SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 333-89248
NMHG Holding Co.
DELAWARE | 31-1637659 | |
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(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) | ||
650 N.E. HOLLADAY STREET; SUITE 1600; PORTLAND, OR | 97232 | |
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(Address of principal executive offices) | (Zip code) |
(503) 721-6000
N/A
NMHG HOLDING CO. IS A WHOLLY OWNED SUBSIDIARY OF NACCO INDUSTRIES, INC. AND MEETS THE CONDITIONS IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q. WE ARE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT UNDER GENERAL INSTRUCTION H(2).
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
YES [ ] NO [X]
At April 30, 2004, 100 common shares were outstanding.
NMHG HOLDING CO.
TABLE OF CONTENTS
1
PART I
FINANCIAL INFORMATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
NMHG HOLDING CO. AND SUBSIDIARIES
MARCH 31 | DECEMBER 31 | |||||||
2004
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2003
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|||||||
(in millions, except share data) | ||||||||
ASSETS
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||||||||
Current Assets
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||||||||
Cash and cash equivalents
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$ | 48.8 | $ | 61.3 | ||||
Accounts receivable, net
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222.3 | 236.2 | ||||||
Tax advances, NACCO Industries, Inc.
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12.8 | 24.5 | ||||||
Inventories
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273.4 | 247.7 | ||||||
Deferred income taxes
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20.4 | 20.4 | ||||||
Prepaid expenses and other
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34.1 | 17.6 | ||||||
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Total Current Assets
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611.8 | 607.7 | ||||||
Property, Plant and Equipment, Net
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240.3 | 242.9 | ||||||
Goodwill
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351.2 | 351.3 | ||||||
Other Non-current Assets
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70.7 | 73.1 | ||||||
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Total Assets
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$ | 1,274.0 | $ | 1,275.0 | ||||
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LIABILITIES AND STOCKHOLDERS EQUITY
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Current Liabilities
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Accounts payable
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$ | 247.1 | $ | 208.0 | ||||
Accounts payable, affiliate
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23.7 | 23.0 | ||||||
Revolving credit agreements
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9.3 | 17.1 | ||||||
Current maturities of long-term debt
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9.2 | 20.5 | ||||||
Accrued payroll
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17.6 | 26.3 | ||||||
Accrued warranty obligations
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26.9 | 25.7 | ||||||
Other current liabilities
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110.8 | 112.5 | ||||||
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Total Current Liabilities
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444.6 | 433.1 | ||||||
Long-term Debt
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258.7 | 270.1 | ||||||
Other Non-current Liabilities
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145.1 | 146.5 | ||||||
Minority Interest
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0.2 | 0.5 | ||||||
Stockholders Equity
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||||||||
Common stock, par value $1 per share, 100 shares authorized;
100 shares outstanding
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Capital in excess of par value
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198.2 | 198.2 | ||||||
Retained earnings
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238.7 | 238.2 | ||||||
Accumulated other comprehensive income (loss):
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Foreign currency translation adjustment
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26.2 | 25.5 | ||||||
Minimum pension liability adjustment
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(38.4 | ) | (38.4 | ) | ||||
Deferred gain on cash flow hedging
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0.7 | 1.3 | ||||||
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425.4 | 424.8 | ||||||
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Total Liabilities and Stockholders Equity
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$ | 1,274.0 | $ | 1,275.0 | ||||
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See notes to unaudited condensed consolidated financial statements.
2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
NMHG HOLDING CO. AND SUBSIDIARIES
THREE MONTHS ENDED | ||||||||
MARCH 31
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2004
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2003
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(in millions) | ||||||||
Revenues
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$ | 470.8 | $ | 419.0 | ||||
Cost of sales
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396.6 | 344.2 | ||||||
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Gross Profit
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74.2 | 74.8 | ||||||
Selling, general and administrative expenses
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65.9 | 62.1 | ||||||
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Operating Profit
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8.3 | 12.7 | ||||||
Other income (expense)
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||||||||
Interest expense
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(8.5 | ) | (8.6 | ) | ||||
Loss on interest rate swap agreements
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(0.1 | ) | (0.4 | ) | ||||
Income from unconsolidated affiliates
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0.8 | 0.7 | ||||||
Other net
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(0.2 | ) | 0.2 | |||||
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(8.0 | ) | (8.1 | ) | ||||
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Income Before Income Taxes and Minority Interest
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0.3 | 4.6 | ||||||
Income tax provision
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0.1 | 1.6 | ||||||
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Income Before Minority Interest
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0.2 | 3.0 | ||||||
Minority interest income
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0.3 | 0.3 | ||||||
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Net Income
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$ | 0.5 | $ | 3.3 | ||||
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Comprehensive Income
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$ | 0.6 | $ | 4.9 | ||||
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See notes to unaudited condensed consolidated financial statements.
3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NMHG HOLDING CO. AND SUBSIDIARIES
THREE MONTHS ENDED | ||||||||
MARCH 31
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2004
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2003
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(in millions) | ||||||||
Operating Activities
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Net income
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$ | 0.5 | $ | 3.3 | ||||
Adjustments to reconcile net income
to net cash provided by operating activities:
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Depreciation and amortization
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10.7 | 11.3 | ||||||
Deferred income taxes
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1.2 | 1.4 | ||||||
Minority interest
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(0.3 | ) | (0.3 | ) | ||||
Other non-cash items
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1.9 | (1.1 | ) | |||||
Working capital changes
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Intercompany receivable/payable, affiliate
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11.8 | 2.8 | ||||||
Accounts receivable
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6.2 | (14.0 | ) | |||||
Inventories
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(30.6 | ) | (9.4 | ) | ||||
Other current assets
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(11.2 | ) | (6.8 | ) | ||||
Accounts payable and other liabilities
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34.1 | 25.5 | ||||||
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Net cash provided by operating activities
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24.3 | 12.7 | ||||||
Investing Activities
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Expenditures for property, plant and equipment
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(7.0 | ) | (3.2 | ) | ||||
Proceeds from the sale of assets
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3.9 | 7.0 | ||||||
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Net cash provided by (used for) investing activities
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(3.1 | ) | 3.8 | |||||
Financing Activities
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Additions to long-term debt and revolving credit agreements
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7.7 | 8.6 | ||||||
Reductions of long-term debt and revolving credit agreements
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(38.5 | ) | (29.8 | ) | ||||
Cash dividends paid
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| (1.2 | ) | |||||
Financing fees paid
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| (0.1 | ) | |||||
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Net cash used for financing activities
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(30.8 | ) | (22.5 | ) | ||||
Effect of exchange rate changes on cash
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(2.9 | ) | (0.8 | ) | ||||
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Cash and Cash Equivalents
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Decrease for the period
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(12.5 | ) | (6.8 | ) | ||||
Balance at the beginning of the period
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61.3 | 54.9 | ||||||
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Balance at the end of the period
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$ | 48.8 | $ | 48.1 | ||||
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See notes to unaudited condensed consolidated financial statements.
