NACCO Industries
Annual Report 2015

Plain-text annual report

NACCO Industries, Inc. 2015 Annual Report Strategic Update NACCO Industries, Inc. at a Glance Principal Businesses 2015 Financial Results Market Positions North American Coal (“NACoal”) Headquarters: Dallas, Texas North American Coal mines coal primarily for use in power generation and provides selected value-added mining services for other natural resources companies. MINING * ** Hamilton Beach Brands (“HBB”) Headquarters: Richmond, Virginia HBB is a leading designer, marketer and distributor of small electric household and specialty housewares 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®, Hamilton Beach® Commercial and Weston®. HBB also sells products under licensed brands such as Jamba® and Wolf Gourmet®. Kitchen Collection Headquarters: Chillicothe, Ohio Kitchen Collection is a national specialty retailer of kitchenware in outlet and traditional malls throughout the United States. 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, and Louisiana to adjacent or nearby power plants or coal processing facilities. 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 department stores, whole- sale distributors, other retail sales outlets and the Internet. Kitchen Collection: Kitchen Collection is a leading specialty retailer of kitchen and related products in outlet and traditional malls with 229 stores throughout the United States at December 31, 2015. NACoal: Revenues: $148.0 million Operating profit: $0.5 million Net income: $5.6 million Adjusted income:(1) $27.3 million Equity: $108.4 million Return on Equity:(1) 5.2% Return on Capital Employed:(1) 3.6% HBB: Revenues: $621.0 million Operating profit: $34.8 million Net income: $19.7 million Equity: $51.4 million Return on Equity:(1) 38.3% Return on Capital Employed:(1) 19.1% Kitchen Collection: Revenues: $151.0 million Operating profit: $0.2 million Net loss: $0.4 million Equity: $31.8 million Return on Equity:(1) (1.4%) Return on Capital Employed:(1) (1.3%) (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 14. * Jamba® is a registered trademark of the Jamba Juice Company. ** Wolf Gourmet® is a registered trademark of the Sub-Zero Group, Inc. NACCO Industries, Inc. is an operating holding company with subsidiaries in the following principal industries: mining, small appliances and specialty retail. Competitive Advantages Financial Objectives Strategic Initiatives NACoal: Earn a minimum return on capital employed of 13 percent, maintain or increase the profitability of all existing mining operations and achieve income growth from development of new mining and services ventures HBB: Achieve $750 million in sales and a minimum operating profit margin target of 10 percent NACoal: • Coal mines provide steady income and cash flow before financing activities • Coal sales contracts are structured to eliminate exposure to market fluctuations of coal prices • 2.0 billion tons of lignite coal reserves, of which approximately 1.1 billion tons are committed to current customers • Outstanding operational and techno- logical 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 Kitchen Collection: • Highly analytical merchandising skills and disciplined operating controls • Strong core Kitchen Collection® store portfolio in outlet malls Kitchen Collection: Achieve a minimum operating profit margin target of 5 percent NACoal: • Using a disciplined approach and utilizing NACoal’s core cost-plus business model, pursue: – Additional opportunities to serve as a contract miner in new or existing coal mining operations – Opportunities in non-coal mining operations, such as aggregates or other minerals – Opportunities to expand value-added services 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 • Enhance placements in the “only-the-best” market with strong brands and broad product lines • 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: • Focus on comparable store sales growth – Enhance sales volume and profitability through refinement of store formats and specific product offerings to improve sales closure rates – Maintain inventory efficiency and store inventory controls – Increase sales of higher-margin products • Selectively open new Kitchen Collection® stores in strong outlet malls in well-positioned locations 1 Selected Financial and Operating Data NACCO Industries, Inc. and Subsidiaries Year Ended December 31 2015 2014(1) 2013 2012(2) 2011(2)(3) (In thousands, except per share data) Operating Statement Data : Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . $915,860 $ 31,827 $ 896,782 $ (66,309) $932,666 $ 61,336 $873,364 $ 67,642 $ 790,455 $ 64,074 Income (loss) from continuing operations . . . . . . . Discontinued operations, net-of-tax(2). . . . . . . . . . . Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,984 – $ 21,984 $ (38,118) – $ (38,118) $ 44,450 – $ 44,450 $ 42,163 66,535 $108,698 $ 79,470 82,601 $ 162,071 Basic Earnings (Loss) per Share: Income (loss) from continuing operations . . . . . . . Discontinued operations, net-of-tax(2) . . . . . . . . . . . Basic earnings (loss) per share . . . . . . . . . . . . . . . . . Diluted Earnings (Loss) per Share: Income (loss) from continuing operations . . . . . . . Discontinued operations, net-of-tax(2) . . . . . . . . . . . Diluted earnings (loss) per share . . . . . . . . . . . . . . . $ 3.14 – $ 3.14 $ (5.02) – $ (5.02) $ 5.48 – $ 5.48 $ 5.04 7.93 $ 12.97 $ 9.49 9.85 $ 19.34 $ 3.13 – $ 3.13 $ (5.02) – $ (5.02) $ 5.47 – $ 5.47 $ 5.02 7.90 $ 12.92 $ 9.46 9.82 $ 19.28 Per Share and Share Data: Cash dividends(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Market value at December 31. . . . . . . . . . . . . . . . . . Stockholders’ equity at December 31 . . . . . . . . . . . $ 1.0450 $ 42.20 $ 29.42 Actual shares outstanding at December 31 . . . . . . Basic weighted average shares outstanding . . . . . Diluted weighted average shares outstanding . . . 