses and other (226,650) (326,201) Increase in accounts payable and miscellaneous accrued liabilities 2,389,141 2,210,827 Increase (decrease) in accounts payable - affiliates (222,400) 210,308 Increase in income taxes payable to affiliate 205,820 167,529 Increase in accrued salaries and benefits 229,964 75,908 Increase in other accrued taxes other than income 59,506 116,372 ---------- ---------- Net cash provided by operating activities 3,282,183 3,134,117 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property, plant and equipment (1,016,915) (1,049,832) Proceeds from disposal of assets 19,941 9,127 ---------- ---------- Net cash used in investing activities (996,974) (1,040,705) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long-term debt (2,400,000) (500,000) Borrowings of long-term debt 5,000,000 - Dividend to stockholder (5,600,000) (1,750,000) Net (borrowings) repayments on loan to affiliate 875,000 (4,000,000) ---------- ---------- Net cash used in financing activities (2,125,000) (6,250,000) ---------- ---------- NET INCREASE (DECREASE) IN CASH 160,209 (4,156,588) CASH, beginning of the year 10,096 4,166,684 ---------- ---------- CASH, end of the year $ 170,305 $ 10,096 ========== ========== Supplemental Disclosure of Cash Flow Information: Cash paid during the year for: Interest $ 210,593 $ 138,441 Income taxes $1,969,894 $1,807,711
The accompanying notes to financial statements are an integral part of these statements. 7 THE KITCHEN COLLECTION, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 (1) ORGANIZATION The Kitchen Collection, Inc. (the Company) is a specialty retailer of kitchenware, tableware, small electrical appliances and related accessories. The Company operates a chain of 119 retail and factory outlet stores and is a wholly-owned subsidiary of NACCO Industries, Inc. (NII). (2) SIGNIFICANT ACCOUNTING POLICIES Inventories Inventories are stated at the lower of cost or market as determined by the retail inventory method. Building, Leasehold Improvements, Furniture and Fixtures Building, leasehold improvements, furniture and fixtures are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred. For financial reporting purposes, depreciation and amortization is provided using the straight-line method based upon the estimated useful lives of the related assets, as follows: Building and leasehold improvements 5-20 years Furniture and fixtures 5 years
Goodwill Goodwill associated with the purchase of the Company by NII has been capitalized and is being amortized over forty years on a straight-line basis. Accumulated amortization was $757,822 and $642,710 at December 31, 1994 and 1993, respectively, with related amortization expense of $115,112 for the years ended December 31, 1994 and 1993, respectively. 8 - 2 - Income Taxes Deferred tax assets or liabilities are based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. Deferred income tax expense or benefit is based on the changes in the assets or liabilities from period to period. Refer to Note 6 "Income Taxes" for additional information. Fair Value of Financial Instruments The fair values of financial instruments have been determined through information obtained from quoted market sources and management estimates. The fair value of the financial instruments approximated their carrying values at December 31, 1994. The Company does not hold or issue financial instruments or derivative financial instruments for trading purposes. The Company enters into interest rate swap agreements with terms that run concurrent with the related debt. The differential between the floating interest rate and the fixed interest rate, which is to be paid or received, is recognized in interest expense as interest rates change over the life of the agreement. (3) LINE-OF-CREDIT AGREEMENT The Company has a line-of-credit agreement with a commercial bank for $2,500,000. Upon renewal of the line on May 31, 1994, the rate was reduced from the bank's prime rate or 1.50% over LIBOR to the bank's prime rate or LIBOR plus a base rate margin of .75% to 1.75%, determined by certain performance measures. The line-of-credit is unsecured. The Company had no funds drawn against the available balance at December 31, 1994 or 1993. The credit agreement expires on May 31, 1995. The Company has annually renewed this agreement in the past and expects to again renew it under similar arrangements prior to its expiration. 9 - 3 - (4) LONG-TERM DEBT Long-term debt consists of the following, as of December 31:
1994 1993 ---------- ---------- Note payable to bank at 7.56% (LIBOR plus 0.75%) at December 31, 1994 and 5.5625% (LIBOR plus 1.50%) at December 31, 1993 $5,000,000 $2,400,000 Less: current maturities - (500,000) ---------- ---------- $5,000,000 $1,900,000 ========== ==========
On May 10, 1994, the Company entered a term note agreement with a commercial bank for $5,000,000, the proceeds from which were used to retire the previously existing note. Interest is payable quarterly at 6.81%, plus a base rate margin between .75% and 1.75%, determined by certain performance measures. The note is unsecured, and is payable in two annual installments beginning January 15, 1999. The note contains restrictive covenants regarding maintenance of minimum net worth, interest coverage and leverage. The Company was in compliance with all covenants as of December 31, 1994 and 1993. Aggregate maturities of the note are as follows: 1995 $ - 1996 - 1997 - 1998 - 1999 2,500,000 Thereafter 2,500,000 ---------- $5,000,000 ==========