4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
NMHG HOLDING CO. AND SUBSIDIARIES
THREE MONTHS ENDED | ||||||||
MARCH 31
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2004
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2003
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|||||||
(in millions) | ||||||||
Common Stock
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$ | | $ | | ||||
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Capital in Excess of Par Value
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198.2 | 198.2 | ||||||
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Retained Earnings
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Beginning balance
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238.2 | 226.8 | ||||||
Net income
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0.5 | 3.3 | ||||||
Cash dividends declared
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| (5.0 | ) | |||||
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238.7 | 225.1 | ||||||
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Accumulated Other Comprehensive Income (Loss)
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Beginning balance
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(11.6 | ) | (42.7 | ) | ||||
Foreign currency translation adjustment
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0.7 | 2.3 | ||||||
Reclassification of hedging activity into earnings
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(1.1 | ) | (0.1 | ) | ||||
Current period cash flow hedging activity
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0.5 | (0.6 | ) | |||||
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||||||
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(11.5 | ) | (41.1 | ) | ||||
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Total Stockholders Equity
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$ | 425.4 | $ | 382.2 | ||||
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See notes to unaudited condensed consolidated financial statements.
5
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include
the accounts of NMHG Holding Co. (NMHG Holding, the parent company), a
Delaware corporation, and its wholly owned subsidiary, NACCO Materials Handling
Group, Inc. (collectively, NMHG or the Company). NMHG Holding is a wholly
owned subsidiary of NACCO Industries, Inc. (NACCO). The Companys
subsidiaries operate in the lift truck industry. NMHG manages its operations
as two reportable segments: wholesale manufacturing (NMHG Wholesale) and
retail distribution (NMHG Retail). Intercompany accounts and transactions
have been eliminated.
NMHG designs, engineers, manufactures, sells, services and leases a
comprehensive line of lift trucks and aftermarket parts marketed globally under
the Hyster
®
and Yale
®
brand names. Lift trucks and component parts are
manufactured in the United States, Northern Ireland, Scotland, the Netherlands,
China, Italy, Japan, Mexico, the Philippines and Brazil. NMHG Wholesale
includes the manufacture and sale of lift trucks and related service parts,
primarily to independent and wholly owned Hyster and Yale retail dealerships.
NMHG Retail includes the sale, leasing and service of Hyster and Yale lift
trucks and related service parts by wholly owned retail dealerships and rental
companies.
These financial statements have been prepared in accordance with accounting
principles generally accepted in the United States for interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the financial
position of the Company as of March 31, 2004 and the results of its operations,
cash flows and changes in stockholders equity for the three-month periods
ended March 31, 2004 and 2003 have been included. These unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Companys
Annual Report on Form 10-K for the year ended December 31, 2003 filed with
the Securities and Exchange Commission on March 15, 2004.
The balance sheet at December 31, 2003 has been derived from the audited
financial statements at that date but does not include all of the information
or notes required by accounting principles generally accepted in the United
States for complete financial statements.
Operating results for the three-month period ended March 31, 2004 are not
necessarily indicative of the results that may be expected for the remainder of
the year ending December 31, 2004. For further information, refer to the
consolidated financial statements and notes thereto included in the Companys
Annual Report on Form 10-K for the year ended December 31, 2003.
Certain amounts in the prior periods Unaudited Condensed Consolidated
Financial Statements have been reclassified to conform to the current periods
presentation.
Note 2 Recent Accounting Pronouncements
In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation (FIN) No. 46, Consolidation of Variable Interest Entities.
FIN No. 46 clarifies the application of Accounting Research Bulletin (ARB)
No. 51, Consolidated Financial Statements, for certain entities in which
equity investors do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other
parties. FIN No. 46 requires that variable interest entities, as defined, be
consolidated by the primary beneficiary, which is defined as the entity that is
expected to absorb the majority of the expected losses, receive a majority of
the expected gains, or both.
NMHGs 20% joint venture, NMHG Financial Services, Inc. (NFS), has been
determined to be a variable interest entity. The Company, however, has
concluded that NMHG is not the primary beneficiary and will, therefore,
continue to use the equity method to account for its 20% interest in NFS. NMHG
does not consider its variable interest in NFS to be significant. See further
discussion of NFS in Note 9.
6
In December 2003, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 132 (Revised) (Revised SFAS No. 132), Employers Disclosure
about Pensions and Other Post-Retirement Benefits. Revised SFAS No. 132
retains disclosure requirements about pension plans and other post-retirement
benefit plans. Revised SFAS No. 132 requires additional disclosures in annual
financial statements about the types of plan assets, investment strategy,
measurement dates, plan obligations, cash flows, and components of net periodic
benefit cost of defined benefit pension plans and other post-retirement benefit
plans. Revised SFAS No. 132 also requires interim disclosure of the elements
of net periodic benefit cost and the total amount of contributions paid or
expected to be paid during the current year if significantly different
from amounts previously disclosed. The interim disclosure requirements of
Revised SFAS No. 132 are effective for interim periods beginning after December
15, 2003. The Company has made the required interim disclosures in Note 6 to
these Unaudited Condensed Consolidated Financial Statements.
On January 12, 2004, the FASB issued FASB Staff Position (FSP) No. SFAS
106-1, Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003. This FSP allows
companies to make a one-time election to defer the accounting for the effects
of the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(the Act) that was signed into law on December 8, 2003.
SFAS No. 106, Employers Accounting for Postretirement Benefits Other than
Pensions, requires presently enacted changes in relevant laws to be considered
in current period measurements of the accumulated postretirement benefit
obligation and the net postretirement benefit costs. The FSP addresses the
fact that certain accounting issues raised by the Act are not explicitly
addressed in SFAS No. 106 and significant uncertainties may exist as to the
direct effects of the Act, as well as the ancillary effects on plan
participants behavior and health care costs. Therefore, a plan sponsor and
its advisors may not have (1) sufficiently reliable information available to
measure the effects of the Act, (2) sufficient time before issuance of the
financial statements for fiscal years that include the Acts enactment to
prepare actuarial valuations that reflect the effects of the Act, or (3)
sufficient guidance to ensure that the sponsors accounting for the effects of
the Act is consistent with accounting principles generally accepted in the
United States. As a result, a plan sponsor may elect to defer recognizing the
effects of the Act in accounting for its plan under SFAS No. 106 and in
providing disclosures related to the plan required by Revised SFAS No. 132,
until authoritative guidance on accounting for certain components of the Act is
issued, or until certain other events occur. The Company has elected to defer
accounting for the Act until further authoritative guidance is issued.
On July 1, 2003, the Company prospectively adopted Emerging Issues Task Force
(EITF) No. 00-21, Accounting for Revenue Arrangements with Multiple
Deliverables. EITF No. 00-21 addresses when and how an arrangement involving
multiple deliverables should be divided into separate units of accounting, as
well as how the arrangement consideration should be measured and allocated to
the separate units of accounting in the arrangement. The adoption of this
standard did not have a material impact on the Companys financial position or
results of operations.
Note
3 - Inventories
Inventories are summarized as follows:
7
The cost of certain manufactured and retail inventories has been determined using the LIFO method. At March 31, 2004 and
December 31, 2003, 63% and 61%, respectively, of total
inventories were determined using the LIFO method. An actual valuation of
inventory under the LIFO method can be made only at the end of the year based
on the inventory levels and costs at that time. Accordingly, interim LIFO
calculations must be based on managements estimates of expected
year-end inventory levels and costs. Because these estimates are subject to
change and may be different than the actual inventory levels and costs at
year-end, interim results are subject to the final year-end LIFO inventory
valuation.