6.837 7.001 7.022 Balance Sheet Data at December 31: Cash(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term debt(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . $ 52,499 $655,408 $160,113 $201,138 $ 1.0225 $ 59.36 $ 29.23 7.236 7.590 7.590 $ 1.0000 $ 62.19 $ 37.83 7.872 8.105 8.124 $ 5.3775 $ 60.69 $ 33.68 8.353 8.384 8.414 $ 2.1200 $ 89.22 $ 68.81 8.374 8.383 8.408 $ 61,135 $ 770,520 $ 191,431 $ 211,474 $ 95,390 $809,956 $152,431 $297,780 $139,855 $776,306 $135,448 $281,331 $ 153,784 $1,808,834 $ 74,471 $ 576,210 (1) During the fourth quarter of 2014, NACoal determined that indicators of impairment existed at its Centennial mining operations and as a result reviewed the Centennial long-lived assets for impairment. NACoal recorded a non-cash, asset impairment charge of $105.1 million pre-tax for Centennial’s long-lived asset group. (2) 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. (3) 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 cost related to this matter was $2.8 million in 2011. (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 14. For certain pre-tax disclosures included in the “Discussion of 2015 Results” on page 4, the resulting after-tax amount and the related income tax amount have been included and reconciled on page 14. 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. 2  Year Ended December 31 2015 2014(1) 2013 2012(2) 2011(2)(3) (In thousands, 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 . . . . . . . . . . . . . . . . . . $ (6,082) 18,581 7,097 203 $ 95,925 13,941 12,548 (14,412) $ 29,525 40,754 (10,071) (7,143) $ 50,158 27,390 3,754 (6,96 7) $ 31,645 24,229 5,026 39,697 $ 100,597 $ 74,335 $ 19,799 $ 53,065 $ 108,002 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) . . . . . . . . . . . . . . . . . . Provided by (used for) financing activities from continuing operations . . . . . . . . . . . . . . . . . . Other Data: Adjusted EBITDA(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,512) (4,775) (1,768) (236) $ (44,143) (29,516) (792) (483) $ (56,185) (2,278) (2,113) (158) $ (56,320) (3,215) (3,852) (381) $ (10,755) (3,705) (2,292) (33) $ (8,291) $ (74,934) $ (60,734) $ (63,768) $ (16,785) $ 94,413 9,166 10,780 (14,648) $ (50,225) (10,935) 6,305 (280) $ (26,660) 38,476 (12,184) (7,301) $ (6,162) 24,175 (98) (7,348) $ 20,890 20,524 2,734 39,664 $ 99,711 $ (55,135) $ (7,669) $ 10,567 $ 83,812 $(108,301) $ 20,979 $ (36,776) $ (24,520) $ (22,446) $ 54,929 $ 63,351 $ 88,815 $ 81,946 $ 79,875 Total employees at December 31(7) . . . . . . . . . . . . . . 3,600 4,000 4,100 4,300 4,000 (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, long-lived asset and goodwill impairment charges 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 Weston Brands starting in 2014, Centennial from 2012 to 2014 and the unconsolidated mines for all years presented. Excludes employees of Hyster-Yale for all years presented. Year Ended December 31 2015 2014(1) 2013 2012(2) 2011(2)(3) (In thousands) Calculation of Adjusted EBITDA(6) Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations, net of tax . . . . . . . . . . . . . Applica settlement and litigation costs . . . . . . . . . . Centennial long-lived asset impairment charge . . . . . . . . . . . . . . . . . . . . . . . . . . Centennial goodwill impairment charge . . . . . . . . . Income tax provision (benefit) . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation, depletion and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjusted EBITDA(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,119 – (38,455) 7,566 (831) – 3,973 11,270 4,775 (225) – – 15,865 6,088 (162) – – 2,815 6,924 (474) – – 32,751 8,789 (290) $ (38,118) – – $ 108,698 (66,535) – $ 44,450 – – $ 21,984 – – 28,070 $ 63,351 17,992 $ 81,946 16,301 $ 79,875 24,572 $ 88,815 23,680 $ 54,929 $ 162,071 (82,601) (57,146) 3 Discussion of 2015 Results NACCO Industries, Inc. and its subsidiaries operate in the mining, small appliances and specialty retail industries. North American Coal (“NACoal”) performed as expected in 2015 with the exception of its Centennial Natural Resources mining operation in Alabama. Revenues at NACoal were lower in 2015 because the Centennial Natural Resources mining operation continued to be affected by decreased demand and depressed coal prices, and the Company’s decision in mid-2015 to cease mining operations at Centennial. NACoal’s consolidated mining operations, excluding Centennial, realized an increase in revenues mainly as a result of an increase in tons sold at its Mississippi Lignite Mining Company (“MLMC”) operation. NACoal reported net income of $5.6 million compared with a net loss of $51.0 million in 2014. The decision to cease mining operations at Centennial came after incurring significant losses resulting from worsening conditions in Alabama and global coal markets and the adverse effects of regulatory changes. NACoal ceased coal production at Centennial in the fourth quarter of 2015. Excluding Centennial, NACoal reported adjusted income of $27.3 million in 2015 compared with adjusted income of $28.0 million in 2014. “Adjusted income” refers to net income or net loss adjusted for the exclusion of Centennial, including the 2014 asset impairment charge. (For reconciliations from GAAP results to the adjusted non-GAAP results, see page 14.) Improved results at MLMC from an increase in tons sold were more than offset by a reduction in gains on sales of assets, a reduction in royalty and other income and higher selling, general and administrative expenses in 2015 compared with 2014. Hamilton Beach Brands (“HBB”) recorded increased revenues in 2015 primarily due to higher volumes and the December 2014 acquisition of Weston Brands. While HBB’s revenues and gross profit improved during 2015 primarily due to an increase in sales volumes and a full year of Weston results, net