Hamilton Beach 2007 Annual Report Download - page 46

[42]
Supplemental Data
Managing for long-term profit growth
RECONCILIATION OF FINANCIAL TARGETS TO NET INCOME:
Minimum Operating Profit Target, Break-Even Net Income Target and Minimum Return on Capital Employed Target as of December 31, 2007
Subsidiaries with Minimum Operating Profit Targets
2007 revenues, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
x Operating profit target percentage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
= Operating profit at target. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: 2007 operating profit, as reported for NMHG Wholesale, HBB and KC . . . . . . . . . . . .
Difference between 2007 operating profit, as reported, and operating profit target . . . . . .
Less: Income tax expense at 38%* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income difference between reported operating profit and operating profit target
for NMHG Wholesale, HBB and KC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subsidiaries with Break-Even Net Income Targets
Net income at target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2007 Net loss, as reported - NMHG Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income difference between reported and target for NMHG Retail . . . . . . . . . . . . . . . . .
Net income difference between reported and target for Consolidated
NMHG, HBB and KC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subsidiaries with Minimum Return on Total Capital Employed Targets
2007 average equity (12/31/2006 and at each of 2007's quarter ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2007 average debt (12/31/2006 and at each of 2007's quarter ends) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total 2007 average capital employed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on total capital employed target percentage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on total capital employed target = target net income before interest expense, after tax. . . . . . . . .
2007 net income, as reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plus: 2007 interest expense, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Income taxes on 2007 interest expense at 38%*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual 2007 return on total capital employed = actual net income before interest expense, after tax . . . .
Actual 2007 return on total capital employed percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on total capital employed target = target net income before interest expense, after tax. . . . . . . . .
Actual return on total capital employed = actual net income before interest expense, after tax. . . . . . . . .
Return on total capital employed difference between actual and target . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on total capital employed target = target net income before interest expense, after tax. . . . . . . . .
Less: 2007 interest expense, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plus: Income taxes on 2007 interest expense at 38%*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Target net income at target return on total capital employed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Target Net income at target return on total capital employed since actual exceeds target. . . . . . . . .
Net income difference between reported net income and target net income at target return on
total capital employed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total of net income differences between reported and targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share impact at 8.263 million basic shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share impact at 8.272 million diluted shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
* Tax rate of 38% represents the Company's marginal tax rate as compared to 2007's effective income tax rate of 20.6%.
NMHG
Wholesale
$ 2,581.9
9.0%
$ 232.4
(66.3)
$ 166.1
(63.1)
$ 103.0
NMHG
Retail
$-
(8.9)
$ 8.9
$111.9
HBB
$ 540.7
10.0%
$ 54.1
(40.3)
$ 13.8
(5.2)
$ 8.6
$ 8.6
NACoal
$ 66.3
110.8
$ 177.1
13.0%
$ 23.0
$ 31.0
7.0
(2.7)
$ 35.3
19.9%
$ 23.0
(35.3)
$ (12.3)
$ 23.0
(7.0)
2.7
$ 18.7
$ (18.7)
$-
Total
$ 3,332.6
N/A
$ 297.0
(107.1)
$ 189.9
(72.1)
$117.8
$ 8.9
$ 126.7
$-
$ 126.7
$ 15.33
$ 15.32
KC
$ 210.0
5.0%
$ 10.5
(0.5)
$ 10.0
(3.8)
$ 6.2
$ 6.2
(U.S. dollars in millions, except per share amounts)
Return on total capital employed is provided solely as a supplemental disclosure with respect to income generation because management believes
it provides useful information with respect to earnings in a form that is comparable to the Company's cost of capital employed, which includes both
equity and debt securities.