Note 4 - Restructuring Charges
The changes to the Companys restructuring accruals since December 31, 2003 are
as follows:
2002 Restructuring Program
As announced in December 2002, NMHG Wholesale is phasing out its Lenoir, North
Carolina, lift truck component facility and restructuring other manufacturing
and administrative operations, primarily its Irvine, Scotland, lift truck
assembly and component facility. During the fourth quarter of 2002, NMHG
Wholesale recognized a restructuring charge of approximately $12.5 million
pre-tax. Of this amount, $3.8 million related to a non-cash asset impairment
charge for building, machinery and tooling, which was determined based on
current market values for similar assets and broker quotes compared with the
net book value of these assets; and $8.7 million related to severance and other
employee benefits to be paid to approximately 615 manufacturing and
administrative employees. Payments of $0.4 million were made to approximately
23 employees during the first quarter of 2004. Payments of $0.1 million
related to post-employment medical benefits were made during the first quarter
of 2004. The post-retirement medical accrual is included in the table above
under Other. Payments related to this restructuring program are expected to
continue through 2006. Approximately $2.2 million of pre-tax restructuring
related costs, which were primarily related to manufacturing inefficiencies and
were not eligible for accrual when the restructuring program was announced in
December 2002, were expensed in the first quarter of 2004 and are not shown
in the table above. Of the $2.2 million additional costs incurred during the
first quarter of 2004, $2.1 million is classified as cost of sales and $0.1
million is classified as selling, general and administrative expenses in the
Unaudited Condensed Consolidated Statements of Income for the three months
ended March 31, 2004.
2001 Restructuring Program
NMHG Retail recognized a restructuring charge of approximately $4.7 million
pre-tax in 2001, of which $0.4 million related to lease termination costs and
$4.3 million related to severance and other employee benefits to be paid to
approximately 140 service technicians, salesmen and administrative personnel at
wholly owned dealers in Europe. The remaining payments of $0.6 million are
expected to be completed during 2004, although no payments were made during the
first quarter of 2004.
8
Note 5 - Accounting for Guarantees
Under various financing arrangements for certain customers, including
independently owned retail dealerships, NMHG provides guarantees of the
residual values of lift trucks, or recourse or repurchase obligations such that
NMHG would be obligated in the event of default by the customer. Terms of the
third-party financing arrangements for which NMHG is providing a guarantee
generally range from one to five years. Total guarantees and amounts subject
to recourse or repurchase obligations at March 31, 2004 and December 31, 2003
were $182.5 million and $183.2 million, respectively. Losses anticipated under
the terms of the guarantees, recourse or repurchase obligations, which are not
significant, have been reserved for in the accompanying Unaudited Condensed
Consolidated Financial Statements. Generally, NMHG retains a security interest
in the related assets financed such that, in the event that NMHG would become
obligated under the terms of the recourse or repurchase obligations, NMHG would
take title to the assets financed. The fair value of collateral held at March
31, 2004 was approximately $208.5 million, based on Company estimates. The
Company estimates the fair value of the collateral using information regarding
the original sales price, the current age of the equipment and general market
conditions that influence the value of both new and used lift trucks.
NMHG has a 20% ownership interest in NFS, a joint venture with GE Capital
Corporation (GECC), formed primarily for the purpose of providing financial
services to Hyster and Yale lift truck dealers and national account customers
in the United States. NMHGs ownership in NFS is accounted for using the
equity method of accounting. Generally, NMHG sells lift trucks through its
independent dealer network or directly to customers. These dealers and
customers may enter into a financing transaction with NFS or other unrelated
third-parties. NFS provides debt financing to dealers and lease financing to
both dealers and customers. On occasion, the credit quality of the customer or
concentration issues within GECC necessitate providing standby recourse or
repurchase obligations or a guarantee of the residual value of the lift trucks
purchased by customers and financed through NFS. At March 31, 2004, $145.6
million of the $182.5 million of guarantees discussed above related to
transactions with NFS. In addition, in connection with the current joint
venture agreement, NMHG also provides a guarantee to GECC for 20% of NFS debt
with GECC, such that NMHG would become liable under the terms of NFS debt
agreements with GECC in the case of default by NFS. At March 31, 2004, the
amount of NFS debt guaranteed by NMHG was $106.1 million. NFS has not
defaulted under the terms of this debt financing in the past and although there
can be no assurances, NMHG is not aware of any circumstances that would cause
NFS to default in future periods.
NMHG provides a standard warranty on its lift trucks, generally for six to
twelve months or 1,000 to 2,000 hours. In addition, NMHG sells extended
warranty agreements, which provide additional warranty up to three to five
years or up to 3,600 to 10,000 hours. The specific terms and conditions of
those warranties vary depending upon the product sold and the country in which
NMHG does business. Revenue received for the sale of extended warranty
contracts is deferred and recognized in the same manner as the costs are
incurred to perform under the warranty contracts, in accordance with FASB
Technical Bulletin 90-1, Accounting for Separately Priced Extended Warranty
and Product Maintenance Contracts. Factors that affect the Companys warranty
liability include the number of units sold, historical and anticipated rates of
warranty claims and the cost per claim. The Company also maintains a quality
enhancement program under which it provides for specifically identified field
product improvements in its warranty obligation. Accruals under this program
are determined based on estimates of the potential number of claims to be
processed and the cost of processing those claims. The Company periodically
assesses the adequacy of its recorded warranty liabilities and adjusts the
amounts as necessary.
Changes in the Companys current and long-term warranty obligations, including
deferred revenue on extended warranty contracts are as follows:
As part of its periodic review of warranty estimates, the Company reduced its
warranty accrual by $2.2 million during the three months ended March 31, 2003,
based on recent history of the volume of claims processed,
9
the amount of those
claims and expectations of future trends under its warranty programs. This
adjustment is
not necessarily indicative of future trends or adjustments that may be required
to adjust the warranty accrual in future periods.
Note 6 Retirement Benefit Plans
The Company maintains various defined benefit pension plans covering most of
its employees. In 1996, pension benefits were frozen for employees covered
under NMHGs United States plans, except for those NMHG employees participating
in collective bargaining agreements. As a result, in the United States, only
certain employees covered under collective bargaining agreements will earn
retirement benefits under defined benefit pension plans. Other employees of
the Company, including employees whose pension benefits were frozen as of
December 31, 1996, will receive retirement benefits under defined contribution
retirement plans. The Companys policy is to periodically make contributions
to fund these plans within the range allowed by applicable regulations. The
Company is currently evaluating the impact of the Pension Funding Equity Act
enacted in April 2004 on projected funding.
The Company also maintains health care and life insurance plans which provide
benefits to certain eligible retired employees. Under the Companys current
policy, plan benefits are funded at the time they are due to participants. The
plans have no assets.
As a result of the Companys election to defer the impact of the Act as
discussed in Note 2, any measures relating to postretirement benefits do not
reflect the impact of the Act on the plans. In addition, authoritative
guidance, once issued, may require the Company to change information previously
reported relating to its postretirement benefit plans.