income declined to $19.7 million in 2015 from $23.1 million in 2014 as unfavorable foreign currency movements negatively affected results. Kitchen Collection made significant improvements in 2015 as a result of realigning its business around a smaller number of core Kitchen Collection® outlet stores. The realignment included closing more than 100 unprofitable stores during 2014 and 2015 in light of changing consumer trends and ongoing market weakness. Although Kitchen Collection revenues decreased substantially in 2015 from the closure of these stores, Kitchen Collection achieved a substantially lower net loss of $0.4 million in 2015 compared to a net loss of $4.6 million in 2014 as a result of a $2.8 million pre-tax charge related to the realignment and store closures recognized in 2014 as well as fewer promotional markdowns, a shift in sales mix to higher-margin products and a reduction in store expenses in 2015. Consolidated NACCO revenues increased from $896.8 million in 2014 to $915.9 million in 2015. Consolidated net income was $22.0 million, or $3.13 per diluted share, in 2015, compared with a net loss of $38.1 million, or $5.02 per diluted share, in 2014. Consolidated adjusted income for the year ended December 31, 2015 was $43.7 million, or $6.22 per diluted share, compared with adjusted income in 2014 of $40.8 million, or $5.37 per diluted share. 4 Camino Real Fuels’ Eagle Pass mine in Texas began delivering coal to its customer in 2015. A Wirtgen© surface miner is used to extract coal, ensuring specific quality parameters are met. To Our Stockholders Introduction NACCO Industries, Inc., headquartered provides selected value-added mining services in Cleveland, Ohio, is an operating holding for other natural resources companies. company with an established objective of Hamilton Beach Brands, Inc., headquartered increasing long-term shareholder wealth, with in Richmond, Virginia, is a leading designer, a particular focus on taxable investors. The marketer and distributor of small electric house- business of NACCO Industries is conducted hold and specialty housewares appliances, as through three separate and independently well as commercial products for restaurants, managed subsidiaries, with a small core of bars and hotels. people performing public company activities The Kitchen Collection, LLC, headquartered at the corporate headquarters. in Chillicothe, Ohio, is a national specialty retailer The North American Coal Corporation, headquartered in Dallas, Texas, mines coal primarily for use in power generation and of kitchenware operating under the Kitchen Collection® store name in outlet and traditional malls throughout the United States. 5 North American Coal NACoal entered into a new 15-year agree- North American Coal’s mines operate ment in 2015 to operate a mine for the Navajo under contracts to supply coal to an individual Transitional Energy Company (NTEC). Under this customer’s power plant or coal processing facility for a long period of time, often for agreement NACoal, through a new wholly owned subsidiary named Bisti Fuels, will act as NTEC’s decades. The mines and the customer facilities contract miner at NTEC’s Navajo Mine, a surface are in close proximity, often adjacent to one another. NACoal also provides value-added services, such as operating and maintaining coal mine located within the Navajo Nation near Fruitland, New Mexico. Similar to most of NACoal’s other mining agreements, the agreement with draglines for limerock producers, and operating NTEC is a cost-plus arrangement, under which and maintaining a coal processing system for NTEC will reimburse Bisti for all operating costs a customer’s power plant. Unconsolidated Mines NACoal employs a business model that of the mine, provide the capital required to operate the mine and pay NACoal an agreed fee per btu of heating value delivered. Production is expected to be 5 million to 6 million tons of differs from most other coal industry participants. coal per year. NTEC will deliver that coal to the All but one of NACoal’s contracts include “cost- third-party owners of the nearby Four Corners plus” pricing terms under which NACoal’s compen- Generating Station. sation includes reimbursement of all operating costs, plus a comparatively small but consistent Consolidated Mines amount of agreed profit on coal tons or heating NACoal has a coal mine located in Mississippi units (btu) delivered. Each contract specifies the that operates pursuant to a more traditional indices and mechanics by which agreed profits business model in which NACoal pays all operating change over time, generally in line with broad costs and provides the capital for the mine. measures of inflation. Financing for these mines This mine is referred to as a “consolidated mine” is supported by, or in some instances actually because its results are consolidated in the provided by, their respective customers in order Company’s financial statements. Mississippi to minimize costs and are without recourse to Lignite Mining Company (MLMC) delivers coal NACoal or NACCO. to a single power plant adjacent to the mine. These mines are referred to as “unconsoli- MLMC’s sales prices are not subject to spot coal dated mines” because they are not consolidated market fluctuations since MLMC sells coal to in the Company’s financial statements. The pre- its customer at a contractually agreed-upon tax profits generated from these mines are shown price which adjusts monthly, primarily based on separately in the Company’s income statement as changes in the level of established indices over “Earnings of unconsolidated mines.” NACoal and time. The indices include cost components such its customers believe strongly that the structure as labor and diesel fuel. The price of diesel fuel is of these long-term contracts fully aligns long-term heavily weighted among these indices. The recent interests