NACCO Industries, Inc. Annual Report 2013

FY2013 Annual Report · NACCO Industries, Inc.

Loading PDF…

NACCO Industries, Inc. | 2013 Annual Report

STRATEGIC INITIATIVES

METALLURGICAL COAL PLATFORM
DOMESTIC COAL EXPANSION
COAL TECHNOLOGY
INTERNATIONAL COAL MINING
NON-COAL MATERIALS MINING

SOLID CORE STORE FOCUS

ENHANCED PLACEMENTS
INTERNET SALES LEADERSHIP
“ONLY-THE-BEST” MARKET PARTICIPATION
EMERGING GROWTH MARKETS
GLOBAL COMMERCIAL LEADERSHIP

NACCO INDUSTRIES, INC. AT A GLANCE

Principal Businesses

2013
Financial Results

Market Positions

North American Coal (“NACoal”)
Headquarters: Dallas, Texas

North American Coal mines and markets steam
and metallurgical coal for use in power generation
and steel production and provides selected value-
added mining services for other natural resources
companies. North American Coal operates seven
surface coal mining operations and has three
additional coal mines under development.

The company also provides dragline mining
services operating under the name “North
American Mining Company” for independently
owned limerock quarries in Florida.

NACoal:
Revenues:

$193.7 million
Operating profit:
$37.5 million

Net income:

$31.9 million

Equity:

$138.4 million
Return on Equity:(1)

26.3%

Return on Capital
Employed:(1)
13.0%

NACoal:
North American Coal is
among the ten largest coal
producers in the United
States.

Coal is delivered from
developed mines in North
Dakota, Texas, Mississippi,
Louisiana and Alabama,
primarily to adjacent or
nearby power plants.

MINING

Hamilton Beach Brands (“HBB”)
Headquarters: Richmond, Virginia

HBB is a leading designer, marketer and distributor
of small electric household appliances, as well
as commercial products for restaurants, bars
and hotels.

HBB has a broad portfolio of some of the most
recognized and respected brands in the small
electric appliance industry, including Hamilton
Beach®, Proctor Silex® and Hamilton Beach®
Commercial.

Kitchen Collection
Headquarters: Chillicothe, Ohio

Kitchen Collection is a national specialty retailer
of kitchenware and gourmet foods operating
under the Kitchen Collection® and Le Gourmet
Chef® store names in outlet and traditional
malls throughout the United States.

HBB:
HBB is a leading company
in retail and commercial
small appliances, with
strong share positions in
many of the categories
in which it competes.

HBB products are primarily
distributed through mass
merchants, national depart-
ment stores, wholesale
distributors and other retail
sales outlets.

Kitchen Collection:
Kitchen Collection is
the nation’s leading
specialty retailer of
kitchen and related
products in factory
outlet malls with 304
stores throughout
the United States at
December 31, 2013.

HBB:
Revenues:

$547.8 million
Operating profit:
$41.0 million

Net income:

$25.1 million

Equity:

$52.3 million
Return on Equity:(1)

51.4%

Return on Capital
Employed:(1)
34.9%

Kitchen Collection:
Revenues:

$196.0 million

Operating loss:
$10.9 million

Net loss:

$6.9 million

Equity:

$36.8 million
Return on Equity:(1)

(17.8%)

Return on Capital
Employed:(1)
(15.6%)

(1) This Annual Report contains references to non-GAAP financial measures. Presentations of, and quantitative reconciliations to, the most directly comparable financial measures calculated and

presented in accordance with U.S. generally accepted accounting principles (“GAAP”) appear on page 20.

NACCO Industries, Inc. is an operating holding company with subsidiaries in the following principal
industries: mining, small appliances and specialty retail. In 2013, total revenues were $932.7 million and
net income was $44.5 million.

Competitive Advantages

Financial Objectives

Strategic Initiatives

NACoal:
Earn a minimum return
on capital employed
of 13 percent, attain
positive Economic
Value Income from all
existing consolidated
mining operations
and any new projects,
maintain or increase
the profitability of all
existing unconsolidated
mining operations and
achieve substantial
income growth by
developing new mining
ventures

HBB:
Achieve a minimum
operating profit margin
target of 10 percent

NACoal:
• Coal mines provide steady income and
cash flow before financing activities and
high returns on equity

• Steam coal contracts are structured to

minimize exposure to market fluctuations
of coal prices

• 2.2 billion tons of lignite coal reserves, of
which approximately 1.1 billion tons are
committed to current customers

• Outstanding operational and technological

mining skills

• Highly efficient heavy equipment utilization
• Excellent record of environmental
responsibility and employee safety

HBB:
• Strong heritage brands with leading

market shares

• Strong relationships with leading retailers
• Highly professional and experienced

management team

• Successful track record of product line
expansion and new product innovation

• Industry-leading working capital

management

NACoal:
• Develop a metallurgical coal business platform
• Actively pursue domestic opportunities for new coal

mining projects

• Pursue a technologically enhanced fuel strategic platform
• Actively pursue international opportunities for new

value-added mining services and exports

• Expand capabilities in the non-coal mining market

HBB:
• Enhance placements in the North American consumer

business

• Achieve a leadership position in internet sales by providing

best-in-class retailer support and increased consumer
content and engagement

• Enter the “only-the-best” market with strong brands and

broad product line

• Expand internationally in emerging Asian and Latin

American markets

• Achieve further penetration of the global Commercial

market through an enhanced global product line

Kitchen Collection:
• Highly analytical merchandising skills
and disciplined operating controls
• A leading Kitchen Collection® store

format in outlet malls

Kitchen Collection:
Achieve a minimum
operating profit margin
target of 5 percent

Kitchen Collection:
• Create a solid core store portfolio and increase comparable

store sales
– Enhance sales volume and profitability through refine-
ment of store formats and specific product offerings
– Improve inventory efficiency and store inventory controls
– Selectively increase the number of Kitchen Collection®
stores in strong outlet malls in well-positioned locations

Front cover:
Top: An electric-loading shovel loads mined lignite coal into a Kress haul truck at The Falkirk Mining Company in North Dakota. Middle: Hamilton Beach® products,
from left to right: Hamilton Beach® Searing Grill, Proctor Silex® 1.5-quart Slow Cooker, Hamilton Beach® Stainless Steel Electric Kettle. Bottom: Kitchen Collection
provides a wide variety of specialty kitchen-related products, as shown in this bakeware display at the Kitchen Collection® store in Jeffersonville, Ohio.

SELECTED FINANCIAL AND OPERATING DATA
NACCO Industries, Inc. and Subsidiaries

Year Ended December 31
2013 2012(1) 2011(1)(2) 2010(1)(2) 2009(1)(2)(3)
(In millions, except per share data)

Operating Statement Data :
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 932.7
$ 61.3

$ 873.4
$ 67.6

$ 790.5
$ 64.1

$ 885.6
$ 94.2

$ 835.4
$ 90.3

Income from continuing operations . . . . . . . . . . . . . .
Discontinued operations, net-of-tax(1)(3). . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 44.5
–
$ 44.5

$ 42.2
66.5
$ 108.7

$ 79.5
82.6
$ 162.1

$ 47.1
32.4
$ 79.5

$ 51.6
(20.5)
$ 31.1

Basic Earnings (Loss) per Share:
Income from continuing operations . . . . . . . . . . . . . .
Discontinued operations, net-of-tax(1)(3) . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . .

Diluted Earnings (Loss) per Share:
Income from continuing operations . . . . . . . . . . . . . .
Discontinued operations, net-of-tax(1)(3) . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . .

$ 5.48
–
$ 5.48

$ 5.04
7.93
$ 12.97

$ 9.49
9.85
$ 19.34

$ 5.66
3.89
$ 9.55

$ 6.22
(2.47)
$ 3.75

$ 5.47
–
$ 5.47

$ 5.02
7.90
$ 12.92

$ 9.46
9.82
$ 19.28

$ 5.65
3.88
$ 9.53

$ 6.22
(2.47)
$ 3.75

Per Share and Share Data:
Cash dividends(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market value at December 31. . . . . . . . . . . . . . . . . . .
Stockholders’ equity at December 31. . . . . . . . . . . . .

$ 1.000
$ 62.19
$ 37.83

Actual shares outstanding at December 31 . . . . . . . . .
Basic weighted average shares outstanding . . . . . . . .
Diluted weighted average shares outstanding . . . . . .

7.872
8.105
8.124

$ 5.378
$ 60.69
$ 33.68

8.353
8.384
8.414

$ 2.120
$ 89.22
$ 68.81

8.374
8.383
8.408

Balance Sheet Data at December 31:
Cash(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 95.4
$ 810.0
$ 152.4
$ 297.8

$ 139.9
$ 776.3
$ 135.4
$ 281.3

$ 153.8
$ 1,808.8
$ 74.5
$ 576.2

$ 2.085
$ 108.37
$ 53.69

8.333
8.328
8.344

$ 92.4
$ 1,670.9
$ 139.8
$ 447.4

$ 2.068
$ 49.80
$ 47.82

8.294
8.290
8.296

$ 93.0
$ 1,497.4
$ 148.4
$ 396.6

(1) During 2012, NACCO spun off Hyster-Yale, a former subsidiary. The results of operations of Hyster-Yale for all periods shown have been reclassified to reflect Hyster-Yale’s

operating results as discontinued operations.

(2) In 2006, NACCO initiated litigation in the Delaware Chancery Court against Applica Incorporated (“Applica”) and individuals and entities affiliated with Applica’s shareholder,
Harbinger Capital Partners Master Fund, Ltd. The litigation alleged a number of contract and tort claims against the defendants related to the failed transaction with Applica,
which had been previously announced. On February 14, 2011, the parties to this litigation entered into a settlement agreement. The settlement agreement provided for,
among other things, the payment of $60 million to NACCO and dismissal of the lawsuit with prejudice. The payment was received in February 2011. Litigation costs
related to this matter were $2.8 million, $18.8 million and $1.1 million in 2011, 2010 and 2009, respectively.

(3) During 2009, the Company’s North American Coal subsidiary completed the sale of certain assets of the Red River Mining Company. The results of operations of Red

River for 2009 and all prior periods have been reclassified to reflect Red River’s operating results as discontinued operations.

(4) Cash dividends in 2012 include a one-time special cash dividend of $3.50 per share. The $0.25 dividend paid in the fourth quarter of 2012 was the first regular quarterly

dividend following the spin-off of Hyster-Yale.

This Annual Report contains references to non-GAAP financial measures. Presentations of, and quantitative reconciliations to, the most directly comparable financial measures
calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”) appear on page 3 and page 20. For certain pre-tax disclosures included
in the “To Our Stockholders” letter beginning on page 4, the resulting after-tax amount and the related income tax amount have been included. Certain after-tax amounts are
considered non-GAAP measures in accordance with Regulation G. Management believes that after-tax information is useful in analyzing the Company’s net income.

Year Ended December 31
2013 2012(1) 2011(1)(2) 2010(1)(2) 2009(1)(2)(3)
(In millions, except employee data)
Cash Flow Data:
Operating Activities
North American Coal Corporation . . . . . . . . . . . . . .
Hamilton Beach Brands . . . . . . . . . . . . . . . . . . . . . .
Kitchen Collection . . . . . . . . . . . . . . . . . . . . . . . . . .
NACCO and Other . . . . . . . . . . . . . . . . . . . . . . . . . .
Provided by operating activities from
continuing operations . . . . . . . . . . . . . . . . . . . . . . .

$ 29.5
40.8
(10.1)
(7.1)

$ 50.2
27.4
3.8
(7.1)

$ 25.9
15.0
6.3
(31.6)

$ 31.7
24.2
4.9
39.8

$ 50.4
35.5
5.4
(41.8)

$ 49.5

$ 15.6

$ 100.6

$ 74.3

$ 53.1

Investing Activities
North American Coal Corporation . . . . . . . . . . . . . .
Hamilton Beach Brands . . . . . . . . . . . . . . . . . . . . . .
Kitchen Collection . . . . . . . . . . . . . . . . . . . . . . . . . .
NACCO and Other . . . . . . . . . . . . . . . . . . . . . . . . . .
Used for investing activities
from continuing operations . . . . . . . . . . . . . . . . . . .

Cash Flow before Financing Activities(5)
North American Coal Corporation . . . . . . . . . . . . . .
Hamilton Beach Brands . . . . . . . . . . . . . . . . . . . . . .
Kitchen Collection . . . . . . . . . . . . . . . . . . . . . . . . . .
NACCO and Other . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Cash Flow before Financing Activities
from continuing operations(5) . . . . . . . . . . . . . . . . . .

Used for financing activities from
continuing operations . . . . . . . . . . . . . . . . . . . . . . .

Other Data:
Adjusted EBITDA(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (56.2)
(2.3)
(2.1)
(0.1)

$ (56.3)
(3.2)
(3.9)
(0.4)

$ (10.7)
(3.7)
(2.3)
(0.1)

$ 6.9
(2.2)
(2.7)
0.7

$ (6.5)
(2.1)
(1.1)
(14.0)

$ (60.7)

$ (63.8)

$ (16.8)

$ (2.7)

$ (23.7)

$ (26.7)
38.5
(12.2)
(7.2)

$ (6.1)
24.2
(0.1)
(7.5)

$ 21.0
20.5
2.6
39.7

$ 32.8
12.8
3.6
(30.9)

$ 43.9
33.4
4.3
(55.8)

$ (7.6)

$ 10.5

$ 83.8

$ 18.3

$ 25.8

$ (36.8)

$ (24.5)

$ (22.4)

$ (18.9)

$ (45.8)

$ 88.8

$ 81.9

$ 80.0

$ 110.3

$ 107.0

Total employees at December 31(3)(7) . . . . . . . . . . . . . .

4,100

4,300

4,000

3,900

4,100

(5) Cash Flow before Financing Activities is equal to net cash provided by operating activities less net cash used for investing activities.
(6) Adjusted EBITDA is provided solely as a supplemental disclosure with respect to operating results. Adjusted EBITDA does not represent net income, as defined by

U.S. GAAP and should not be considered as a substitute for net income or net loss, or as an indicator of our operating performance. NACCO defines Adjusted EBITDA
as income before discontinued operations, Applica settlement and litigation charges, goodwill impairment charge and income taxes plus net interest expense and
depreciation, depletion and amortization expense. Adjusted EBITDA is not a measurement under U.S. GAAP and is not necessarily comparable with similarly titled
measures of other companies.