The components of pension and post-retirement (income) expense are set forth
below:
10
Note 7 Unaudited Condensed Consolidating Guarantor and Non-Guarantor
Financial Information
The following tables set forth the unaudited condensed consolidating statements
of income and cash flows for the three months ended March 31, 2004 and 2003 and
the unaudited condensed consolidating balance sheets as of March 31, 2004 and
December 31, 2003. The following information is included as a result of the
guarantee of the Parent Companys Senior Notes by each of NMHGs wholly owned
U.S. subsidiaries (Guarantor Companies). None of the Companys other
subsidiaries has guaranteed the Senior Notes. Each of the guarantees is joint
and several and full and unconditional. NMHG Holding includes the
consolidated financial results of the parent company only, with all of its
wholly owned subsidiaries accounted for under the equity method.
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF INCOME
11
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF INCOME
12
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
13
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
14
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
15
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
16
Note 8 Segment Information
Financial information for each of the Companys reportable segments, as defined
by SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, is presented in the following table.
NMHG Wholesale derives a portion of its revenues from transactions with NMHG
Retail. The amount of these revenues, which are based on current market prices
of similar third-party transactions, are indicated in the following table on
the line NMHG Eliminations in the revenues section.
17
NMHG HOLDING CO. AND SUBSIDIARIES
MARCH 31, 2004
(Tabular Amounts in Millions, Except Percentage Data)
Table of Contents
MARCH 31
DECEMBER 31
2004
2003
$
122.3
$
113.5
141.2
121.6
263.5
235.1
29.0
27.9
292.5
263.0
(19.1
)
(15.3
)
$
273.4
$
247.7
Table of Contents
Lease
Severance
Impairment
Other
Total
$
6.7
$
$
0.6
$
7.3
0.1
0.1
(0.4
)
(0.1
)
(0.5
)
$
6.4
$
$
0.5
$
6.9
$
0.4
$
0.2
$
$
0.6
$
0.4
$
0.2
$
$
0.6
Table of Contents
Table of Contents
Table of Contents
FOR THE THREE MONTHS ENDED MARCH 31, 2004
NMHG
Guarantor
Non-Guarantor
Consolidating
NMHG
Holding
Companies
Companies
Eliminations
Consolidated
$
$
269.5
$
273.0
$
(71.7
)
$
470.8
235.4
232.9
(71.7
)
396.6
31.1
34.8
65.9
3.0
5.3
8.3
(6.8
)
(1.7
)
(8.5
)
0.5
3.3
(3.0
)
0.8
0.1
(0.4
)
(0.3
)
0.5
(0.4
)
3.2
(3.0
)
0.3
(0.9
)
1.0
0.1
0.5
0.5
2.2
(3.0
)
0.2
0.3
0.3
$
0.5
$
0.5
$
2.5
$
(3.0
)
$
0.5
Table of Contents
FOR THE THREE MONTHS ENDED MARCH 31, 2003
NMHG
Guarantor
Non-Guarantor
Consolidating
NMHG
Holding
Companies
Companies
Eliminations
Consolidated
$
$
262.9
$
214.1
$
(58.0
)
$
419.0
221.8
180.3
(57.9
)
344.2
32.6
29.5
62.1
8.5
4.3
(0.1
)
12.7
(7.0
)
(1.6
)
(8.6
)
3.3
3.1
(5.7
)
0.7
(0.3
)
0.1
(0.2
)
3.3
4.3
2.8
(5.8
)
4.6
0.9
0.7
1.6
3.3
3.4
2.1
(5.8
)
3.0
0.3
0.3
$
3.3
$
3.4
$
2.4
$
(5.8
)
$
3.3
Table of Contents
AT MARCH 31, 2004
NMHG
Guarantor
Non-Guarantor
Consolidating
NMHG
Holding
Companies
Companies
Eliminations
Consolidated
$
$
16.3
$
32.5
$
$
48.8
10.5
85.0
220.3
(93.5
)
222.3
145.9
127.5
273.4
2.3
48.8
44.6
(28.4
)
67.3
12.8
296.0
424.9
(121.9
)
611.8
133.9
106.4
240.3
307.3
43.9
351.2
669.6
315.1
26.0
(940.0
)
70.7
$
682.4
$
1,052.3
$
601.2
$
(1,061.9
)
$
1,274.0
$
$
183.5
$
168.4
$
(81.1
)
$
270.8
9.5
92.7
102.2
(39.9
)
164.5
9.3
9.3
9.5
276.2
279.9
(121.0
)
444.6
247.5
0.1
11.1
258.7
371.6
86.5
(312.8
)
145.3
425.4
404.4
223.7
(628.1
)
425.4
$
682.4
$
1,052.3
$
601.2
$
(1,061.9
)
$
1,274.0
Table of Contents
AT DECEMBER 31, 2003
NMHG
Guarantor
Non-Guarantor
Consolidating
NMHG
Holding
Companies
Companies
Eliminations
Consolidated
$
$
15.4
$
45.9
$
$
61.3
9.1
98.0
221.8
(92.7
)
236.2
129.5
118.2
247.7
2.4
45.7
18.5
(4.1
)
62.5
11.5
288.6
404.4
(96.8
)
607.7
134.2
108.7
242.9
307.3
44.0
351.3
664.2
312.3
24.9
(928.3
)
73.1
$
675.7
$
1,042.4
$
582.0
$
(1,025.1
)
$
1,275.0
$
$
146.6
$
164.3
$
(79.9
)
$
231.0
3.3
113.7
84.2
(16.2
)
185.0
17.1
17.1
3.3
260.3
265.6
(96.1
)
433.1
247.5
262.1
46.6
(286.1
)
270.1
0.1
116.2
49.9
(19.2
)
147.0
424.8
403.8
219.9
(623.7
)
424.8
$
675.7
$
1,042.4
$
582.0
$
(1,025.1
)
$
1,275.0
Table of Contents
FOR THE THREE MONTHS ENDED MARCH 31, 2004
NMHG
Guarantor
Non-Guarantor
Consolidating
NMHG
Holding
Companies
Companies
Eliminations
Consolidated
$
$
35.9
$
(11.8
)
$
0.2
$
24.3
(3.8
)
(3.2
)
(7.0
)
0.5
3.4
3.9
(3.3
)
0.2
(3.1
)
1.9
5.8
7.7
(20.4
)
(18.1
)
(38.5
)
(13.2
)
13.4
(0.2
)
(31.7
)
1.1
(0.2
)
(30.8
)
(2.9
)
(2.9
)
0.9
(13.4
)
(12.5
)
15.4
45.9
61.3
$
$
16.3
$
32.5
$
$
48.8
Table of Contents
FOR THE THREE MONTHS ENDED MARCH 31, 2003
NMHG
Guarantor
Non-Guarantor
Consolidating
NMHG
Holding
Companies
Companies
Eliminations
Consolidated
$
1.9
$
13.1
$
(1.1
)
$
(1.2
)
$
12.7
(2.0
)
(1.2
)
(3.2
)
7.3
(0.3
)
7.0
5.3
(1.5
)
3.8
1.1
7.5
8.6
(5.2
)
(0.9
)
(23.7
)
(29.8
)
4.6
(6.4
)
1.8
(1.3
)
(1.2
)
1.2
(1.3
)
(1.9
)
(7.4
)
(14.4
)
1.2
(22.5
)
(0.8
)
(0.8
)
11.0
(17.8
)
(6.8
)
5.3
49.6
54.9
$
$
16.3
$
31.8
$
$
48.1
Table of Contents
Table of Contents
MARCH 31 | DECEMBER 31 | |||||||
2004
|
2003
|
|||||||
TOTAL ASSETS
|
||||||||
NMHG Wholesale
|
$ | 1,197.9 | $ | 1,179.5 | ||||
NMHG Retail
|
161.7 | 174.5 | ||||||
NMHG Eliminations
|
(85.6 | ) | (79.0 | ) | ||||
|
|
|
||||||
NMHG Consolidated
|
$ | 1,274.0 | $ | 1,275.0 | ||||
|
|
|
NACCO typically charges fees to its operating subsidiaries, including NMHG. The amount charged to NMHG for the three months ended March 31, 2003 was $2.0 million and is included in selling, general and administrative expenses. No amount was charged for the three months ended March 31, 2004.