of the mine and the customer in a way substantial decline in diesel fuel prices is expected that assures low costs for the customer over the to reduce 2016 earnings as a moderate increase long term. NACoal’s analysis of historical data in tons sold and the beneficial effect of lower supports that conclusion. diesel prices on production costs will only partially 6 reclamation is complete or ownership of the mines is transferred. NACoal is also evaluating a range of strategies for its Alabama mineral reserves, including holding reserves with substantial unmined coal tons for sale or contract mining when conditions in Alabama and global coal markets improve. Value-added Services NACoal’s “cost-plus” business model also applies to its value-added services operations. NACoal personnel operate and maintain drag- lines for extraction of limerock at independent customer-owned limerock quarries in Florida. This business is operated as a division of NACoal and its financial results are included in the results of consolidated operations. NACoal also operates a coal processing system for a power plant customer pursuant to a cost-plus arrangement. Safety and Environmental Excellence NACoal consistently ranks among the safest and most environmentally responsible coal mining companies in the country. In 2015, the National Mining Association ranked NACoal among the North American Coal signed a new agreement to operate a surface mine located within the Navajo Nation, near Fruitland, New Mexico. Pictured left to right are Rick Ziegler, President of NACoal’s subsidiary, Bisti Fuels Company, which will operate the mine, Navajo Nation President Russell Begaye, and J.C. Butler, President and Chief Executive Officer of North American Coal. offset the reduction in sales prices. MLMC’s safest coal mining companies in the United contract with its customer expires in 2032. States based on the Mine Safety and Health During the third quarter of 2015, NACoal’s Administration (MSHA) 2015 incident rate. Safety management recommended and its Board of is at the very core of NACoal’s culture, embedded Directors approved cessation of coal production deeply in employee training programs, operating at the Centennial Natural Resources business procedures and best practices shared among in Alabama by the end of 2015. The cessation of all of NACoal’s operations. coal production at Centennial occurred during NACoal’s permitting, mining and reclamation the fourth quarter of 2015, eliminating NACoal’s activities utilize state-of-the-art technology and a only direct exposure to coal market price volatility. commitment to excellence to ensure that activities Centennial will continue to evaluate strategies to comply with, or exceed, legal requirements. Work maximize cash flow, including through the sale of on mine sites is performed with the greatest mineral reserves, equipment and parts inventory. degree of care to ensure that land is returned However, cash expenditures related to mine to a productive natural state. Frequently, NACoal reclamation at Centennial will continue until employees and their families are farmers, 7 ranchers and outdoorsmen who live near mining low U.S. inflation rates, as reflected in typical areas. They care deeply about the land, water and market indices such as the Consumer Price Index wildlife where they live, and are excellent stewards. and the Producer Price Index, will determine the As evidence of this corporate and individual extent to which contractual compensation at the commitment to the environment, NACoal’s Coteau unconsolidated mines will change year by year. Properties Company received the inaugural 2015 Achievement of the goal to increase earnings Distinction in Reclamation Award. This award of the unconsolidated mines by 50 percent is was given by the American Society of Mining currently expected to occur in 2017 or 2018, but and Reclamation for construction of a lake and timing will depend on future inflation rates and reclamation of surrounding grasslands on mined customer demand. land, which were donated by Coteau to the North At MLMC, NACoal’s only operating consoli- Dakota Game and Fish Department for public use. dated mine, profits are determined by customer Strategic Initiatives and Long-term View NACoal’s unconsolidated operations, which constitute a large majority of its earnings and cash flow capabilities, provide a strong core that is central to NACoal’s business model. NACoal has been very fortunate to enter into eight new agreements over the last several years to develop or operate new mines, or provide value-added services to customers. With the exception of demand for coal, index-based coal prices, and actual operating costs incurred. As previously mentioned, as long as low diesel prices persist MLMC’s earnings will be affected. NACoal will focus efforts on increasing sales, reducing costs and evaluating capital requirements at MLMC. Generally, the power plants served by NACoal are lower-cost producers of electricity on their respective grids. NACoal expects to continue to be a low-cost miner of coal at existing mines and Centennial, these arrangements have all been its mines in development. structured as cost-plus contracts. Camino Real began delivering coal to its customer during the fourth quarter of 2015, Coyote Creek will begin delivering coal to its customer mid-2016, and Liberty Fuels’ and Bisti Fuels’ customers have Given the current unsupportive regulatory environment for developing new traditional coal- fired power plants, and based on lessons learned at Centennial, NACoal is taking an extremely disciplined approach with respect to growth. This indicated they expect to begin accepting deliveries includes thoughtful consideration of NACoal’s core during the second half of 2016. skills, strengths and relationships. Opportunities Over the longer term, NACoal’s goal continues may exist to serve