(7) Includes employees of Reed Minerals from 2012 and the unconsolidated mining subsidiaries for all years presented and excludes employees of Hyster-Yale and Red River

for all years presented.

Year Ended December 31
2013 2012(1) 2011(1)(2) 2010(1)(2) 2009(1)(2)(3)
(In millions)
Calculation of Adjusted EBITDA(6)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net of tax . . . . . . . . . . . . . . .
Applica settlement and litigation costs . . . . . . . . . . . . .
Goodwill impairment charge . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, depletion and amortization expense . . .
Adjusted EBITDA(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 162.1
(82.6)
(57.1)
—
32.8
8.8
(0.3)
16.3
$ 80.0

$ 44.5
—
—
4.0
11.3
4.8
(0.3)
24.5
$ 88.8

$ 108.7
(66.5)
—
—
15.8
6.1
(0.2)
18.0
$ 81.9

$ 79.5
(32.4)
18.8
—
15.6
10.8
(0.3)
18.3
$ 110.3

$ 31.1
20.5
1.1
—
24.1
13.2
(0.4)
17.4
$ 107.0

TO OUR STOCKHOLDERS

INTRODUCTION

Just over a year ago NACCO Industries Inc.
completed a significant transformation in its business
through the spin-off of its Hyster-Yale forklift truck
business and its entry into the bituminous and
metallurgical coal business in Alabama. Since
then, NACCO has remained
focused on key strategic initiatives
for its North American Coal
Corporation (“NACoal”) and
Hamilton Beach Brands (“HBB”)
subsidiaries and on realigning
its Kitchen Collection business to
compete profitably in the current
traditional and outlet mall retail
environment.

Coal deliveries from NACoal’s

lignite mines increased in 2013
as more electrical demand at its
customers’ power plants translated
into higher customer requirements
and the Company benefited from
a full year of deliveries from its
Reed Minerals (“Reed”) operation,
which was acquired in August 2012. However, as
a result of a downturn in the metallurgical coal
market, a decrease in metallurgical coal prices to levels
moderately below the Company’s expectations and
short-term cost challenges, tons delivered, revenues
and profits at Reed did not achieve the Company’s
expectations for its first full year of ownership.

SUBSIDIARY LONG-TERM
FINANCIAL OBJECTIVES:

• NACoal: Earn a minimum return on
capital employed of 13 percent, attain
positive Economic Value Income from
all existing consolidated mining opera-
tions and any new projects, maintain or
increase the profitability of all existing
unconsolidated mining operations and
achieve substantial income growth by
developing new mining ventures.

• HBB: Achieve a minimum operating
profit margin of 10 percent.

• Kitchen Collection: Achieve a minimum
operating profit margin of 5 percent.

• All businesses: Generate substantial
cash flow before financing activities.

Limerock customers increased requirements as a
result of significant demand related primarily to one
large project in the Florida construction market that
ended during the second half of 2013.

Middle-market mass consumers, which are

HBB’s and Kitchen Collection’s target customers,
remained under pressure in
2013. Customer visits to stores,
particularly at traditional and
outlet malls, continued to drop
in 2013, especially during the
fourth-quarter holiday selling
season. Despite this highly
challenging environment,
revenues and profits improved
at HBB as a result of increased
placements and promotions at its
largest customers. On the other
hand, Kitchen Collection, which
continued to make adjustments
to attract customers, was not
able to overcome the unfavorable
effect of the decline in customer
visits to its stores.
Given these conditions, 2013 was a challenging
year for NACCO Industries, Inc. While consolidated
revenues for NACCO grew to $932.7 million in 2013
from $873.4 million in 2012, primarily due to increased
deliveries at NACoal and higher sales volumes of
higher-priced and new products at HBB, consolidated
income from continuing operations increased only

MINING

modestly to $44.5 million, or $5.47 per diluted share,
in 2013 from $42.2 million, or $5.02 per diluted
share, in 2012. HBB achieved very strong operating
results on a solid revenue increase. However, operating
results at both NACoal and Kitchen Collection were
disappointing. NACoal’s results suffered from reduced
volume and temporarily higher costs at the Reed
Minerals operation. Kitchen Collection’s results were
hurt by fewer customer visits, reduced margins and
charges totaling $2.0 million, or $1.3 million after tax
of $0.7 million, for the impairment of certain fixed
assets, employee severance in connection with future
closings of unprofitable stores and a write-down of
certain inventory to fair market value.

In 2013, strong returns on capital employed(1)

(“ROTCE”) on a net debt basis were realized at both
NACoal (13.0 percent) and HBB (34.9 percent).
However, Kitchen Collection generated a loss.

The Company generated negative consolidated
cash flow before financing activities of $7.6 million
in 2013 as strong positive cash flow before financing
activities at HBB of $38.5 million was offset by negative
cash flow before financing activities of $26.7 million
at NACoal and $12.2 million at Kitchen Collection.
NACoal’s negative cash flow before financing activities
was primarily the result of equipment and coal reserve
acquisitions as part of NACoal’s plan to improve
mining efficiencies, increase volumes and reduce costs
at Reed, while Kitchen Collection’s negative cash flow
was primarily because of the significant 2013 operating

loss. The Company had consolidated cash on hand
of $95.4 million as of December 31, 2013 compared
with $139.9 million as of December 31, 2012. Debt as
of December 31, 2013 was $183.8 million compared
with $177.7 million as of December 31, 2012. NACCO
expects strong cash flow before financing activities
from NACoal and HBB in 2014 and improved cash
flow before financing activities at Kitchen Collection.
In November 2011, the Company’s Board of
Directors approved the repurchase of up to $50 million
of the Company’s outstanding Class A common stock
(the “2011 Stock Repurchase Program”). In November
2013, the Company’s Board of Directors terminated
the 2011 Stock Repurchase Program and approved
a new stock repurchase program (the “2013 Stock
Repurchase Program”) providing for the purchase
of up to $60 million of the Company’s outstanding
Class A Common Stock through December 31, 2015.
Neither of the share repurchase programs required
the Company to acquire any specific number of shares.
In total under the 2011 Stock Repurchase Program,
NACCO repurchased approximately 624,000 shares
of Class A common stock for an aggregate purchase
price of $35.6 million, including $30.4 million of stock
purchased during 2013. As of December 31, 2013,
the Company had repurchased approximately 16,100
shares of Class A common stock for $0.9 million under
the 2013 Stock Repurchase Program. A total of $31.3
million of Class A common stock was purchased in
2013 under both plans.

(1) See page 20 for the calculation of return on capital employed.

NORTH AMERICAN COAL
2013 Results

NACoal has delivered stable financial performance

over the years, and 2013, while no exception, was not
without its challenges. Tons delivered, income before
income taxes and net income at NACoal’s unconsoli-
dated and consolidated mining operations, excluding
Reed Minerals, increased year over year. Increased
deliveries and lower operating expenses at Mississippi
Lignite Mining Company (“MLMC”), increased
deliveries at the Florida limerock dragline operations
and increased deliveries and contractual escalation at
the unconsolidated mining operations all contributed
to the year-over-year improvements. Royalty and other
income from third parties also increased very signifi-
cantly. These improvements, combined with reduced
professional fees and employee-related costs, primarily
due to the 2012 Reed acquisition, and a favorable shift
in mix of income to entities with lower tax rates added
to the net income improvement. However, despite
these favorable developments, income before income
taxes decreased to $35.4 million in 2013 from $41.8
million in 2012 and 2013 net income decreased to
$31.9 million from $32.8 million in 2012, primarily
due to a significant loss at Reed.