18
Note 9 Equity Investments
NMHG has a 20% ownership interest in NFS, a joint venture with GE Capital Corporation, formed primarily for the purpose of providing financial services to independent and wholly owned Hyster and Yale lift truck dealers and national account customers in the United States. NMHGs ownership in NFS is accounted for using the equity method of accounting.
Summarized financial information for this equity investment is as follows:
THREE MONTHS ENDED
MARCH 31
2004
2003
$
10.3
$
10.5
$
6.7
$
6.3
$
3.3
$
2.5
NMHG has a 50% ownership interest in Sumitomo NACCO Materials Handling Company, Ltd. (SN), a limited liability company which was formed primarily for the manufacture and distribution of Sumitomo-Yale branded lift trucks in Japan and the export of Hyster and Yale branded lift trucks and related components and service parts outside of Japan. NMHG purchases products from SN under normal trade terms. NMHGs ownership in SN is also accounted for using the equity method of accounting.
19
Item 2. Managements Discussion and Analysis
NMHG designs, engineers, manufactures, sells, services and leases a
comprehensive line of lift trucks and aftermarket parts marketed globally under
the Hyster
®
and Yale
®
brand names. The Company manages its operations as two
reportable segments: wholesale manufacturing (NMHG Wholesale) and retail
distribution (NMHG Retail). Lift trucks and component parts are manufactured
in the United States, Northern Ireland, Scotland, the Netherlands, China,
Italy, Japan, Mexico, the Philippines and Brazil. NMHG Wholesale includes the
manufacture and sale of lift trucks and related service parts, primarily to
independent and wholly owned Hyster and Yale retail dealerships. NMHG Retail
includes the sale, leasing and service of Hyster and Yale lift trucks and
related service parts by wholly owned retail dealerships and rental companies.
NMHG Retail includes the elimination of intercompany revenues and profits
resulting from sales by NMHG Wholesale to NMHG Retail.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Please refer to the discussion of the Companys Critical Accounting Policies
and Estimates as disclosed on pages 9 through 11 in the Companys Form 10-K for
the year ended December 31, 2003.
FINANCIAL REVIEW
The segment and geographic results of operations for NMHG were as follows for
the three months ended March 31:
20
First Quarter of 2004 Compared with First Quarter of 2003
NMHG Wholesale
Revenues:
The following table identifies the components of the changes in revenues for
the first quarter of 2004 compared with the first quarter of 2003:
Revenues increased $38.7 million, or 10.1%, to $421.3 million in the first
quarter of 2004 compared with $382.6 million in the first quarter of 2003. The
increase in revenues was primarily due to the favorable impact of the
translation of sales in foreign currencies to U.S. dollars, primarily in
Europe, and a shift in product mix to higher-priced lift trucks and increased
parts sales, primarily in the Americas.
Worldwide unit shipments increased 1.0% to 17,624 units in the first quarter of
2004 from 17,452 units in 2003 as an increase in unit volumes, primarily in
Europe, was partially offset by a decline in unit volumes in the Americas.
Lift truck volume in Europe increased 892 units, or 18.7%, while lift truck
volume in the Americas decreased 680 units, or 5.8%, primarily due to shipping
delays. The shipping delays were primarily caused by the additional time
necessary to ensure that U.S. lift trucks met new engine emission standards and
the on-going implementation of restructuring programs in the Americas.
21
Operating profit:
The following table identifies the components of the changes in operating
profit for the first quarter of 2004 compared with the first quarter of 2003:
NMHG Wholesales operating profit decreased $4.0 million, or 29.2%, to $9.7
million in the first quarter of 2004 compared with $13.7 million in the first
quarter of 2003. The beneficial impact of higher service parts sales and
favorable product mix were more than offset by adverse material price
movements, particularly higher commodity costs for steel, incremental costs
associated with engine emission regulatory compliance and unfavorable currency
movements. Also negatively impacting operating results was a $1.1 million
increase in transition costs, included in other cost of sales, related to
previously-implemented restructuring programs at NMHGs manufacturing
facilities, primarily at the Lenoir facility. See further discussion of these
restructuring programs below. Also contributing to the decline in operating
profit was an increase in selling, general and administrative expenses,
primarily due to higher marketing expenses associated with the introduction of
new products currently under development, as well as higher employee-related
expenses, partially offset by a reduction in fees paid to NACCO.
Net income:
Net income decreased $2.2 million to $2.5 million in the first quarter of 2004
compared with $4.7 million in the first quarter of 2003, primarily due to the
factors impacting operating profit discussed above. The impact of decreased
operating profit was partially offset by an increase in other income (expense),
net due to a reduction in the loss on interest rate swap agreements being
amortized from Other comprehensive income (loss) as a result of NMHGs May 2002
debt refinancing.
Backlog
The worldwide backlog level was 24,500 units at March 31, 2004 compared with
19,100 units at December 31, 2003 and 17,300 units at March 31, 2003. The
increases were primarily due to increased demand for lift trucks in the
Americas.
22
NMHG Retail (net of eliminations)
Revenues:
The following table identifies the components of the changes in revenues for
the first quarter of 2004 compared with the first quarter of 2003:
Revenues increased $13.1 million, or 36.0%, to $49.5 million for the quarter
ended March 31, 2004 compared with the first quarter of 2003. Revenues for the
first quarter of 2003 included $0.7 million from NMHG Retails only wholly
owned U.S. dealer. See further discussion below. During the first quarter of
2004, revenues increased primarily due to the favorable impact of foreign
currency in Europe and Asia-Pacific due to a stronger euro, Australian dollar
and British pound sterling compared with the U.S. dollar and higher service
revenues in all regions. Revenues from the sales of lift trucks decreased as
pricing pressure and lower volumes in Asia-Pacific more than offset increased
volume in Europe.
Operating loss:
The following table identifies the components of the changes in operating loss
for the first quarter of 2004 compared with the first quarter of 2003:
NMHG Retails operating loss for the quarter ended March 31, 2004 was $1.4
million, $0.4 million higher than the 2003 operating loss of $1.0 million. The
first-quarter 2003 operating loss included wind-down costs related to the
settlement of contingent liabilities for previously-sold dealers. The
increased operating loss in the first quarter of 2004 was primarily due to
higher repairs and maintenance expenditures associated with rental contracts in
Asia-Pacific and Europe.
23
Net loss:
NMHG Retails net loss increased $0.6 million to $2.0 million in the first
quarter of 2004 from $1.4 million in the first quarter of 2003. The increase
in NMHG Retails net loss is due to the increase in operating loss discussed
above as well as higher interest expense.