as a cost-plus contract miner to be to increase earnings of its unconsolidated for those who continue to need coal for power mines by approximately 50 percent from the 2012 generation or other processes using coal. NACoal level of $45.2 million through the development and is well suited to serve as a cost-plus contract miner maturation of its newer mines and normal escala- in non-coal mining operations, such as aggregates tion of contractual compensation at its existing mines. Income related to a full year of deliveries at the Camino Real mine, the commencement of deliveries at the Liberty Fuels and Coyote Creek mines and income at Bisti Fuels will contribute to this goal in 2016 and beyond. However, generally or other minerals. Also, strategic growth could come from projects based on 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 8 products derived from coal. NACoal is working with integral part of the nation’s total energy mix for a range of technical experts and potential partners the United States to continue to be competitive in who could help develop projects based on these a global economy. NACoal will continue to monitor technologies. However, any significant growth pending regulations and legislation and will take in domestic coal mining opportunities is largely a leadership role to help encourage reasonable dependent on the United States adopting a more regulation by the government. Importantly, NACoal balanced energy policy in which coal continues expects to continue to address changes to to play a key role, including through new coal domestic environmental regulatory requirements technologies. Developing new opportunities and by working collaboratively with its customers, securing new contracts is a long-term initiative trade associations, representatives of regulatory that will take time. This is a significant strategic bodies, and government officials. priority at NACoal. Overall, NACoal’s attractive but unusual NACoal believes that a large majority of business model, based largely on long-term cost- consumers in the United States will benefit reimbursable contracts, provides a solid foundation from a domestic energy policy which balances for all of the company’s coal and limerock mining affordability, energy needs and environmental operations. This business model offers generally responsibility. The company believes that, for stable cash flow before financing activities with the foreseeable future, coal must remain an minimal capital investment, other than at MLMC, which will continue to require ongoing replacement capital. NACoal will continue to pursue growth over the next few years mainly as the company’s newer mines reach full production. 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. Hamilton Beach Brands Overview Hamilton Beach Brands’ (HBB) vision is to be a leading designer, marketer and distributor of small electric household and specialty house- wares appliances, as well as commercial products sold worldwide under preferred brand names and to achieve profitable growth from innovative solutions that improve everyday living. HBB develops and invests in several core competencies that are critical to achieving that vision. Most importantly HBB has a culture based on a foundation of Good Thinking™. Whether Hamilton Beach’s focus on consumer-driven innovation led to the development of the following products (clockwise from bottom right): Digital Simplicity™ Rice Cooker, Breakfast Burrito Maker, 8-Cup Food Processor, FlexBrew® Programmable Single Serve Coffee maker with Hot Water Dispenser, Set & Forget® Programmable Slow Cooker, and Easy Reach™ Convection Oven. 9 developing innovation to address consumers’ unmet needs, solving a challenge in the supply chain or partnering with a retail customer, HBB’s Good Thinking™ culture provides a meaningful competitive advantage. The only way to maintain that culture is by hiring and retaining talented and dedicated employees globally. In addition, HBB believes it is best in class at sourcing and logistics as well as support systems to meet the needs of retail and commercial customers. HBB pursues market and product development expertise to help ensure that its products delight consumers across the most desirable market opportunities. Finally, HBB maintains and invests in a strong brand portfolio to increase customer and consumer confidence that HBB’s family of products is right for them. Strategic Initiatives and Long-term View HBB’s vision includes delivering sales of Hamilton Beach Brands’ Wolf Gourmet® Countertop Oven is the flagship product in a line of luxury countertop appliances created through a licensing agreement with Sub-Zero Group, Inc. strong brand portfolio which includes Proctor Silex®, Hamilton Beach®, Weston®, Wolf Gourmet® and Jamba®. A second area of growth opportunity is approximately $750 million over the next three through the enhancement of online sales and to five years by focusing on its five key strategic communications. In the past few years, online initiatives. As the company moves toward this sales of small kitchen appliances have grown target sales level, HBB expects to take advantage significantly. During 2015, over 20 percent of of increasing economies of scale to improve small kitchen appliance category dollars were return on sales. purchased online. Retailers are looking for First, HBB is focused on enhancing placements partners that can provide not only products, but in the North American consumer business through also the capabilities and support for promotion, consumer-driven innovative products and strong marketing and distribution programs appropriate sales and marketing support. The company’s for the online channel. As consumers’ shopping product and placement track record is strong due habits evolve to rely more on the Internet, HBB to innovation processes centered on understanding is focused on