Hamilton Beach 2011 Annual Report Download - page 6

Introduction
The global reach of NACCO Industries,
Inc. and its subsidiaries helped the
Company achieve financial results in 2011
that were substantially higher than 2010.
These strong results were driven primarily
by improvements in global lift truck
markets and enhanced by a significant
one-time event.
The year began with the settlement
of litigation initiated by NACCO in 2006
against Applica Incorporated (“Applica”)
and individuals and entities affiliated with
Applica’s shareholder, Harbinger Capital
Partners Master Fund I Ltd. In February
2011, NACCO received a payment of $60
million ($39.0 million after taxes of $21.0
million) in connection with this settlement.
The settlement was a favorable lead-in
to a strong financial year. As we predicted
last year, lift truck markets around the world
continued to improve in 2011, resulting
in significant volume increases at NACCO
Materials Handling Group (“NMHG”).
However, most of this market improvement
occurred in the first three quarters of the
year, and as the year came to a close, lift
truck market growth began to moderate.
The improvement in the lift truck markets
at NMHG was tempered by weak mass-
consumer markets at Hamilton Beach
Brands (“HBB”) and Kitchen Collection and
reduced customer requirements for coal
and limerock at The North American Coal
Corporation (“NACoal”), as well as globally
increasing commodity costs and adverse
changes in foreign currency exchange
rates primarily at NMHG. The mid-market
consumer, which is the primary consumer
for HBB and Kitchen Collection, continued
to struggle with high unemployment rates
and financial concerns. At NACoal, excess
rain and snow in the Western United States
resulted in more hydropower, rather than
coal, being utilized to create energy, and a
customer’s continued struggle with power
plant operation issues caused a number of
unplanned outages throughout the year. In
addition, the southern Florida construction
market, which uses limerock, remained
weak. Finally, adding to the lower market
demand, NACoal’s contract to supply coal
to the San Miguel power plant expired at
the end of 2010.
Given 2011 market conditions,
excellent results were achieved at NMHG
but results at HBB, Kitchen Collection and
NACoal were disappointing. Consolidated
revenues for NACCO increased to $3.3
billion in 2011 from $2.7 billion in 2010,
with the increase primarily driven by volume
improvements at NMHG partially offset by
fewer deliveries by NACoal and reduced
volumes due to fewer retail placements
at HBB.
Net income(1) increased substantially
to $162.1 million, or $19.28 per diluted
share, in 2011 from $79.5 million, or
$9.53 per diluted share, in 2010. Net
income for 2011 includes the receipt of
the Applica litigation settlement in the first
quarter of 2011. This settlement was
partially offset by litigation costs of $2.8
million, or $1.8 million after taxes of $1.0
million, also incurred in the first quarter
of 2011. Net income in 2010 includes
expenses of $18.8 million, or $12.2 million
after tax of $6.6 million, for Applica litiga-
tion costs. Excluding the settlement and
litigation costs, consolidated adjusted
income(2) for the year ended December 31,
2011 was $124.9 million, or $14.85 per
diluted share, compared with consolidated
adjusted income in 2010 of $91.7 million,
or $10.99 per diluted share.
Lif t Truc k s
M i n i n g
H o u s e w a r e s
To Our Stockholders
Three
(1) For purposes of this annual report, discussions about net income refer to net income attributable to stockholders.
(2) “Consolidated adjusted income” in this letter refers to net income results that exclude the Applica settlement and related litigation
costs. (For reconciliations from GAAP results to the adjusted non-GAAP results, see page eighteen.) Management believes a discussion
of consolidated adjusted income is more reflective of NACCO’s underlying business operations and assists investors in better
understanding the results of operations of NACCO and its subsidiaries.
Top: The new Hyster®J30-40XNT
3-wheel electric lift truck, with a lifting
capacity of 3,000 to 4,000 pounds, has
a compact design and tight turning
radius for limited space.
Center: Early morning mining operations
at The Coteau Properties Company’s
Freedom Mine in North Dakota.
Bottom: The newest model of the
Hamilton Beach®BrewStation®12-cup
coffee maker.