2003 Sale of U.S. Dealer:
On January 3, 2003, NMHG sold substantially all of the assets and liabilities
of its wholly owned dealer in the U.S., which comprised the Americas component
of NMHG Retail. Revenues from the NMHG Retail-Americas operation in the first
quarter of 2003 were $0.7 million, net of eliminations from transactions with
NMHG Wholesale. As a result of the sale of this business, no additional
revenues or losses are expected. However, NMHG Wholesale sold lift trucks and
service parts to the new independent owner of this retail dealership in 2003
and in the first quarter of 2004 and such sales are expected to continue.
Restructuring Programs
NMHG 2002 Restructuring Program
Approximately $2.2 million of pre-tax restructuring related costs, primarily as
a result of manufacturing inefficiencies which were not eligible for accrual in
December 2002, were expensed during the first three months of 2004. Additional
costs, not eligible for accrual, for severance and manufacturing inefficiencies
are expected to be approximately $6.8 million for the remainder of 2004, $5.0
million in 2005 and $2.3 million in 2006. Cost savings, primarily from reduced
employee wages and benefits were $0.6 million in the first quarter of 2004 and
are expected to be $5.6 million for the remainder of 2004. Cost savings of
$9.3 million and $13.9 million are expected in 2005 and 2006, respectively,
with annual cost savings of $13.4 million thereafter. Although a majority of
the projected savings is the result of a reduction in fixed factory costs, the
overall benefit estimates could vary depending on unit volumes and the
resulting effect on manufacturing efficiencies.
This restructuring program will allow the Company to re-focus its operating
activities, including the manufacturing of new products in Europe. As a
result, the Company expects to receive government grants during 2004 and 2005
totaling approximately $4.2 million.
NMHG 2001 Restructuring Program
NMHG Retail recognized a restructuring charge of approximately $4.7 million
pre-tax in 2001, of which $0.4 million related to lease termination costs and
$4.3 million related to severance and other employee benefits to be paid to
approximately 140 service technicians, salesmen and administrative personnel at
wholly owned dealers in Europe. As of December 31, 2003, severance payments,
net of currency effects, of $3.3 million had been made to approximately 117
employees and $0.7 million of the amount originally accrued was reversed. The
remaining payments of $0.6 million are expected to be completed during 2004
although no payments were made during the first quarter of 2004. Cost savings
primarily from reduced employee wages, employee benefits and lease costs of
approximately $0.8 million pre-tax were realized in the first three months of
2004 and are expected to be approximately $2.3 million pre-tax for the
remainder of 2004 related to this program. Annual pre-tax cost savings of $3.1
million are expected to continue subsequent to 2004. Estimated benefits could
be reduced by additional severance payments, if any, made to employees above
the statutory or contractually required amount that was accrued in 2001 or due
to changes in foreign currency rates.
24
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The following tables detail the changes in cash flow for the quarter ended
March 31:
Cash provided by operations increased $11.6 million primarily due to an
increase in cash from working capital. The increase in working capital cash
flow was primarily due to an increase in the change in receivables, due to
increased collection efforts, and payables, due to timing of payments, during
the first quarter of 2004. These positive impacts were partially offset by a
decrease in the change in inventories, primarily as a result of shipping delays
in the Americas during the first quarter of 2004. Investing cash flows
decreased $6.9 million, due to an increase in spending on property, plant and
equipment and a decrease in proceeds from the sale of assets. The increase in
capital spending was primarily due to increased spending on tooling for
production of the 1 to 8 ton lift trucks currently in development. The
decrease in proceeds from the sale of assets was primarily due to the sale of
NMHG Retails only wholly owned U.S. dealer in January 2003.
25
Cash used for financing activities increased $8.3 million in the first quarter
of 2004 compared with the first quarter of 2003 primarily due to an increase in
repayments of debt using available cash and an effort to minimize NMHG Retails
external debt through loans from NMHG Wholesale.
Financing Activities
During 2002, NMHG issued $250.0 million of 10% unsecured Senior Notes that
mature on May 15, 2009. The Senior Notes are senior unsecured obligations of
NMHG Holding Co. and are guaranteed by substantially all of NMHGs domestic
subsidiaries. NMHG Holding Co. has the option to redeem all or a portion of
the Senior Notes on or after May 15, 2006 at the redemption prices set forth in
the Indenture governing the Senior Notes. The proceeds from the Senior Notes
were reduced by an original issue discount of $3.1 million.
NMHG also has a secured, floating-rate revolving credit facility that expires
in May 2005. Availability under the revolving credit facility is up to $175.0
million and is governed by a borrowing base derived from advance rates against
the inventory and accounts receivable of the borrowers, as defined in the
revolving credit facility. Adjustments to reserves booked against these
assets, including inventory reserves, will change the eligible borrowing base
and thereby impact the liquidity provided by the facility. At March 31, 2004,
the borrowing base under the revolving credit facility was $98.3 million, which
reflects reductions for the commitments or availability under certain foreign
credit facilities and for an excess availability requirement of $15.0 million.
There were no borrowings outstanding under this facility at March 31, 2004.
In addition to the amount outstanding under the Senior Notes, NMHG had
borrowings of approximately $10.7 million outstanding at March 31, 2004 under
various foreign working capital facilities.
Both the revolving credit facility and terms of the Senior Notes include
restrictive covenants, which, among other things, limit the payment of
dividends to NACCO. The revolving credit facility also requires NMHG to meet
certain financial tests, including, but not limited to, minimum excess
availability, maximum capital expenditures, maximum leverage ratio and minimum
fixed charge coverage ratio tests. At March 31, 2004, the Company is in
compliance with all of its debt covenants.
NMHG believes that funds available under the revolving credit facility, other
available lines of credit and operating cash flows will provide sufficient
liquidity to meet its operating needs and commitments arising during the next
twelve months and until the expiration of NMHGs revolving credit facility in
May 2005.
Contractual Obligations, Contingent Liabilities and Commitments
Since December 31, 2003, there have been no significant changes in the total
amount of NMHGs contractual obligations or commercial commitments, or the
timing of cash flows in accordance with those obligations, as reported in the
Companys Form 10-K for the year ended December 31, 2003.
26
Capital Expenditures
Expenditures for property, plant and equipment were $6.8 million for NMHG
Wholesale and $0.2 million for NMHG Retail during the first three months of
2004. These capital expenditures included tooling for new products, machinery,
equipment and lease and rental fleet. It is estimated that NMHG Wholesales
capital expenditures will be approximately $26.8 million and NMHG Retails
capital expenditures are expected to be $1.4 million for the remainder of 2004.
Planned expenditures for the remainder of 2004 include tooling related to the
launch of the new 1 to 8 ton internal combustion engine lift trucks currently
in development, as well as investments in manufacturing equipment and plant
improvements. The principal sources of financing for these capital
expenditures will be internally generated funds and bank borrowings.
Capital Structure
NMHGs capital structure is presented below:
The decrease in total net tangible assets is primarily due to a $39.8 million
increase in payables as a result of the timing of cash disbursements at the end
of the first quarter of 2004. Debt decreased as a result of the availability
of excess cash to pay down outstanding balances during the first quarter of
2004 as discussed in the Cash Flow section above.
Stockholders equity increased $0.6 million in the first quarter of 2004 as a
result of net income of $0.5 million and a $0.1 million increase in Other
comprehensive income (loss) (OCI). The change in OCI was the result of a $0.7
million net favorable adjustment to the foreign currency cumulative translation
balance offset by $0.6 million loss on deferred cash flow hedges.