providing best-in-class retailer and meeting end-user needs and focusing on support, increasing engagement with end users, quality and best-in-class customer service. In the including maintaining a website that is appropriate North American consumer market, HBB believes for mobile devices, and enhancing its programs it has a stronger and deeper portfolio of new designed to make HBB the preferred partner for products than its competitors. HBB will continue small appliances. to introduce new products across a wide range of Third, HBB has increased focus and invest- brands, price points and categories in both the ment around our strategy to become a leader retail and commercial marketplace, leveraging its in the “only-the-best” high-end small appliance 10 market segment. This segment accounts for HBB’s objective is to increase international sales to approximately one-third of the U.S. small kitchen 35 to 45 percent of total sales by concentrating on appliance market, and the target consumer is key markets. HBB’s efforts will focus on continuing financially strong. This “only-the-best” segment to expand its established positions in Mexico, offers a strong growth opportunity in an area Canada, Central America and South America as in which HBB has not previously participated. In well as further expanding HBB’s position in the 2014, HBB announced its entry into the “only-the- emerging markets of China and Brazil. HBB expects best” high-end small kitchen appliance market to pursue other markets by selectively leveraging segment through multi-year licensing agreements primarily the Hamilton Beach and Wolf Gourmet with the Sub-Zero Group, Inc. and the Jamba Juice brands. To achieve this growth, HBB is working Company. HBB and Sub–Zero Group launched a full line of Wolf Gourmet® branded small kitchen appliances and cooking tools in 2015 for sale in to enhance its understanding of local consumers’ needs, developing products to meet those needs and increasing sales and marketing resources high-end retail channels, in Sub-Zero and Wolf allocated to these markets, especially in the mid- showrooms, and on the Internet. Hamilton Beach to high-end segments. HBB began selling retail secured its lead distribution partners for the Wolf Gourmet® branded products in 2015 and expects to add additional distribution channels in products in China in 2013, and in Brazil in 2014. HBB expects to increase sales in these areas in 2016. 2016 both domestically and in its Canadian and Fifth, while HBB has a leading position in Mexican markets. The company is also working the commercial market, it continues to focus with the Jamba Juice Company and launched a on achieving further penetration of the global product line focused on blending and juicing under the Jamba® brand in 2015. HBB is pursuing other opportunities to create additional product commercial market through a commitment to an enhanced global product line for chains and distributors serving the global food service and lines that can be distributed in high-end or hospitality markets. HBB is enhancing its global specialty stores and on the Internet, including the introduction of the Hamilton Beach® Professional premium line of counter-top kitchen appliances. commercial product line, particularly with new innovative juicing, blending and mixing platforms, and strengthening its food service and hospitality Fourth, HBB is focused on expanding its retail offerings in order to achieve further market presence internationally in the emerging growth penetration in this segment. Over the near term, markets of Asia and Latin America by increasing HBB anticipates continuing to build distribution product offerings designed specifically for those capabilities and resources in the international market needs and by expanding distribution food service market, where products and services channels and sales and marketing capabilities. will be directed at global food service chains. While HBB has a long-standing presence in the HBB made significant progress in most global commercial products market, HBB’s segments of the business in 2015. Momentum historical strength in the retail segment has is building in its core business and from efforts been in the U.S. consumer goods market, with resulting from its Strategic Initiatives. HBB is approximately 20 percent of its total sales optimistic that it will be able to build on that occurring outside the United States in 2015. momentum in the years ahead. HBB believes 11 it is well-positioned to continue its leadership merchandise mix, store displays and appearance position in the small appliance industry. Achieving and enhancing customers’ store experience its $750 million sales objective will help move through improved customer interactions. A the company toward achieving its near-term particular focus will be on increasing sales of financial objective of 8 percent operating profit higher-margin products. Nonetheless, at current margin and its long-term financial objective of mall and store traffic levels, reaching the company’s a minimum 10 percent operating profit margin long-term 5 percent operating profit margin in the years ahead. It also expects to continue to target will be challenging. be a substantial generator of cash flow before Overall, Kitchen Collection is dealing with a financing activities, with a continued low level difficult environment and evolving aggressively of capital expenditures required. in a constructive manner. To achieve its vision, Kitchen Collection Kitchen Collection’s vision is to be a leading specialty retailer of kitchenware in outlet malls and to a lesser degree traditional malls through- out the United States. Constrained discretionary income, lower rates of household formation and increased online shopping have resulted in fewer visits to many of the malls and outlets where Kitchen Collection has store locations. In this environment, not all malls where Kitchen Collection maintains stores have been adequately profitable. Kitchen Collection must increase the number of customers coming into its stores and its sale closure rate with these customers. Kitchen Collection believes its remaining stores are well- positioned to allow the company to perform at close to break-even in the current challenging environment and to take advantage of any future market rebound. The company will continue to evaluate and, as lease contracts permit, terminate or restructure leases for underperforming stores. Capital expenditures are expected to be modest, with generation of positive cash flow before Kitchen Collection closed nearly 100 stores during financing activities expected. 