10 - 4 - (5) INTEREST RATE RISK MANAGEMENT The Company entered into an interest rate swap agreement with a six year term during 1994. The use of this agreement allowed the Company to enter into a long-term credit agreement with a performance based, floating rate of interest and then swap it for a fixed rate as opposed to entering into a higher cost fixed-rate credit agreement. This agreement is with a major commercial bank; therefore, the risk of credit loss from nonperformance by the bank is minimal. The following summarizes the notional amount and related rates on this interest rate swap agreement at December 31, 1994: Notional amount $5,000,000 Average variable rate received 5.81% Average fixed rate paid 7.56%
(6) INCOME TAXES The provision for income taxes consists of the following:
1994 1993 ---------- ---------- Currently payable: Federal $1,779,000 $1,538,000 State and local 383,000 347,000 ---------- ---------- 2,162,000 1,885,000 ---------- ---------- Deferred: Federal (78,000) (1,000) State and local (5,000) (5,000) ---------- ---------- (83,000) (6,000) ---------- ---------- Total provision $2,079,000 $1,879,000 ========== ==========
The components of the net deferred income tax benefit are as follows:
1994 1993 ----------- --------- Store closing reserve $ (14,000) $ 1,600 Uniform capitalization of inventory (54,000) (26,000) Tax over book depreciation 49,000 4,700 Vacation pay (14,000) (14,700) Medical cost (59,000) (10,000) State income taxes 18,000 19,300 Other (9,000) 19,100 ----------- -------- Total deferred income tax benefit, net $ (83,000) $ (6,000) =========== ========
11 -5- Reconciliation of the Federal statutory and effective income tax rates is as follows:
1994 1993 ---- ---- Federal statutory rate 35.0% 35.0% Amortization of goodwill 0.8 0.8 State and local income tax, net of Federal income 4.8 4.8 tax effect Other (0.6) - ---- ---- Effective tax rate 40.0% 40.6% ==== ====
A summary of the components of the net deferred tax asset balances, included in the accompanying balance sheet in prepaid expenses and other, are as follows:
1994 1993 --------- --------- Inventories $ 188,000 $ 158,000 Accrued expenses and reserves 149,000 35,000 State income taxes 1,000 21,000 Depreciation (214,000) (173,000) --------- --------- Deferred tax asset, net $ 124,000 $ 41,000 ========= =========
(7) RELATED PARTY TRANSACTIONS Net purchases of inventories from HBPS during the years ended December 31, 1994 and 1993 were $6,083,151 and $5,005,846, respectively. HBPS is 80% owned by NII. At December 31, 1994 and 1993, the Company owed HBPS $196,421 and $408,621, respectively, for these purchases. The Company incurred $19,600 and $12,000 for miscellaneous services provided by NII for the years ended December 31, 1994 and 1993, respectively. The Company had payables for such services at December 31, 1994 and 1993 of $11,828 and $21,000, respectively. The Company paid dividends to NII during 1994 and 1993 of $5,600,000 and $1,750,000, respectively. The Company has an agreement with NII to loan NII up to $15,000,000. Outstanding amounts are collectible on demand. Interest is payable quarterly at the Applicable Federal Rate. The Company has receivables due from NII at December 31, 1994 and 1993 of $3,125,000 and $4,000,000, 12 -6- respectively. The Company recorded related interest income of $71,036 during 1994 and $11,000 during 1993. The Company has a Tax Sharing Agreement with NII as NII and the Company are included in the same consolidated group for Federal tax purposes. The Company files separate tax returns for state and local tax purposes. The Company has taxes payable to NII at December 31, 1994 and 1993 of $1,077,360 and $871,540, respectively. (8) LEASES The Company leases retail stores, warehouse space and equipment under noncancellable operating leases which expire at various dates through 2003. Future minimum lease payments are as follows: 1995 $ 5,047,000 1996 4,989,000 1997 4,409,000 1998 3,726,000 1999 2,754,000 Thereafter 3,163,000 ----------- Total minimum payments $24,088,000 ===========
The Company has leases with percentage of sales clauses in all but two of its store locations. Percentage of sales rent expense amounted to $443,072 for the year ended December 31, 1994 and $395,960 for the year ended December 31, 1993. The Company's total rent expense for the years ended December 31, 1994 and 1993 was $6,429,710 and $5,191,258, respectively. (9) RETIREMENT INCOME PLAN In 1987, the Company established a defined contribution savings plan for employees who have completed one year of service and are at least 21 years of age. Employees can elect to defer and contribute a portion of their salary, following the guidelines established in the plan. The Company makes matching contributions of 50% of the employee's contribution. In addition, the Company can make an annual profit sharing contribution at its discretion. The matching contribution, limited to 3% of the employee's compensation, and the Company's profit sharing contribution amounted to $319,958 and $291,205 for the years ended December 31, 1994 and 1993, respectively. (10) SUBSEQUENT EVENTS Through January 26, 1995, the Company made additional advances to NII of $1,060,000 and received payments of $3,420,000, for a net receivable balance of $765,000 at January 26, 1995.