Reed Minerals, a coal mining business in
Alabama that produces steam and metallurgical coal,
was acquired on August 31, 2012. The 2013 financial
results include revenues of $71.8 million and a net
loss of $9.8 million for 2013 from Reed compared
with revenues of $29.3 million and net income of $1.0
million for the four months ended December 31, 2012.
Reed experienced a number of difficulties during 2013.
Reduced demand and lower-then-anticipated metal-
lurgical coal prices, combined with significantly higher
mining costs due to the unexpected thinning of a coal
seam in an isolated area, substantial costs associated
with the development of a new mining area and
temporary mining restrictions which significantly
increased hauling distances and reduced equipment
and overburden removal productivity, in total led to
very poor 2013 operating results at Reed. While 2013
was a very difficult year at the Reed Minerals operation,
NACoal is optimistic that productivity improvements

made in 2013 and being made in the first half of
2014 will begin to turn that operation around. The
company’s short-term objective for Reed is to achieve at
least break-even operations in the second half of 2014.
NACoal generated cash flow from operations
of $29.5 million, but had negative cash flow before
financing activities of $26.7 million predominantly
due to $52.7 million of capital expenditures primarily
for equipment and coal reserve acquisitions as part
of NACoal’s plan to improve operating results and
mining efficiencies at Reed by increasing production
capacity and reducing costs. The negative cash flow
before financing activities of $6.1 million in 2012 was
also largely as a result of the Reed acquisition.

Outlook for 2014

NACoal remains focused on safety, environmental
compliance and continuous improvement programs.
These well-established programs and the company’s
unique lignite coal business model-based largely on
long-term cost reimbursable contracts, provide stable
cash flow with minimal capital investment and provide
a solid foundation for all of the company’s coal and
limerock mining operations.

NACoal expects improved operating performance

overall at its coal mining operations in 2014. At the
unconsolidated mining operations, steam coal tons
delivered in 2014 are expected to increase over 2013
provided customers achieve currently planned power
plant operating levels. Demery Resources Company’s
Five Forks Mine commenced delivering coal to its
customer in 2012 and full production levels are
expected to be reached in late 2015. Liberty Fuels also
commenced production of lignite coal in 2013 for
Mississippi Power Company’s new Kemper County
Energy Facility. Production levels at Liberty Fuels are
expected to increase gradually from 0.5 million to
1 million tons in 2014 to full production of approxi-
mately 4.7 million tons of lignite coal annually in 2019.
Unconsolidated mines currently in development
are expected to continue to generate modest income
in 2014. The three mines in development are not
expected to be at full production for several years.
In the first quarter of 2013, mining permits needed

Above: The Mississippi Lignite Mining Company uses a variety of equipment
to uncover and mine coal in the pit of the Red Hills Mine.

At Right: A new water truck sprays water to maintain good road conditions
at the Reed Minerals’ Jap Creek mining location.

Below: An Easi-Miner mines lignite coal from the ground into a Kress haul
truck at the Sabine Mining Company in Texas.

North American Coal’s Liberty Mine
commenced production in 2013 for the
adjacent Mississippi Power Company’s
new Kemper County Energy Facility.
The assembly of the new dragline used
to remove overburden was completed
in late 2013. The new mine also uses a
variety of other equipment to uncover
and mine the lignite coal in the area,
including bulldozers and a number of
truck/shovel operations.

to commence mining operations were issued for the
Caddo Creek Resources Company and the Camino
Real Fuels projects in Texas. Caddo Creek expects
to begin making initial coal deliveries in late 2014.
Camino Real Fuels expects initial deliveries in the
latter half of 2015, and expects to mine approximately
3.0 million tons of coal annually when at full produc-
tion. Coyote Creek Mining Company is developing a
lignite mine in Mercer County, North Dakota, from
which it expects to deliver approximately 2.5 million
tons of coal annually beginning in May 2016.

The consolidated coal mining operations are
expected to improve significantly. Tons sold at Reed
are expected to increase in 2014 compared with 2013
and productivity improvements and increased mining
efficiencies are expected in the second half of 2014.
As part of its overall Reed improvement program,

NACoal plans to temporarily idle a higher-cost Reed
mining area during the last three quarters of 2014
while it files a revised mining permit. This permit
will allow for a larger contiguous mining area that is
expected to improve productivity and reduce costs.
While this mining area is temporarily idled, NACoal
will continue to supply current customers with coal
mined from a nearby operation. However, these
improvements at Reed are expected to be somewhat
offset by reduced results at MLMC due to fewer
deliveries in 2014 compared with 2013 because of two
significant planned outages at the customer’s power
plant in 2014. Deliveries at MLMC are expected to
increase over the longer term as a result of continued
operational improvements at the customer’s power
plant. NACoal also has project opportunities for which
it expects to continue to incur additional expenses in

2014. In particular, the company continues to move
forward to obtain a permit for its Otter Creek reserve
in North Dakota in preparation for construction of a
new mine.

Limerock deliveries in 2014 are expected to
be lower than 2013 as customer requirements are
expected to decline. Substantial declines in royalty and
other income are also expected in 2014 from the high
levels realized in 2013 and as a result, net income at
NACoal is expected to decrease significantly in 2014
compared with 2013.

The decrease in 2014 net income is expected to
occur largely in the first half of 2014 due to significant
losses at Reed in the first half of the year and substan-
tially lower royalty and other income. Productivity
improvements and increased mining efficiencies are
expected to result in a slight profit at Reed in the

second half of 2014 but are unlikely to offset the large
operating losses expected at Reed in the first half of
the year, fewer deliveries for the year at MLMC and
significantly lower royalty and other income. NACoal’s
cash flow before financing activities in 2014 is expected
to be positive compared with the negative cash flow
before financing activities in 2013.

Longer-Term Perspective

Over the longer term, NACoal’s goal is to
increase earnings of its unconsolidated mines by
approximately 50 percent over 2012 results over the
following five years through the development and
maturation of its new mines and normal escalation of
contractual compensation at its existing mines. Also,
NACoal has a goal of at least doubling the earnings
contribution of its consolidated mining operations

At Right: An electric shovel loads
overburden into a Caterpillar end
dump truck to expose the coal
for extraction at Reed Minerals’
Fishtrap mining location.

Below: A truck/shovel operation
moves coal in the pit of Reed
Minerals’ Jap Creek mining loca-
tion.

Below: Caterpillar end dump
trucks and shovels are used to
build the new mining pit at North
American Coal’s Liberty Mine in
Mississippi.

over the following five years from 2012 levels due
to benefits from anticipated continued operational
improvements at MLMC’s customer’s power plant
and from the company’s execution of its long-term
plan at the Reed Minerals operations. The company
views its acquisition of Reed as a metallurgical
coal strategic initiative which includes significantly
increased volume and profitability for the company
over the long term.