2014 and 2015 due to a rigorous and strategic review of the short-term and long-term prospects Conclusion and NACCO Outlook of each location. As part of that process, Kitchen NACCO is a strong, multi-industry company Collection determined it was important to focus on with leading businesses in the mining and small the Kitchen Collection brand, which resulted in the closure of all remaining Le Gourmet Chef® stores. As the business moves into 2016, Kitchen appliances industries. The Company continues to believe HBB’s growth opportunities are significant. NACCO is confident that HBB has the right strategic Collection has a strong core in its Kitchen Collection® store format in outlet malls. While the company continues to optimize its store initiatives in place to move it closer to achieving its long-term growth and financial objectives. While growth opportunities also are significant portfolio with stores in high-traffic locations in at NACoal, they are largely based on growth at strong outlet malls, the focus is now shifting to existing and newer mines. Both HBB and NACoal comparable store sales growth. Kitchen Collection will be prudent in pursuing any new opportunities. expects to accomplish this by increasing closure Kitchen Collection’s long-term prospects at this rates through continued refinement of its format, time are uncertain, but its near-term prospects ongoing review of specific product offerings, are positive and should improve. NACCO is 12 well-positioned to support its individual businesses Bob began his career with NACoal in 1976 as in the years ahead. Each subsidiary is benefitting Senior Mining Engineer responsible for supervising from programs previously put in place which, facility construction and overseeing contract when combined with the initiatives now being administration at the Falkirk Mine, which was in implemented, should improve income and return development. He was promoted to Production on total capital employed at each business over Manager of the Falkirk Mine in 1979, and named the next few years. In addition, the Company Manager of the Indian Head Mine in 1983. Bob expects each business to generate significant cash was President of Coteau’s Freedom Mine from flow before financing over time, which it expects 1990 to 1997, when he was asked to lead the to use mainly to pay dividends, repurchase stock, construction and startup of MLMC’s Red Hills Mine when that is an attractive investment for its as its first General Manager. Bob assumed the shareholders, and reduce debt. Of course, NACoal additional role of VP, Eastern and Southern and HBB will continue to look for internal and Operations in 2001, and became Executive Vice external opportunities to expand their range of President and Chief Operating Officer of NACoal activities in the long term. in 2005. Bob served as President and Chief In the fourth quarter of 2015, NACCO Executive Officer of NACoal from 2006 to 2015. completed its $60 million Class A stock repur- Under Bob’s leadership NACoal grew significantly, chase program, which had been announced with the addition of eight new mining and in November 2013. In total, NACCO purchased services contracts. We appreciate Bob’s many approximately 1,123,000 shares of its Class A contributions, and wish him well in retirement. common stock for an aggregate purchase price In closing, we would like to thank all of our of $60.0 million, including $24.0 million of subsidiaries’ customers, retailers and suppliers, stock purchased during 2015. Under a previous and all of NACCO’s stockholders, for their stock repurchase program, which ran from continued support. Most importantly, we would November 2011 to November 2013, the Company also like to thank all employees of NACCO and its repurchased approximately 624,000 shares subsidiary companies for their continued hard of Class A common stock for an aggregate work. We continue to have great confidence in purchase price of $35.6 million. the management teams leading each of our n n n subsidiaries and the parent company, and we are confident these teams can successfully We would like to recognize Bob Benson, who implement their respective strategic initiatives retired from NACoal during 2015 after serving the to enhance the Company’s sales and profits Company in an exemplary way for over 39 years. over the next few years. Alfred M. Rankin, Jr. Chairman, President and Chief Executive Officer NACCO Industries, Inc. J.C. Butler, Jr. 