Hamilton Beach 2007 Annual Report Download - page 39

[35]
2007 Results
North American Coal (“NACoal”) had a very good year
in 2007, despite slightly lower lignite coal and limerock
deliveries than in 2006. NACoal’s six lignite coal mining
operations delivered 33.7 million tons of lignite coal in 2007
compared with 35.4 million tons in 2006, maintaining
NACoal’s position as the nation’s largest lignite coal producer
and one of the top ten coal producers nationwide. The
company’s lignite coal reserve position remains strong with
a total of 2.3 billion tons, of which 1.2 billion tons are
committed to current customers.
NACoal’s limerock dragline
mining operations delivered 37.6
million cubic yards during 2007
compared with 39.2 million cubic
yards in 2006.
NACoal’s 2007 net income
was $31.0 million compared with
$39.7 million in 2006. However, a
significant portion of 2006 net
income resulted from a gain of
$21.5 million, or $13.1 million net
of taxes of $8.4 million, from the sale
of two electric draglines. Excluding the dragline sales, 2007
net income improved compared with 2006, mainly from
improved results from operations and the receipt of an
arbitration award of $3.7 million pre-tax to recover costs
related to a power plant and mine development project in
Turkey, which was undertaken and cancelled several years ago.
As a result of this performance, NACoal produced a
strong return on equity (1) of 46.8 percent and a return on
total capital employed (“ROTCE”) of 19.9 percent in 2007
compared with 25.6 percent in 2006, or 18.1 percent without
the impact of the dragline sales. (See reconciliations of
non-GAAP ROTCE on page 43.)
NACoal generated cash flow before financing activities
of $26.7 million in 2007 compared with $42.9 million in
2006, or $12.9 million in 2006, excluding proceeds of
approximately $30 million from the sale of two draglines.
Vision and Goals
NACoal’s vision is to be the
leading low-cost miner of lignite coal
used in power generation, coal
gasification and coal-to-liquids plants
and to provide selected value-added
mining services for companies in the
aggregates business. NACoal’s goals
are to earn a minimum ROTCE of 13
percent and deliver positive Economic
Value Income (“EVI”) from all existing
consolidated mining operations and
any new projects; maintain or increase the profitability of all
existing unconsolidated project mining operations; generate
substantial consolidated cash flow before financing activities
from existing operations; and achieve substantial income
growth by developing new mining ventures. NACoal is
making good progress toward achieving all of its goals.
North American Coal
mined over 30 million
tons of lignite coal in 2007,
once again making it
the largest lignite coal
producer in the nation.
*Includes gain on sale of $21.5 million, or $13.1 million after
taxes of $8.4 million, from the sale of two electric draglines.
(1) Return on equity = 2007 net income divided by 2007 average equity (a five-point average of equity at December 31, 2006 and each of 2007’s quarter ends).
Left: Daybreak across the mining pit at the Sabine Mining Company in Texas.
Net Income
(In millions)
03
04
05
06
07
$0 $10 $20 $30 $40
$14.3
$18.6
$16.2
$39.7*
Lignite Coal Tons & Limerock
Cubic Yards Delivered
(In millions)
03
04
05
06
07
0 10 20 30 40
37.6
33.7
25.2
34.7
18.9
34.4
39.2
35.4
11. 0
35.5
■ Lignite Coal Tons ■ Limerock Cubic Yards
Revenues
(In millions)
03
04
05
06
07
$0 $20 $40 $60 $80 $100 $120 $140 $160
$149.0
$118.4
$110.8
$94.1
$31.0
$137.1