NACoal expects to continue its record of

operational excellence in safety, environmental
stewardship and production at each of its mining
operations and, over time, to deliver profitability
that exceeds its financial objectives.

NACoal expects to continue to be a low-cost

miner of coal at its existing mines and its mines in
development, in support of customer power plants
which are among the lower-cost producers of electricity
on their respective grids. The company hopes that
any new EPA regulations will not significantly disturb
the current low-cost and reliable power generation
structure in favor of high-cost/low CO2 producers.
Because the current regulatory environment is very
difficult for developing new traditional coal-fired power
plants, NACoal is taking a very disciplined view of
where likely domestic growth opportunities exist.

Given current political and regulatory barriers
to coal-fired power generation in the United States,
NACoal has put in place four additional strategic
initiatives which have the potential to provide future
growth of the company.

First, leveraging its skills as expert miners,
NACoal entered a narrow segment of the metallurgical
coal and power market in Alabama with the Reed
Minerals acquisition in 2012. The company considers
its acquisition of Reed as the first step in a metallurgical
coal strategic initiative which includes significantly
increased volume and profitability for the company
in the Alabama market and, in the future, coal exports.
NACoal’s full integration of Reed, as well as the
improvements made to the mining operation in 2013
and currently under way in 2014, are expected to
increase capacity and lower costs, providing enhanced
opportunities to increase both domestic and export
sales, especially as the steel industry improves.

Second, strategic growth may come from projects

developed out of new technologies that utilize coal,
such as integrated gasification combined cycle power
generation, and production of alternative fuels made
from coal, as well as other clean coal technologies and
non-traditional products derived from coal. NACoal is
working with a range of technical experts and potential
partners who could help develop projects based on
these advanced technologies. However, any significant
growth in domestic opportunities is largely dependent
on the United States adopting a balanced energy policy
in which coal continues to play a key role, including
through new coal technologies.

Third, the company is also pursuing opportunities
to expand by serving international mining operations,
including new opportunities to provide value-added
mining services outside the United States, similar to
its current activities in India.

Fourth, the company is investigating a number
of non-coal mining opportunities, both domestically
and internationally, which include providing selected
value-added mining services for companies in the
aggregates business.

NACoal believes that a large majority of con-

sumers in the United States want a domestic energy
policy which balances affordability, energy needs and
environmental responsibility. The company believes
that coal must remain an integral part of the nation’s
total energy mix for the United States to continue
to be competitive in a global economy. NACoal
will continue to monitor pending regulations and
legislation and will take a leadership role to help
ensure that reasonable actions are undertaken by
the government. Importantly, NACoal expects to
effectively address currently anticipated changes to
domestic environmental regulatory requirements
by working collaboratively with its customers.

Overall, NACoal anticipates good prospects
for growth over the next few years as the company’s
new mines currently in development reach full
production and its five-year targets for its consolidated
and unconsolidated mines are attained. This financial
performance over the next few years should provide
a solid base for NACoal to attain further growth in
later years through its strategic initiatives.

2014. International and commercial product markets
in which HBB participates are also anticipated to grow
in 2014 compared with 2013.

HBB expects sales volumes to grow more
favorably than the market due to improved place-
ments and sales volumes in 2014 compared with 2013.
HBB continues to focus on strengthening its North
American consumer market position through product
innovation, promotions, increased placements and
branding programs, together with appropriate levels
of advertising for the company’s highly successful and
innovative product lines. HBB expects the FlexBrewTM
coffee maker, launched in late 2012, and the Hamilton
Beach® Breakfast Sandwich Maker, launched in early
2013, to continue to gain market position. The company
is continuing to introduce innovative products and
upgrades to certain products in several small appliance
categories. These products, as well as other new product
introductions in the pipeline for 2014, are expected
to affect both revenues and operating profit positively.
As a result of these new products and execution of the
company’s strategic initiatives, both domestically and
internationally, HBB expects an increase in revenues
in 2014 compared with 2013 at more than the 2014
market forecast rate of increase.

Overall, HBB expects full-year 2014 net income to
be comparable to the very robust results in 2013. The
anticipated increase in sales volumes attributable to
the continued implementation and execution of HBB’s
strategic initiatives is expected to be substantially
offset by the costs to implement these initiatives and by
increased advertising and promotional costs. Product
and transportation costs, as well as the negative effects
of foreign currency fluctuations, are currently expected
to increase modestly in 2014 compared with 2013.

HAMILTON BEACH BRANDS
2013 Results

HBB had an exceptional 2013. The company
delivered a 14 percent improvement in operating
profit on a 5 percent revenue increase despite continued
weak demand in the middle-market segment of the
consumer market and higher operating expenses.
Sales of HBB’s new products, strong placements
and promotions, particularly in the fourth-quarter
holiday season, and the company’s ability to sell
products with higher price points resulted in revenues
increasing from $521.6 million in 2012 to $547.8
million in 2013, which included substantially higher
sales volumes in the U.S. consumer business. Sales of
higher-margin products throughout the year and stable
commodity costs allowed the company to offset higher
operating expenses from increased employee-related
and advertising expenses as well as additional costs
associated with HBB’s strategic initiatives, resulting
in an operating profit margin which increased to 7.5
percent in 2013 from 6.9 percent in 2012. The improve-
ment in operating profit and reduced interest expense
on substantially lower levels of debt contributed to the
increase in net income to $25.1 million in 2013 from
$21.2 million in 2012. In addition, HBB ended the year
with a significant improvement in cash flow before
financing activities by generating $38.5 million in
2013 compared with $24.2 million in 2012.

Outlook for 2014

HBB maintains a strong position in the mass
market, but growth in sales to its target customer in that
market has been challenging. HBB’s target consumer,
the middle-market mass consumer, continues to
struggle with financial and economic concerns. As a
result, sales volumes in the middle-market portion of
the U.S. small kitchen appliance market in which HBB
participates are projected to grow only moderately in

Left to Right: Hamilton Beach® Breakfast
Sandwich Maker, Hamilton Beach® Single Clip
Stay or Go® 6-quart Portable Slow Cooker

Above: Hamilton Beach Brands’ newest products include, clockwise
from top: Hamilton Beach® Commercial Fury™ High-Performance Blender,
Hamilton Beach® Big Mouth® Pro Juice Extractor, Hamilton Beach®
Durathon® Digital Iron with Retractable Cord, Hamilton Beach® Stack
& Press™ 3-Cup Glass Bowl Chopper, Hamilton Beach® 2-Way FlexBrew®
Coffee Maker

At Left: Hamilton Beach® Countertop Oven with Convection & Rotisserie

Above: The new Hamilton® Commercial Fury™
High-Performance Blender – one of Hamilton Beach’s
many products to increase its global presence in the
high-performance commercial blending business.

At Left: Hamilton Beach Brands’ website has been
enhanced to provide increased consumer content
and engagement.

HBB continues to monitor both currency effects and
commodity costs closely and intends to adjust product
prices and product placements, as appropriate, if
these costs increase more than anticipated. HBB
expects cash flow before financing activities in 2014
to be substantial but down significantly from 2013’s
very strong results.