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 13 Supplemental Data Reconciliation of 2015 and 2014 Net Income (Loss) "As reported" to Adjusted Income: (In thousands, except per share data) NACoal Consolidated Year Ended 2015 Year Ended 2015 Diluted earnings per share 2015 Net Income, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments to eliminate Centennial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 Adjusted Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $ 5,619 21,684 27,303 $ $ 21,984 21,684 43,668 $ $ 3.13 3.09 6.22 2014 Net Loss, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments to eliminate Centennial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 Adjusted Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Year Ended 2014 $ (50,977) 78,941 27,964 $ Year Ended 2014 $ (38,118) 78,941 40,823 $ Diluted earnings per share $ $ (5.02) 10.39 5.37 Adjusted Income is a measure of income that differs from Net Income (Loss) measured in accordance with U.S. GAAP. The Company has reported Adjusted Income and Diluted earnings per share for the years ended December 31, 2015 and 2014 excluding the net effect of adjustments to eliminate Centennial. Management believes a discussion excluding these adjustments to eliminate Centennial is more reflective of NACCO’s underlying business operations and enables investors to better understand the results of operations of the Company. Calculation of Return on Capital Employed and Return on Equity: (In thousands, except percentage data) 2015 2015 Average Equity (12/31/2014 and each of 2015’s quarter ends) . . . . . . . 2015 Average Debt (12/31/2014 and at each of 2015’s quarter ends) . . . . . . 2015 Average Cash (12/31/2014 and at each of 2015’s quarter ends) . . . . . . Total 2015 average capital employed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NACoal $ 107,240 132,308 (2,886) $ 236,662 $ HBB 51,541 58,870 (1,373) $ 109,038 2015 Net income (loss), as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plus: 2015 Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Income taxes on 2015 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). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $ 5,619 4,545 (1,727) 8,437 3.6% 5.2% Calculation of Return on Capital Employed and Return on Equity: 2014 2014 Average Equity (12/31/2013 and each of 2014’s quarter ends) . . . . . . . . 2014 Average Debt (12/31/2013 and at each of 2014’s quarter ends) . . . . . . . 2014 Average Cash (12/31/2013 and at each of 2014’s quarter ends) . . . . . . . Total 2014 average capital employed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NACoal $ 139,791 179,841 (136) $ 319,496 2014 Net income (loss), as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plus: 2014 Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Income taxes on 2014 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). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (50,977) 5,211 (1,980) $ (47,746) (14.9%) (36.5%) $ $ $ $ $ $ 19,749 1,775 (675) 20,849 19.1% 38.3% HBB 53,453 32,284 (2,783) 82,954 23,144 1,133 (431) 23,846 28.7% 43.3% $ $ $ $ $ $ $ $ Kitchen Collection 30,101 795 (4,681) 26,215 (420) 131 (50) (339) (1.3%) (1.4%) Kitchen Collection 32,176 8,126 (1,684) 38,618 (4,603) 367 (139) (4,375) (11.3%) (14.3%) (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 2015’s effective income tax rate of 11.4%. ** Tax rate of 38% represents the Company’s target marginal tax rate compared with 2014’s effective income tax rate of 50.2%. 14 Corporate Information Annual Meeting The Annual Meeting of Stockholders of NACCO Industries, Inc. will be held on May 9, 2016, at 2:30 p.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 (U.S., Canada and Puerto Rico) (781) 575-4735 (International) 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.proctorsilex.com www.commercial.hamiltonbeach.com www.commercial.hamiltonbeach.com H Hamilton Beach Brands–Mexico: www.hamiltonbeach.com.mx Weston Brands: www.westonproducts.com Kitchen Collection: www.kitchencollection.com North American Coal: www.nacoal.com (cid:34)(cid:33)(cid:32)(cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:31)(cid:34)(cid:26)(cid:25)(cid:24)(cid:32)(cid:23)(cid:25)(cid:26)(cid:22)(cid:31)(cid:21)(cid:24)(cid:32)(cid:20)(cid:19)(cid:16)(cid:32)(cid:15)(cid:31)(cid:14)(cid:13)(cid:13)(cid:24)(cid:31)(cid:16)(cid:12)(cid:32)(cid:26)(cid:15)(cid:31)(cid:11)(cid:13)(cid:23)(cid:21)(cid:20)(cid:10)(cid:31)(cid:9)(cid:26)(cid:13)(cid:23)(cid:31)(cid:9)(cid:13)(cid:26)(cid:32)(cid:15)(cid:8)(cid:15)(cid:31)(cid:14)(cid:33)(cid:21)(cid:11)(cid:33)(cid:31)(cid:33)(cid:25)(cid:7)(cid:32)(cid:31)(cid:12)(cid:32)(cid:32)(cid:20)(cid:31)(cid:11)(cid:32)(cid:26)(cid:21)(cid:19)(cid:9)(cid:32)(cid:24)(cid:31)(cid:21)(cid:20)(cid:31)(cid:25)(cid:11)(cid:11)(cid:13)(cid:26)(cid:24)(cid:25)(cid:20)(cid:11)(cid:32)(cid:31)(cid:14)(cid:21)(cid:8)(cid:33)(cid:31)(cid:8)(cid:33)(cid:32)(cid:31)(cid:26)(cid:6)(cid:5)(cid:32)(cid:15)(cid:31)(cid:13)(cid:9)(cid:31)(cid:8)(cid:33)(cid:32)(cid:31)(cid:30)(cid:13)(cid:26)(cid:32)(cid:15)(cid:8)(cid:31)(cid:29)(cid:8)(cid:32)(cid:14)(cid:25)(cid:26)(cid:24)(cid:15)(cid:33)(cid:21)(cid:4)(cid:31)(cid:28)(cid:13)(cid:6)(cid:20)(cid:11)(cid:21)(cid:5)(cid:27)(cid:3) Environmental Benefits This Annual Report on Form 10­K is printed using post­consumer waste recycled paper and vegetable­based inks. By using this environmental paper, Hyster­Yale Materials Handling, Inc. saved the following resources: 29 trees pre­ served for the future 84 lbs. water­ borne waste not created 12,092 gal. wastewater flow saved 1,338 lbs. solid waste not generated 2,634 lbs. net greenhouse gases prevented 20,162,000 BTUs energy not consumed (cid:30)(cid:29)(cid:28)(cid:31)(cid:21)(cid:15)(cid:31)(cid:20)(cid:13)(cid:8)(cid:31)(cid:26)(cid:32)(cid:15)(cid:4)(cid:13)(cid:20)(cid:15)(cid:21)(cid:12)(cid:5)(cid:32)(cid:31)(cid:9)(cid:13)(cid:26)(cid:31)(cid:8)(cid:33)(cid:32)(cid:15)(cid:32)(cid:31)(cid:11)(cid:25)(cid:5)(cid:11)(cid:6)(cid:5)(cid:25)(cid:19)(cid:13)(cid:20)(cid:15)(cid:3)(cid:31)(cid:28)(cid:25)(cid:5)(cid:11)(cid:6)(cid:5)(cid:25)(cid:19)(cid:13)(cid:20)(cid:15)(cid:31)(cid:4)(cid:32)(cid:26)(cid:31)(cid:2)(cid:13)(cid:33)(cid:25)(cid:14)(cid:22)(cid:31)(cid:1)(cid:20)(cid:7)(cid:21)(cid:26)(cid:13)(cid:20)(cid:23)(cid:32)(cid:20)(cid:8)(cid:25)(cid:5)(cid:31)(cid:28)(cid:25)(cid:5)(cid:11)(cid:6)(cid:5)(cid:25)(cid:8)(cid:13)(cid:26)(cid:3) 5875 Landerbrook Drive, Suite 220 • Cleveland, Ohio 44124 An Equal Opportunity Employer 

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