RELATED PARTY TRANSACTIONS
NACCO typically charges its operating subsidiaries for services provided by its
corporate headquarters. NACCO charged fees of $2.0 million to NMHG during the
quarter ended March 31, 2003, which are included in selling, general and
administrative expenses in the Unaudited Condensed Consolidated Statements of
Income. No such fee was charged to NMHG in the first quarter of 2004.
EFFECTS OF FOREIGN CURRENCY
NMHG operates internationally and enters into transactions denominated in
foreign currencies. As such, the Companys financial results are subject to
the variability that arises from exchange rate movements. The Company
maintains a foreign exchange hedging program designed to moderate the effects
of foreign exchange fluctuations over the near term. The effects of foreign
currency fluctuations on revenues, operating profit and net income are
addressed in the previous discussion of operating results.
27
OUTLOOK
NMHG Wholesale
In 2004, NMHG Wholesale continues to expect stronger lift truck markets in the
Americas and Japan, strong growth in the China lift truck market and relatively
flat lift truck markets in Europe and the rest of Asia-Pacific. While first
quarter backlog has risen significantly compared with a year ago and is
anticipated to remain strong, NMHG Wholesale anticipates that its unit shipment
levels for 2004 will remain at controlled rates to accommodate the phase in of
newly designed products at its manufacturing facilities.
Adverse currency movements and increasing materials costs are anticipated to
continue to affect the remainder of 2004. However, NMHG Wholesale is hopeful
that price increases initiated in the first quarter of 2004 will help mitigate
the effects of these items beginning in mid-2004. High product development and
introduction costs are expected to continue, while manufacturing restructuring
costs are anticipated to decline compared with 2003.
Longer-term, global lift truck markets are expected to return gradually to
average pre-recession levels by 2007-2008. NMHG Wholesales various long-term
programs are expected to enhance profitability and generate growth as they
begin to mature, particularly in the 2006-2008 period. In particular, NMHG
Wholesale continues to move forward with significant new product development
programs. The Company believes that the initial introduction of the next wave
of these new products is on schedule for early 2005, with expected introduction
of all of these products by the end of 2008.
NMHG Retail
NMHG Retail expects to continue programs to improve the performance of its
wholly owned dealerships in 2004 as part of its objective to achieve and
sustain at least break-even results while building market position.
FORWARD-LOOKING STATEMENTS
The statements contained in this Form 10-Q that are not historical facts are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are made subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
presented in these forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements. The Company
undertakes no obligation to publicly revise these forward-looking statements to
reflect events or circumstances that arise after the date hereof. Such risks
and uncertainties with respect to the Companys operations include, without
limitation:
(1) changes in demand for lift trucks and related aftermarket parts and service
on a worldwide basis, especially in the U.S. where the Company derives a
majority of its sales, (2) changes in sales prices, (3) delays in delivery or
changes in costs of raw materials or sourced products and labor, (4) delays in
manufacturing and delivery schedules, (5) exchange rate fluctuations, price
fluctuations for certain raw materials, changes in foreign import tariffs and
monetary policies and other changes in the regulatory climate in the foreign
countries in which NMHG operates and/or sells products, (6) product liability
or other litigation, warranty claims or returns of products, (7) delays in or
increased costs of restructuring programs, (8) the effectiveness of the cost
reduction programs implemented globally, including the successful
implementation of procurement initiatives, (9) customer acceptance of, changes
in the prices of, or delays in the development of new products, (10)
acquisitions and/or dispositions of dealerships by NMHG, (11) changes mandated
by federal and state regulation including health, safety or environmental
legislation and (12) the uncertain impact on the economy or the publics
confidence in general from terrorist activities and the impact of the situation
in Iraq.
28
of Financial Condition and Results of Operations
(Tabular Amounts in Millions)
2004
2003
$
264.9
$
256.2
128.2
102.7
28.2
23.7
421.3
382.6
0.7
21.6
17.5
27.9
18.2
49.5
36.4
$
470.8
$
419.0
$
7.0
$
13.2
1.8
0.5
0.9
9.7
13.7
0.2
(0.8
)
(1.5
)
(0.6
)
0.3
(1.4
)
(1.0
)
$
8.3
$
12.7
$
(6.9
)
$
(7.2
)
(1.6
)
(1.4
)
$
(8.5
)
$
(8.6
)
Table of Contents
2004
2003
$
0.5
$
0.2
0.3
$
0.5
$
0.5
$
2.5
$
4.7
(2.0
)
(1.4
)
$
0.5
$
3.3
33.3
%
34.3
%
33.3
%
33.3
%
33.3
%
34.8
%
Revenues
$
382.6
20.7
9.1
5.6
3.1
0.2
$
421.3
Table of Contents
Table of Contents
Revenues
$
36.4
(0.7
)
35.7
12.6
1.3
(0.5
)
0.4
$
49.5
Operating
Loss
$
(1.0
)
1.0
(1.4
)
0.7
(0.7
)
$
(1.4
)
Table of Contents
Table of Contents
Percentage
impact on cash
flow before
Increase
financing activities
2004
2003
(decrease)
(1)
$
0.5
$
3.3
$
(2.8
)
(17.0
)%
10.7
11.3
(0.6
)
(3.6
)%
2.8
2.8
17.0
%
10.3
(1.9
)
12.2
73.9
%
24.3
12.7
11.6
70.3
%
(7.0
)
(3.2
)
(3.8
)
(23.0
)%
3.9
7.0
(3.1
)
(18.8
)%
(3.1
)
3.8
(6.9
)
(41.8
)%
$
21.2
$
16.5
$
4.7
28.5
%
(1)
Percentage impact on cash flow before financing activities is computed by dividing the increase
(decrease) amount by the 2003 cash flow before financing activities of $16.5 million.
Table of Contents
(1)
Percentage impact on net cash used for financing activities is computed by dividing the (increase)
decrease amount by the 2003 net cash used for financing activities of $22.5 million.
Table of Contents
March 31
December 31
Increase
2004
2003
(decrease)
$
350.0
$
380.1
$
(30.1
)
499.2
499.3
(0.1
)
849.2
879.4
(30.2
)
(146.4
)
(146.4
)
(277.2
)
(307.7
)
30.5
(0.2
)
(0.5
)
0.3
$
425.4
$
424.8
$
0.6
39
%
42
%
(3
)%
Table of Contents
Table of Contents
Item 4. Controls and Procedures
Disclosure controls and procedures
: An evaluation was carried out under the
supervision and with the participation of the Companys management, including
the Principal Executive Officer and the Principal Financial Officer, of the
effectiveness of the Companys disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period
covered by this report. Based on that evaluation, these officers have
concluded that the Companys disclosure controls and procedures are effective.
Changes in internal control over financial reporting
: During the first quarter
of 2004, there have been no significant changes in the Companys internal
control over financial reporting or in other factors that have materially
affected, or are reasonably likely to effect, the Companys internal control
over financial reporting.
29
Table of Contents
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
30
(a)
Exhibits.
See Exhibit Index on page 32 of this quarterly report on Form 10-Q.
(b)
Reports on Form 8-K.