Longer-Term Perspective

HBB’s vision is to be the leading designer,
marketer and distributor of small electric household
and commercial appliances sold worldwide under
strong brand names and to achieve profitable growth
from innovative solutions that improve everyday living.
As part of this vision, HBB is focused on delivering
growth above historic rates to reach sales of approxi-
mately $750 million. As the company moves toward
this target sales level, HBB expects to take advantage
of increasing economies of scale to improve return on
sales by focusing on its five key strategic initiatives.

First, HBB is focused on enhancing placements
in the North American consumer business through
consumer-driven innovative products and strong
sales and marketing support. The company’s product
and placement track record is strong due to innovation
processes centered on understanding and meeting
end-user needs and focusing on quality and best-
in-class customer service. In the North American
consumer market, HBB believes it has a stronger and
deeper portfolio of new products than its competitors.
HBB expects its product pipeline in 2014 and beyond
to be at or above 2013 levels, with strong brands and
best-in-class products.

A second area of growth opportunity is through

the enhancement of online sales. In the past few
years, online sales of small kitchen appliances have
grown significantly. During 2013, 15 percent of small
kitchen appliances were purchased online. Retailers
are looking for partners that can provide not only
products, but also the capabilities and support for
promotion, marketing and distribution programs
appropriate for that channel. As consumers’ shopping
habits evolve to rely more on the Internet, HBB is
focused on providing best-in-class retailer support,
increasing engagement with end users, including
maintaining a website that is appropriate for mobile

devices, and enhancing its programs designed to make
HBB the preferred source for small appliances.

Third, the “only-the-best” high-end small kitchen

appliance market segment is a strong growth area
in which HBB has not previously participated. This
segment accounts for approximately 38 percent of
the small kitchen appliance market, and its target
consumer is financially strong. HBB is concentrating its
efforts on participating in the “only-the-best” market
with strong brands and a broad product line. HBB is
planning to enter the “only-the-best” high-end small
kitchen appliance market selectively. The company is
currently working with the Jamba Juice Company to
create a product line focused on blending and juicing.
HBB is also working with other partners to create
additional lines that can be distributed in high-end
specialty stores and on the Internet.

Fourth, HBB is focused on expanding its retail
presence internationally in the emerging growth
markets of Asia and Latin America by increasing
product offerings designed specifically for those
market needs and by expanding distribution channels
and sales and marketing capabilities. HBB’s historical
strength has been in the domestic consumer goods
market, with only 22 percent of total sales occurring
outside the United States in 2013. The company’s
objective is to increase international sales to 35 to 45
percent of total sales by concentrating on key markets.
HBB’s efforts will focus on continuing to expand in
Mexico, Canada, Central America and South America,
as well as entering the emerging markets of China,
India and Brazil. To achieve this growth, the company
is working to understand local consumers’ needs,
increasing resources allocated to these markets and
developing products to meet those needs, especially
in the mid- to high-end segments of these markets.
In addition, HBB expects to work with local partners
in certain targeted countries. HBB began selling
retail product in China in early 2013 and in Brazil
in late 2013. The company expects to increase sales
in these areas in 2014 and enter the Indian market
during mid-2014.

Fifth, while HBB has a solid position in the
Commercial market, it continues to focus on achieving
further penetration of the global Commercial market
through a commitment to an enhanced global product

line for chains and distributors serving the global food
service and hospitality markets. HBB is enhancing
its global commercial product line, particularly with
new innovative blending and mixing platforms, and
strengthening its food service and hospitality offerings
in order to achieve further market penetration in this
segment. Over the near term, the company anticipates
continuing to build distribution capabilities and
increase the number of sales representatives in the
international food service market, where products and
services will be directed at global food service chains.
HBB is optimistic that it will be able to build

on the momentum achieved in 2013 by focusing on
these five strategic initiatives as a solid set of strategies
for profitable growth. The company believes it is well-
positioned to continue its leadership position in the
small kitchen appliances industry and to move toward
achieving its near-term financial objective of 8 percent
operating profit margin and its long-term financial
objective of a minimum 10 percent operating profit
margin in the years ahead.

KITCHEN COLLECTION
2013 Results

Despite a number of improvements to its Kitchen

Collection® and Le Gourmet Chef® store formats
over the past few years, Kitchen Collection continues
to struggle with fewer customer visits and, as a conse-
quence, declining sales and operating results. During
2013, Kitchen Collection closed a significant number
of stores in both formats early in the year and opened
a smaller number of Kitchen Collection® stores toward
the end of the year. Unfortunately, these adjustments
did not translate into overall financial improvement.
The Kitchen Collection® stores, which sell a
wide variety of basic kitchen items, generated an
increased average sales transaction value. However, the
number of customer visits and transactions declined.
The Le Gourmet Chef® stores, which sell higher-end
goods focusing on cooking and entertaining themes,
continued to struggle in 2013. A slightly higher average
sales transaction value did not make up for fewer
transactions due to reduced customer visits.

At Left: Hamilton Beach Brands’ newest
Commercial product, the Blend-in-Cup
commercial blender.

At Right: Hamilton Beach® Single-Serve
FlexBrew® Coffee Maker, Hamilton Beach®
Searing Grill, Proctor Silex® 1.5-quart
Slow Cooker, Hamilton Beach® Stainless
Steel Electric Kettle.

Below: Hamilton Beach is focused on
growing its international business.

Overall, revenues decreased from $224.7 million
in 2012 to $196.0 million in 2013. Operating results
were also very disappointing as a result of reduced
revenues, lower margins due to the liquidation of a
significant amount of inventory as stores were closed
and charges totaling $2.0 million, or $1.3 million after
tax of $0.7 million, for the impairment of fixed assets
($1.1 million), employee severance costs ($0.6 million)
as part of a program to close more underperforming
stores in 2014 and inventory valuation reductions ($0.3
million). As a result, Kitchen Collection reported a net
loss of $6.9 million in 2013 compared with a net loss
of $3.1 million in 2012 and had negative cash flow
before financing activities of $12.2 million in 2013
compared with negative cash flow before financing
activities of $0.1 million in 2012.

Outlook for 2014

Consumer traffic to all mall locations, and
particularly outlet malls, continued to decline in 2013,
especially in the fourth quarter. Prospects for 2014 are
uncertain. Fewer households were established in 2013,

and this trend is expected to continue in 2014 because
the middle-market consumer remains under pressure
as a result of financial and economic concerns. These
concerns are expected to continue to dampen consumer
sentiment and limit consumer spending levels for
Kitchen Collection’s target customer in 2014. In this
context, Kitchen Collection expects to close over 50
stores in 2014, with the majority closing in the first
quarter, as part of a program to close underperforming
stores and realign the business around core stores
which perform with acceptable profitability. Kitchen
Collection plans to maintain a lower number of stores
in 2014 and, as a result, expects 2014 revenues to
decrease compared with 2013.

The net effect of closing stores early in 2014 and
the anticipated opening of a small number of new stores
during the second half of 2014 is expected to contribute
to significantly improved operating results, with the
objective of approaching break-even operating profit in
2014 compared with a significant loss in 2013. As part
of Kitchen Collection’s program to realign its business,
the company plans not only to close unprofitable stores,

but also to reduce expenses through a number of cost
reduction programs at its headquarters, distribution
center and remaining core stores and by terminating
its medical benefit plan. This program is expected to
be largely implemented in the first half of 2014 and
generate significant improvements during the second
half of 2014. In addition, Kitchen Collection is
focused on driving consumer interest back toward
higher-margin products.

