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 through 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.
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.
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.
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
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.
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,
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.
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 through 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:
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.
The location, customer, sales tonnage and contract expiration date for the mines operated by North American Coal in 1994 were as follows:
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
"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.
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.
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.
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.
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.
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
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".
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.
Item 3.
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.
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.
PART II -------
Item 5.
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:
At December 31, 1994, there were approximately 900 Class A common stockholders of record and 600 Class B common stockholders of record.
Item 6.
Item 6. Selected Financial Data --------------------------------
NACCO Industries, Inc. and Subsidiaries
Item 7.
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 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 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 of this annual report.
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:
Revenues, income before taxes, provision for taxes and net income were as follows for the year ended December 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)
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:
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.
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:
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:
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.
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.
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:
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:
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.
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:
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.
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:
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.
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.
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.
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:
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 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:
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:
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.
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:
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.
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:
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 COMPARED WITH 1993
The following schedule details the components of the changes in revenues, operating profit and net income for 1994 compared with 1993:
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.
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:
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.
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:
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:
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.
1993 COMPARED WITH 1992
The following schedule details the components of the changes in operating loss and net loss for 1993 compared with 1992:
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.
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.
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:
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.
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:
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.
Item 8.
Item 8. Financial Statements and Supplementary Data --------------------------------------------------------
The information required by this Item 8 is set forth at pages through of the Financial Statements and Supplementary Data contained in Part IV hereof.
Item 9.
Item 9. Changes in and Disagreements with Accountants on -------------------------------------------------------- Accounting and Financial Disclosure -----------------------------------
Not Applicable.
PART III --------
Item 10.
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.
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.
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.
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.
PART IV -------
Item 14.
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 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 of this Annual Report on Form 10-K.
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
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.
*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
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
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.
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
CONSOLIDATED BALANCE SHEETS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
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.
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.
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.
NOTE D--INVENTORIES
Inventories are summarized as follows:
The cost of manufacturing inventories has been determined by the LIFO method for 69% of such inventories at December 31, 1994 and 1993.
NOTE E--PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment includes the following:
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.
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:
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:
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.
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:
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:
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:
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:
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.
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:
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:
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.
NOTE I--LEASE COMMITMENTS
Future minimum operating lease payments, excluding project mining subsidiaries, at December 31, 1994, are as follows:
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:
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:
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.
NOTE M--OTHER - NET
Items included in other-net for the year ended December 31 are as follows:
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:
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:
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:
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:
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.
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.
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:
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.
NOTE P--BUSINESS SEGMENTS--Continued
NOTE P--BUSINESS SEGMENTS--Continued
NOTE P--BUSINESS SEGMENTS--Continued
DATA BY GEOGRAPHIC AREA
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.
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:
NOTE Q--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)--Continued
NOTE R--PARENT COMPANY CONDENSED BALANCE SHEETS
The condensed balance sheets of NACCO, the parent company, at December 31 are as follows:
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.
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.
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.
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 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 *(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 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 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 *(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 (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 (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 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 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 (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 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 *(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 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 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 *(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 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 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 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 *(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 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 (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 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