Current Report on Form 8-K filed with the Commission on March 2, 2004 (Items 7 and 9)
Table of Contents
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
31
NMHG Holding Co.
(Registrant)
Date May 10, 2004
/s/ Michael K. Smith
Michael K. Smith
Vice President Finance & Information Systems,
and Chief Financial Officer
(Authorized Officer and Principal
Financial and Accounting Officer)
Table of Contents
Exhibit Index
Exhibit
Number*
Description of Exhibits
Amendment No. 2 to the Restated and
Amended Joint Venture Agreement between General Electric Capital
Corporation and NACCO Materials Handling Group, Inc., dated as of
January 1, 2004
Letter Agreement, dated March 12,
2004, between General Electric Capital Corporation and NACCO
Materials Handling Group, Inc. amending the International Operating
Agreement
Certification of Reginald R. Eklund pursuant to Rule
13a-14(a)/15d-14(a) of the Exchange Act
Certification of Michael K. Smith pursuant to Rule
13a-14(a)/15d-14(a) of the Exchange Act
Certifications pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and
dated by Reginald R. Eklund and Michael K. Smith
*Numbered in accordance with Item 601 of Regulation S-K.
32
Exhibit 10.35
Amendment No. 2 to
the Restated and Amended Joint Venture and Shareholders Agreement Between General Electric Capital Corporation and NACCO Material Handling Group, Inc. Dated April 15, 1998
WHEREAS, General Electric Capital Corporation ("GECC") and NACCO Materials Handling Group, Inc ("NMHG") each have determined that it is in their best interest to make certain amendments to the above-captioned Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the above premises and mutual covenants contained herein below, the parties hereto hereby agree that as of 01January, 2004, the Agreement is hereby amended as follows:
1. Section 1(b) shall be amended by adding thereto the following subjection (ix):
(ix) All of the financial accommodations set forth in Subsections (vi) through (vii) above, shall hereinafter collectively be referred to as "Financial Accommodations."
2. Section 14(a) shall be amended by replacing the date "December 31, 2002" in the second line thereof with the date "December 31, 2008."
3. Section 17(a) shall be deleted in its entirety and the following shall be substituted in its stead:
(a) NMHG shall supply frontroom personnel (frontroom personnel are those that primarily dedicate their time to working on Wholesale and Retail Financing prior to closing and booking), which personnel may comprise the following positions: managers, field representatives, account representatives, wholesale administrators and administrative assistants. All such personnel (whether supplied by NMHG or GECC) will be fully dedicated to the Corporation. Frontroom staffing, and the costs associated therewith, shall be mutually agreed upon by the parties from time to time based on the needs of the Corporation. Frontroom locations will be at Hyster and Yale brand headquarters and/or such other location(s) designated by Hyster and Yale, respectively. As compensation for the Frontroom staffing, NMHG shall be entitled to a loan origination fee ("Loan Origination Fee") composed of the following: a fixed amount equal to $500,000.00 plus a variable amount equal to .9% of the booked Financial Accommodations per annum.
4. Section 33 and related Exhibit I is hereby deleted in its entirety.
5. Section 34 (ii) is hereby deleted in its entirety and the following shall be substituted in its stead:
(ii) Retail Rates: GECC shall advise NMHG in writing, from time to time, of the minimum target standard rates ("Minimum Target Standard Rates") applicable to Retail Financing. GECC shall give NMHG notice of any change to the Minimum Target Standard Rates at least
five Business Days prior to any change thereto. Notwithstanding the foregoing, Minimum Target Standard Rates shall expire on December 31 of each year; provided, however, that in the case of any proposed Retail Financing for which GECC has delivered credit approval to NMHG on behalf of a Customer the Minimum Target Standard Rates applicable to such proposed Retail Financing shall remain in effect for 90 days from the date upon which said Customer received such credit approval. Minimum Target Standard Rate shall be determined from time to time, as follows:
All Tax Lease Products - 4.25 over 5 Year SWAP Rates ("Tax Lease Products" shall mean all Financial Accommodations recognized by the Internal Revenue Service as being a lease other than a capital lease.
All Quasi/Loans - 3.50 over 5 Year SWAP Rates ("Quasi/Loans" shall mean all Financial Accommodations other than Tax Leases.
The applicable SWAP Rate shall be determined as follows:
Based on the Federal Reserve H.15 Statistical Release.
The Amendment shall become fully effective as of January 1, 2004. Except as modified hereby, the terms and conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and year first above written.
GENERAL ELECTRIC CAPITAL NACCO MATERIALS HANDLING CORPORATION GROUP, INC. By:/s/ Edward J. Simoneau By: /s/ Reginald R. Eklund ------------------------------ ------------------------- Vice President & General Manager - Dealer Financial Title: Sevices Title: President & CEO ------------------------------------- ---------------------- |
Exhibit 10.36
March 12, 2004
Mr. Edward J. Simoneau
Vice President & General Manager - Dealer Financial Services
44 Old Ridgebury Road
Danbury, CT 06810-5105
Re: International Operating Agreement dated April 15, 1998 as amended from time to time (the "Operating Agreement")
Dear Ed:
NACCO Materials Handling Group, Inc. ("NMHG") and General Electric Capital Corporation ("GE Capital") and all of their respective affiliates and subsidiaries which may be parties to the above-described Operating Agreement, hereby agree that the "Base Term" (as that term is described in the Agreement) shall be extended and shall now expire on December 15, 2004 ("New Base Expiration Date") and all of the duties and obligations of the parties to the Operating Agreement (as amended) shall continue unmodified and in full force and effect until such date. Accordingly, in conjunction with the extension of such "Base Term", the obligations of NMHG arising under (i) the Recourse for Wholesale Accounts set forth in Section 3.7 of the Operating Agreement and (ii) the terms of the Guaranty (as amended) shall continue unmodified and in full force and effect through the New Base Expiration Date.
By their respective signatures below, NMHG and GE Capital each hereby agree to all of the extensions noted above.
NACCO MATERIALS HANDLING GROUP, INC.
/s/ Jeffrey C. Mattern ----------------------------------------------------- Jeffrey C. Mattern Treasurer |
GENERAL ELECTRIC CAPITAL CORPORATION
/s/ Edward J. Simoneau ----------------------------------------------------- Edward J. Simoneau Vice President & General Manager - Dealer Financial Services |
EXHIBIT 31.1
CERTIFICATIONS
I, Reginald R. Eklund, certify that:
1. I have reviewed this quarterly report on Form 10-Q of NMHG Holding Co.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 10, 2004 /s/ Reginald R. Eklund ------------------------------------- Reginald R. Eklund President and Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATIONS
I, Michael K. Smith, certify that:
1. I have reviewed this quarterly report on Form 10-Q of NMHG Holding Co.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 10, 2004 /s/ Michael K. Smith --------------------------------- Michael K. Smith Vice President, Finance and Information Systems, and Chief Financial Officer (Principal Financial Officer) |
EXHIBIT 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of NMHG Holding Co. (the "Company") on Form 10-Q for the quarter ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
Date: May 10, 2004 /s/ Reginald R. Eklund ----------------------------- Reginald R. Eklund President and Chief Executive Officer (Principal Executive Officer) Date: May 10, 2004 /s/ Michael K. Smith ----------------------------- Michael K. Smith Vice President, Finance and Information Systems, and Chief Financial Officer (Principal Financial Officer) |