Longer-Term Perspective

Kitchen Collection’s vision is to be the leading
specialty retailer of kitchen, home entertaining and
gourmet food products mainly in outlet malls and
certain traditional mall types for consumers seeking
a large selection of unique, high-quality products at
an exceptional value. However, to achieve this vision,
Kitchen Collection must attract customers back to
its stores, which is difficult in a mall environment
in which consumers shopping at these malls, and
especially at the outlet malls, are financially stressed.
High unemployment and fewer two-income families
have resulted in fewer visits to many of the malls and
outlets where Kitchen Collection has store locations.

In addition, there is intense competitive pressure for
value which has brought margins under pressure as a
result of additional discounting. In this environment,
only certain malls where Kitchen Collection maintains
stores are doing well. In the strong malls in which
Kitchen Collection has a good store position, its stores
do well, but those in struggling malls with poor store
locations are not doing well.

The company’s core strength is its Kitchen

Collection® store format in outlet malls. Kitchen
Collection is moving to establish a strong core around
this store format in selected additional malls. As a
result, it plans on closing a number of mainly less
profitable traditional mall and Le Gourmet Chef®
store locations early in 2014 and open other stores,
primarily Kitchen Collection® stores in outlet malls,
very cautiously. By the end of 2014, essentially all
stores not contributing to corporate profitability are
expected to be closed. Further, at current mall and
store traffic levels, reaching the company’s 5 percent
operating profit margin target will be challenging.
Overall, Kitchen Collection is dealing with a
difficult environment and evolving in a constructive
manner. As the company improves its business around

At Left: A free-standing display of
products at the Kitchen Collection®
store in Jeffersonville, Ohio, makes
it easier for customers to shop and
select products.

Below: New display layouts and
signage at Kitchen Collection’s
Le Gourmet Chef® store in Aurora,
Ohio. Le Gourmet Chef® stores
feature brand-name kitchenware
and gourmet foods.

a solid core store portfolio, it will focus on comparable
store sales growth. Kitchen Collection expects to accom-
plish this by enhancing sales volume and profitability
through continued refinement of its formats and on-
going review of specific product offerings, merchandise
mix, store displays and appearance, while improving
inventory efficiency and store inventory controls. A
particular focus will be on increasing sales of higher-
margin products. The company will also continue
to evaluate and, as lease contracts permit, close or
restructure leases for underperforming and loss-
generating stores. In the near term, Kitchen Collection
expects to add stores cautiously and focus its growth
on its core Kitchen Collection® stores, with new stores
expected to be located in sound positions in strong
outlet malls. Kitchen Collection also expects to focus
on growth opportunities in e-commerce with a newly
revamped website.

Conclusion and NACCO Outlook

NACCO is a strong, multi-industry company

with leading businesses in the mining and small
appliances industries, and is well positioned to support
its individual businesses in the years ahead. The
Company continues to believe growth opportunities
are particularly significant at the NACoal and HBB
businesses, although both will be prudent in pursuing
any such opportunities. NACCO is confident that
NACoal and HBB have the right strategic initiatives in
place to move them closer to achieving their long-term
growth and financial objectives. Kitchen Collection’s
prospects at this time are uncertain, but Kitchen
Collection is concentrating on ways to improve results
by thoughtfully identifying what is working and what
is not, and making appropriate changes, including
realigning the entire organization, not just making
changes at the store level. Each subsidiary is benefitting
from programs previously put in place which, when
combined with the initiatives being implemented,
should improve results at each business over the next
few years.

In 2014, overall consolidated net income is
expected to decrease compared with 2013, primarily

as a result of the expected decrease in NACoal’s net
income. The housewares market is expected to remain
challenging for Kitchen Collection, but Kitchen
Collection is hopeful that consumer confidence and its
customers’ financial position will improve over time
in a way which will increase the number of customer
visits per store, the number of transactions per store
and sales per transaction at the malls where it retains
stores. While 2014 is expected to continue to be difficult
for Kitchen Collection, store closures and reduced
operating expenses from the business realignment are
expected to bring the operations closer to breakeven.
Comparable 2014 results are expected at HBB as higher
expenses associated with implementing its strategic
initiatives are expected to offset the gross margin effect
of anticipated top-line growth. Finally, at NACoal,
while steady performance at the unconsolidated coal
mines and improvements at Reed are expected, lower
royalty revenues and the planned outages at MLMC’s
customer’s power plant are expected to result in a
significant decrease in net income. NACCO expects
a significant increase in cash flow before financing
activities in 2014 compared with 2013.

d
In closing, we would like to thank all of our
subsidiaries’ customers, retailers and suppliers, and all
of NACCO’s stockholders, for their continued support.
Most importantly, we would also like to thank all
employees of NACCO and its subsidiary companies
for their continued hard work and commitment to
achieving the successes and meeting the challenges
of 2013. We continue to have great confidence in the
management teams leading each of our subsidiaries
and the parent company. Our many experienced and
highly motivated professionals worked successfully
to overcome challenges in the metallurgical coal and
housewares markets and deliver the Company’s solid
financial results in 2013. We are confident they can
successfully implement their respective strategic
initiatives to move the Company forward over the
next few years.

Alfred M. Rankin, Jr.
Chairman, President and Chief Executive Officer
NACCO Industries, Inc.

Robert L. Benson
President and Chief Executive Officer
The North American Coal Corporation

Gregory H. Trepp
President and Chief Executive Officer
Hamilton Beach Brands, Inc.
Chief Executive Officer, The Kitchen Collection, LLC

SUPPLEMENTAL DATA

Calculation of Return on Capital Employed and Return on Equity:

(In millions, except percentage data)

2013
2013 Average Equity (12/31/2012 and each of 2013’s quarter ends) . . . . . . . . . . . .
2013 Average Debt (12/31/2012 and at each of 2013’s quarter ends) . . . . . . . . . . .
2013 Average Cash (12/31/2012 and at each of 2013’s quarter ends) . . . . . . . . . . .
Total 2013 average capital employed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013 Net income (loss), as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plus: 2013 Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Income taxes on 2013 interest expense at 38%* . . . . . . . . . . . . . . . . . . . . . . .
Actual return on capital employed = actual net income (loss)

before interest expense, net, after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on capital employed percentage(1). . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on equity percentage(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Calculation of Return on Capital Employed and Return on Equity:

2012
2012 Average Equity (12/31/2011 and each of 2012’s quarter ends) . . . . . . . . . . . .
2012 Average Debt (12/31/2011 and at each of 2012’s quarter ends) . . . . . . . . . . .
2012 Average Cash (12/31/2011 and at each of 2012’s quarter ends) . . . . . . . . . . .
Total 2012 average capital employed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2012 Net income (loss), as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plus: 2012 Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Income taxes on 2012 interest expense at 38%** . . . . . . . . . . . . . . . . . . . . . .
Actual return on capital employed = actual net income (loss)

NACoal

HBB

Kitchen
Collection

121.2
140.3

(1.2)
260.3

31.9
3.1
(1.2)

33.8
13.0%
26.3%

48.8
27.2
(1.8)
74.2

25.1
1.3
(0.5)

25.9
34.9%
51.4%

NACoal

HBB

96.4
109.0

(5.7)
199.7

32.8
2.8
(1.1)

34.5
17.3%
34.0%

36.0
45.5
(3.7)
77.8

21.2
2.6
(1.0)

22.8
29.3%
58.9%

38.8
7.3
(3.1)
43.0

(6.9)
0.4
(0.2)

(6.7)
(15.6%)
(17.8%)

Kitchen
Collection

42.9
7.9
(5.3)
45.5

(3.1)
0.5
(0.2)

(2.8)
(6.1%)
(7.2%)

(1) Return on 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, net of cash.

(2) Return on equity is defined as net income divided by average equity.

* Tax rate of 38% represents the Company’s target marginal tax rate compared with 2013’s effective income tax rate of 20.2%.
** Tax rate of 38% represents the Company’s target marginal tax rate compared with 2012’s effective income tax rate of 27.3%.

DIRECTORS AND OFFICERS

Directors and Officers of
NACCO Industries, Inc.
Directors:

John P. Jumper
Chairman of the Board and Chief Executive Officer
of Leidos Holdings, Inc.
Retired Chief of Staff, United States Air Force
Dennis W. LaBarre
Of Counsel, Jones Day
Richard de J. Osborne
Retired Chairman and Chief Executive Officer,
ASARCO Incorporated
Alfred M. Rankin, Jr.
Chairman, President and Chief Executive Officer,
NACCO Industries, Inc.
Chairman, President and Chief Executive Officer,
Hyster-Yale Materials Handling, Inc.
James A. Ratner
Executive Vice President of Forest City Enterprises, Inc.
and Chairman and Chief Executive Officer of Forest City
Commercial Group
Britton T. Taplin
Self employed (personal investments)
David F. Taplin
Self employed (tree farming)
John F. Turben
Founding Partner, Kirtland Capital Partners
David B. H. Williams
Partner of Williams, Bax & Saltzman, P.C.

Officers:

Alfred M. Rankin, Jr.
Chairman, President and Chief Executive Officer
J.C. Butler, Jr.
Senior Vice President–Finance, Treasurer and Chief
Administrative Officer
Elizabeth I. Loveman
Vice President and Controller
John D. Neumann
Vice President, General Counsel and Secretary
Miles B. Haberer
Associate General Counsel and Assistant Secretary
Mary D. Maloney
Associate General Counsel, Assistant Secretary and
Senior Director-Benefits & Human Resources
Robert L. Benson
President and Chief Executive Officer –
The North American Coal Corporation
Gregory H. Trepp
President and Chief Executive Officer –
Hamilton Beach Brands, Inc.
Jesse L. Adkins
Associate Counsel and Assistant Secretary

Officers of Subsidiaries

Officers of
The North American Coal Corporation

Alfred M. Rankin, Jr.
Chairman
Robert L. Benson
President and Chief Executive Officer
J.C. Butler, Jr.
Senior Vice President-Project Development and
Administration
Michael J. Gregory
Vice President-Marketing and Special Projects
Miles B. Haberer
Associate General Counsel and Assistant Secretary
and Director-Land
Mary D. Maloney
Associate General Counsel, Assistant Secretary and
Senior Director-Benefits & Compensation
John D. Neumann
Vice President, General Counsel and Secretary
John P. Sullivan, Jr.
Vice President and Chief Financial Officer
Harry B. Tipton III
Vice President-Engineering and Louisiana, Alabama and
Mississippi Operations
Jesse L. Adkins
Associate Counsel and Assistant Secretary
K. Donald Grischow
Treasurer
John R. Pokorny
Controller

Officers of Hamilton Beach Brands, Inc.

Alfred M. Rankin, Jr.
Chairman
Gregory H. Trepp
President and Chief Executive Officer
Gregory E. Salyers
Senior Vice President, Global Operations
R. Scott Tidey
Senior Vice President, North America Sales and Marketing
Keith B. Burns
Vice President, Engineering and Information Technology
Kathleen L. Diller
Vice President, General Counsel and Secretary
James H. Taylor
Vice President and Chief Financial Officer
Richard E. Moss
Senior Director, Finance & Treasurer
J.C. Butler, Jr.
Assistant Secretary

Officers of The Kitchen Collection, LLC

Alfred M. Rankin, Jr.
Chairman
Gregory H. Trepp
Chief Executive Officer
Randy L. Sklenar
Vice President-Field Operations and Human Resources
Robert O. Strenski
Vice President, General Merchandise Manager
Karen E. Cavender
Controller
L.J. Kennedy
Secretary and Treasurer
J.C. Butler, Jr.
Assistant Secretary

CORPORATE INFORMATION

Annual Meeting

The Annual Meeting of Stockholders of NACCO
Industries, Inc. will be held on May 8, 2014, at 9:00 a.m.
at the corporate office located at: 5875 Landerbrook
Drive, Cleveland, Ohio 44124

Form 10-K

Additional copies of the Company’s Form 10-K filed
with the Securities and Exchange Commission are
available free of charge through NACCO Industries’
website (www.nacco.com) or by request to:

Investor Relations
NACCO Industries, Inc.
5875 Landerbrook Drive, Suite 220
Cleveland, Ohio 44124
(440) 229-5130

Stock Transfer Agent and Registrar

Stockholder Correspondence:
Computershare
P.O. Box 30170
College Station, TX 77842-3170

Overnight Correspondence:
Computershare
211 Quality Circle, Suite 210
College Station, TX 77845

(800) 622-6757

Legal Counsel

McDermott Will & Emery LLP
227 West Monroe Street
Chicago, Illinois 60606

Independent Registered Public Accounting Firm

Ernst & Young LLP
950 Main Ave., Suite 1800
Cleveland, Ohio 44113

Stock Exchange Listing

The New York Stock Exchange
Symbol: NC

Investor Relations Contact

Investor questions may be addressed to:

Investor Relations
NACCO Industries, Inc.
5875 Landerbrook Drive, Suite 220
Cleveland, Ohio 44124
(440) 229-5130
E-mail: ir@naccoind.com

NACCO Industries Website

Additional information on NACCO Industries may be
found at the corporate website, www.nacco.com.
The Company considers this website to be one of the
primary sources of information for investors and other
interested parties.

Subsidiary Company Websites

The websites for NACCO’s subsidiaries are as follows:
Hamilton Beach Brands–U.S.:
www.hamiltonbeach.com
www.proctorsilex.com
www.commercial.hamiltonbeach.com
Hamilton Beach Brands–Mexico:
www.hamiltonbeach.com.mx
Kitchen Collection:
www.kitchencollection.com
www.legourmetchef.com
North American Coal:
www.nacoal.com

Environmental Benefits
This Annual Report on Form 10-K is printed using post-consumer waste recycled paper and vegetable-based inks.
By using this environmental paper, NACCO Industries, Inc. saved the following resources:

64 trees
preserved for
the future

143 lbs. water-
borne waste
not created

42,927 gal.
wastewater
flow saved

5,575 lbs.
solid waste
not generated

4,575 lbs. net
greenhouse
gases prevented

35,020,000
BTUs energy
not consumed

The FSC Trademark identifies wood fibers coming from forests which have been certified in accordance with the rules of the Forest Stewardship Council.

5875 Landerbrook Drive, Suite 220 • Cleveland, Ohio 44124
An Equal Opportunity Employer